Software development costs are capitalized if they are incurred:
A) Prior to the point at which technological feasibility has been established.
B) After commercial production has begun.
C) After technological feasibility has been established but prior to the product availability date.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

Software development costs are capitalized if they are incurred after technological feasibility has been established but prior to the product availability date. Prior to this point, all costs should be expensed. Once the product is available for general release and is being sold or used in the company's operations, all costs should be expensed as research and development expenses. Option A is incorrect because costs incurred before technological feasibility has been established should be expensed. Option B is incorrect because costs incurred after commercial production has begun are not eligible for capitalization. Option D is incorrect because option C is the correct choice.

Software Development Costs Are Capitalized If They Are Incurred