Website Development Costs
EITF Issue No. 00-2
“Accounting for Web Site Development Costs”
“Accounting for Web Site Development Costs”
AICPA SOP 98-1
“Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”
“Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”
Activities to develop websites
1. Planning stage
2. Development stage
(1) Infrastructure development stage
(2) Application development stage
(3) Graphics development stage
(4) Content development stage
3. Operating stage
2. Development stage
(1) Infrastructure development stage
(2) Application development stage
(3) Graphics development stage
(4) Content development stage
3. Operating stage
Planning stage costs
–> expensed
Internet domain name costs
–> capitalized
Development stage costs
–> apply the rules of AICPA SOP 98-1
Operating stage costs
–> apply the rules of AICPA SOP 98-1
Rules of AICPA SOP 98-1
Three stages to develop software
1. Preliminary project stage
2. Application development stage
3. Post-implementation/operation stage
2. Application development stage
3. Post-implementation/operation stage
Preliminary project stage
–> Costs are expensed as incurred
Application development stage
–> Costs to develop internal-use software
–> during the application development stage
–> are capitalized
–> during the application development stage
–> are capitalized
Post-implementation/operation stage
–> Costs are expensed as incurred
Upgrades and enhancements to software
–> Costs may be capitalized
–> if “additional functionality” is added
–> if “additional functionality” is added
Capitalized software costs
–> are amortized on a “straight line” basis
–> over the estimated useful life
and
–> should be reviewed for impairment
–> over the estimated useful life
and
–> should be reviewed for impairment