September 2001
Background Note
HBS Case Collection

Accounting for Computer Software Development Costs

By: Robert S. Kaplan and Tatiana Sandino

Format:Print
| Pages:9

Abstract

Summarizes the debate on accounting for computer software development costs. Provides a historical description of the development of standards on accounting of computer software development costs, both in the United States and internationally. Describes how, after much debate, standard setters gave companies the option to capitalize development costs that meet definitive standards, such as proof of technological feasibility. An exhibit reveals that, despite the requirement in the financial accounting standard to capitalize post-technological development costs, few large software companies in the United States capitalize any of their software development costs.

Keywords

Accounting; Information Technology Industry; Accounting Industry; United States

Citation

Kaplan, Robert S., and Tatiana Sandino. "Accounting for Computer Software Development Costs." Harvard Business School Background Note 102-034, September 2001.