[homerun07]

this is question #26 on the F2 homework under “matching of revenues and expenses, correcting and adjusting accounts”

“Brill Co. made the following expenditures during the current year:

Costs to develop computer software for us in Brill’s general management information systems $100,000

Costs of market research activities $75,000

What amount of these expenditures should Brill report in its current year income statement as research and development under U.S GAAP?

The answer is $0

I understand why the cost of market research is not expensed but i’m wondering why the

cost to develop software internally is not expensed..

in the becker textbook on page F2-20

it says that computer software developed internally or obtained for internal use only should “expense costs incurred for the preliminary project state and costs incurred for training and maintenance”

and “capitalize costs incurred after the preliminary state and for upgrades and enhancements”

i thought “developing” would be considered a preliminary state….

am i understanding this wrong? someone please explain :))) !!

[homerun07]

Also, in the explanation of why it's not expensed– it says : This software is for internal use, unrelated to production and is not considered research and development”

[Author]

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