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Software development costs are treated as Research and Development expense until technological feasibility of the product...

Software development costs are treated as Research and Development expense until technological feasibility of the product is established.

True or False?

Business   Accounting   
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Answer #1

False, As the software development costs if made is for sale/lease/ marketing purposes then the above statement is true but is given in general for both puposes as stated below which does not hold good hence it is false.

As the software development expenses can be two puposes being for internal use and for sale/lease/marketing. The purpose for which they are developed determines the treatment to be expensed or capitalized as the case may be.

Internal purpose - after the preliminary project stage has ended

Sale/lease/Marketing - only after the technological feasibility is established.

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