A company is developing software for internal use. - Preliminary project stage costs: $50,000 - Application development stage costs (coding/testing): $200,000 - Training costs: $30,000 - Post-implementation maintenance: $20,000 What amount should be capitalized?

Answer options:

$250,000

$230,000

$200,000

$300,000

How to approach this question

Internal Use Software Rule: Expense Preliminary Stage. Capitalize Application Development Stage. Expense Post-Implementation/Training.

Full Answer

C.$200,000✓ Correct

ASC 350-40: Capitalize costs incurred during the Application Development Stage ($200,000). Expense Preliminary Project Stage, Training, and Maintenance.

Common mistakes

Capitalizing preliminary or training costs.

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A company is developing software for internal use. <br/>- Preliminary project stage costs: $50,000<br/>- Application development stage costs (coding/testing): $200,000<br/>- Training costs: $30,000<br/>- Post-implementation maintenance: $20,000<br/><br/>What amount should be capitalized?

How to approach this question

Full Answer

Common mistakes

Practice the full CPA FAR Practice Exam 4

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