Therefore, while a company is developing software, they should report the incurred creative costs to a research and development account (Warfield, Weygandt, & Kieso, 2007). Once the software product has reached a point where it is feasibly considered a technological product the costing can be adjusted to begin capitalizing the costs (Warfield, Weygandt, & Kieso). As established in FASB Statement No. 2, any costs incurred in the developing, creating, testing, and so forth of software products will be charged to the research and development expense account; however any adjustments to the software for upgrades and any costs to market the product would not be included in the research and development expense account (Accounting-Financial-Tax.com, 2012). This is because by the point the product is ready to be marketed or needs to be upgraded to meet new technological standards, the feasibility of the product has been established and therefore the product should be capitalized (Accounting-Financial-Tax.com). If however, after meeting the feasibility requirements, there is substantial risk associate...
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Accounting For Management. (2011). Return on Shareholder’s investment or net worth ratio. Retrieved from, http://www.accountingformanagement.com/retun_on_share_holders_investment_or_net_worth.htm
Kennon, J. (2012). Return on assets (ROA). Retrieved from, http://beginnersinvest.about.com/od/incomestatementanalysis/a/return-on-assets-roa-income-statement.htm
Tracy, J. A. (2004). How to read a financial report (6th ed.). Hoboken, NJ: John Wiley & Sons.
Warfield, T. D., Weygandt, J. J., & Kieso, D. E. (2007). Intermediate accounting (2nd ed.). Hoboken, NJ: John Wiley & Sons.
Whittington, R., & Pany, K. (2012). Principles of auditing and other assurances (18th ed.). New York, NY: McGraw-Hill
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