Discussion:Re: Software Capitalization - FAS 86
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| 29 May 2009 | |
| I am wondering if anyone has first hand experience with this.
1. Company developed a software and it is ready to use. Company capitalized all the cost after the establishment of the feasibility. 2. Now company want to modify the software into other languages (such as German, Italian, French etc)No modification in the program but just an additional work to translate into other languages. The question - Can we capitalize the cost of translation or should we expense it? Any specific details on this or direction is hihgly appreciated. Thanks in advance. | |
| 29 May 2009 | |
| I don't see much on translation specifically, so I'd call translation a product enhancement, which means you'd establish feasibility of the translation and capitalize until it is available for general release. See CT Co2.824:
Q — Must the technological feasibility criteria (paragraph .103) be met for a product enhancement if the criteria had been met for the original product? A — Yes. Product enhancements are specifically included in the scope of this section and, as such, are subject to the same requirements as any other software product. However, technological feasibility may be more easily established for a product enhancement than for a new product, and capitalization of costs may, therefore, begin relatively earlier in the software process. For example, an enhancement that adds one function to an already successful product may require only minor modifications to the original product's detail program design to establish technological feasibility. Similarly, in some cases, software that is ported (made available for a different piece of hardware) may not require a new detail program design, and capitalization of the enhancement costs may begin once any high-risk development issues have been resolved. [Q&A.86 #25] | |
| 2 June 2009 | |
| Thanks Jerry. I also have hard time finding specific on translation! I would think it is a common cost that are incurring for many software developers, yet FAS 86 do not address specifically on this. I also think it can be treated under product enhancement. | |
| 10 June 2009 | |
| There's more to translation than just substituting words. For example, some operating systems are configured to support only a limited number of character sets. So you will have to test a bunch of different installations to make sure the product still works correctly after translation.
Some graphical user interface navigation models must be changed. And in some of the more extreme cases, you might have to re-engineer a user interface and data field parsers because in some languages, characters are read from right to left instead of left to right. This to me is all capitalizable work, not expense. "Internationalizing" software is pretty commonplace, so I don't think you have to go through the proof of concept or prototyping phase. | |
