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Internally developed software

BAR Chapter 11 · Area II · Blueprint II.B

Software is now one of the largest assets many companies build for themselves, and GAAP has two different rule books for it: one for software a company uses internally and one for software it sells. The Blueprint asks you to recall when costs may be capitalized under each and to calculate the capitalized amount and its amortization. Ledgerline Software is building a new internal billing system and, at the same time, a payments app called PayFlow that it will sell.

In this chapter

1. Two kinds of software, two rule books
2. Internal-use software: the three stages
3. Amortizing internal-use software and cloud implementation costs
4. Software to be sold: technological feasibility
5. Amortizing software to be sold and the NRV test
6. The 2025 update to internal-use software
7. Presentation, disclosure and a full project

This chapter has 7 lessons, 50 practice MCQs with explanations and 10 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Internal-use software stages
• software to be sold
• capitalization and amortization

Chapter 10: Goodwill and indefinite-lived intangibles · Chapter 12: Revenue recognition: reading contracts