{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/330/985/","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","number":"330-985","topic":"330","title":"Software","area":"Assets","paragraphs":4,"summary":"This subtopic governs how a software vendor accounts for the costs of producing physical copies of software to be sold, leased, or otherwise marketed. Costs of duplicating the software, documentation, and training materials from the product masters and of physically packaging the product for distribution are capitalized as inventory on a unit-specific basis (330-985-25-1). Those capitalized costs are charged to cost of sales when revenue from the sale of the related units is recognized (330-985-40-1).","concepts":["product masters","duplication costs","packaging costs","unit-specific capitalization","software inventory","cost of sales","software to be sold, leased, or marketed"],"categories":["Inventory and PP&E","Recognition","Derecognition","Industry-specific"],"level":"intermediate","topic_title":"Inventory","sections":[{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"330-985-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic provides guidance on inventory costs of computer software.</div></div>","snippet":"This Subtopic provides guidance on inventory costs of computer software.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6d5dee2f04171cc1821fa71b1a7cba7f5de06606528516aabb667f08940e50e8","downloaded_from":"2026-09-09T23:53:59.630Z","last_downloaded_at":"2026-09-09T23:53:59.630Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477710","source_sha256":"a525eb91bc17eb43c09ea5f95d58ceb0ac7ca59a1927030d5f3b8a3d142cfdb5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7b82ae0946a5b80fe4b6242882cec8169e45776491bf4e5d65937215e00213c6","downloaded_from":"2026-09-09T23:53:59.630Z","last_downloaded_at":"2026-09-09T23:53:59.630Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not 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class=\"norm-text\">This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section <a altsource=\"GUID-E9A65B11-09F4-4D95-A0B1-628BD4BC1F72.ditamap\" class=\"ditamap\">985-10-15</a>.</div></div>","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 985-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bf22ec9f1e4d6602c21a9f59de270d4ad83f3f3dc424997e91e39834bc5bba7f","downloaded_from":"2026-09-09T23:54:02.015Z","last_downloaded_at":"2026-09-09T23:54:02.015Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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id=\"sfr_4BA0E4F3-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The costs incurred for duplicating the computer software, documentation, and training materials from the <a href=\"/glossary/p/#product-master\" class=\"term\" title=\"A completed version, ready for copying, of the computer software product, the documentation, and the training materials that are to be sold, leased, or otherwise marketed.\"><span>product masters</span></a> and for physically packaging the product for distribution shall be capitalized as inventory on a unit-specific basis. </span></span></div></div>","snippet":"The costs incurred for duplicating the computer software, documentation, and training materials from the product masters and for physically packaging the product for distribution shall be capitalized as inventory on a un…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c8639d7bc9ee45d7ba3a1b46f6376b0840ff2d798b16999cc4ebaf1d80332d5a","downloaded_from":"2026-09-09T23:54:08.959Z","last_downloaded_at":"2026-09-09T23:54:08.959Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477739","source_sha256":"4c5f93bd9bd56e14a9bc93d24e45630a3bc16e1240cb602993a4610c6ca320d0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2fc3ee9fb6213167fcaa090881911799362e605630563708d2a0b38d05285cd1","downloaded_from":"2026-09-09T23:54:08.959Z","last_downloaded_at":"2026-09-09T23:54:08.959Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477739","source_sha256":"4c5f93bd9bd56e14a9bc93d24e45630a3bc16e1240cb602993a4610c6ca320d0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1381f369bbe054a639aa4dcda369e99fd3f3f5c32e5f743c6714c4ca452be833","downloaded_from":"2026-09-09T23:54:08.959Z","last_downloaded_at":"2026-09-09T23:54:08.959Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477739","source_sha256":"4c5f93bd9bd56e14a9bc93d24e45630a3bc16e1240cb602993a4610c6ca320d0"}},{"number":"40","label":"40 Derecognition","anchor":"40-derecognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"330-985-40-1","para":"40-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_4BA9407C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The costs incurred for duplicating the computer software, documentation, and training materials from the <a href=\"/glossary/p/#product-master\" class=\"term\" title=\"A completed version, ready for copying, of the computer software product, the documentation, and the training materials that are to be sold, leased, or otherwise marketed.