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Technology Spotlight — Scoping Considerations When Accounting for Software and Software-Related Costs (June 2020)

Technology Spotlight
June 2020
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Scoping Considerations When Accounting for Software and Software-Related Costs

Footnotes

1
For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.”
2
Production costs for software that is to be used as an integral part of a product or process cannot be capitalized until both (1) technological feasibility has been established and (2) all research and development activities for the other components of the product or process have been completed.
3
FASB Accounting Standards Update (ASU) No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.
4
A hosting arrangement is defined in the ASC master glossary as being “[i]n connection with accessing and using software products, an arrangement in which the customer of the software does not currently have possession of the software; rather, the customer accesses and uses the software on an as-needed basis.”
5
The ASC master glossary defines reasonably possible as “[t]he chance of the future event or events occurring is more than remote but less than likely.”
6
See ASC 350-40-15-2C and ASC 350-40-35-10.
7
See ASC 350-40-35-7 and 35-8.
8
See ASC 350-40-35-9.
9
See ASC 350-40-15-4A through 15-4C.
10
A stand-alone price is defined in ASC 350-40-20 as the “price at which a customer would purchase a component of a contract separately.”
11
See ASC 985-20-25-1.
12
See ASC 350-40-15-7(b)(1) and ASC 730-10-55-1(h).
13
See ASC 350-40-15-7(b)(2).