Читать книгу Annual Accounting and Auditing Workshop - Kurt Oestriecher - Страница 103

An entity shall follow the guidance in ASC 350-40 in determining which upfront costs shall be capitalized as an asset related to the service contract, with all other costs being expensed. The guidance requires an entity to determine which of the following phases of implementation the costs are incurred:

 Preliminary project stage — Expensed

 Application development stage — Capitalized, depending on the nature of the cost

 Postimplementation stage — Expensed

Any application development stage costs that are capitalized are required to be amortized over the term of the hosting arrangement. This term includes the noncancelable period of the arrangement plus periods covered by the following:

 An option to extend the arrangement if it is reasonable that the option will be exercised

 An option to terminate the agreement if it is not reasonably certain that the termination option will be exercised

 An option to extend (or not terminate) the arrangement in which the option is in control of the vendor

Any capitalized costs will also be subject to the impairment guidance in ASC 350-40 if the costs are long-lived assets.