\"><span>product masters</span></a> and for physically packaging the product for distribution shall be charged to cost of sales when revenue from the sale of those units is recognized. </span></span></div></div>","snippet":"The costs incurred for duplicating the computer software, documentation, and training materials from the product masters and for physically packaging the product for distribution shall be charged to cost of sales when re…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:21b2ed7fcd6f45af62a84e29fd8505df1d0ccc8b9509c404010a42ab60c47e90","downloaded_from":"2026-09-09T23:54:12.400Z","last_downloaded_at":"2026-09-09T23:54:12.400Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477789","source_sha256":"0dc7a3e471c56481f85b417c23def6479ec1baec2fbf1d03e39ceed31af390fc"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b9f91eb177d8e232828c7f533423a761d28865d3e0e22bd1d110265e05d9cdee","downloaded_from":"2026-09-09T23:54:12.400Z","last_downloaded_at":"2026-09-09T23:54:12.400Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not 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Costs of duplicating the software, documentation, and training materials from the product masters and of physically packaging the product for distribution are capitalized as inventory on a unit-specific basis (330-985-25-1). Those capitalized costs are charged to cost of sales when revenue from the sale of the related units is recognized (330-985-40-1).","key_points":["Scope follows the Software Overall Subtopic, Section 985-10-15 (330-985-15-1), i.e., software to be sold, leased, or otherwise marketed.","Duplication costs for the software, documentation, and training materials from product masters, plus physical packaging costs for distribution, are capitalized as inventory on a unit-specific basis (330-985-25-1).","Capitalized duplication and packaging costs are charged to cost of sales when revenue from the sale of those units is recognized (330-985-40-1), matching cost with revenue.","The guidance addresses only inventory costs of computer software (330-985-05-1); costs of developing the product masters themselves are addressed elsewhere in Topic 985."],"categories":["Inventory and PP&E","Recognition","Derecognition","Industry-specific"],"audience_level":"intermediate","student_note":"Exam trap: distinguish costs of creating the product master (software development costs under 985-20, amortized as an asset) from costs of duplicating and packaging copies (inventory here, expensed to cost of sales as units sell). Students often expense duplication costs as incurred instead of capitalizing them as inventory.","related_topics":["985-10","985-20","985-605","330-10","350-40"],"key_concepts":["product masters","duplication costs","packaging costs","unit-specific capitalization","software inventory","cost of sales","software to be sold, leased, or marketed"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d25a72eed0f25ba71380d8d37ce971d52c2350f0d280ab1d5c5e1edacbb053e","downloaded_from":"2026-09-09T23:53:59.630Z","last_downloaded_at":"2026-09-09T23:54:12.400Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"350-985","title":"Software","topic_title":"Intangibles—Goodwill and Other","score":0.8016,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a073c86e23fb5a5df88a516c555bd135fef07923626293a0e8abb6ee720ad36d","downloaded_from":"2026-09-10T00:05:21.279Z","last_downloaded_at":"2026-09-10T00:05:31.733Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"705-985","title":"Software","topic_title":"Cost of Sales and Services","score":0.7424,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:235b72f0908706e297af9ff09e300ac306f303aba64b5480aae7b87be3bfa5f6","downloaded_from":"2026-09-10T00:56:55.035Z","last_downloaded_at":"2026-09-10T00:57:08.857Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"730-985","title":"Software","topic_title":"Research and Development","score":0.729,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:98122683f260b3a2644961fadf176b41b3c59545af0149e79711778c157e9ec4","downloaded_from":"2026-09-10T01:16:06.499Z","last_downloaded_at":"2026-09-10T01:16:08.583Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"985-20","title":"Costs of Software to Be Sold, Leased, or 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Activities","topic_title":"Inventory","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1f1e16faadd2262c053640e7ece7a3845f200e82d3d9bbf60b8fd2b0df07c3bd","downloaded_from":"2026-09-09T23:53:35.942Z","last_downloaded_at":"2026-09-09T23:53:56.981Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"340-10","title":"Overall","topic_title":"Other Assets and Deferred Costs","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9fdb5c62edb35126692d0636d92d67b9997e3434a8c7db0f3b16025db1d01930","downloaded_from":"2026-09-09T23:54:15.524Z","last_downloaded_at":"2026-09-09T23:55:04.724Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not 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