# ASC 330-985: Inventory — Software

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/330/985/)

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.

Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure.

Source downloaded (UTC): 2026-09-09T23:53:59.630Z to 2026-09-09T23:54:12.400Z

Record version: sha256:9015556e7af97e46aaba92407753c4627622ebb8b787302a0cf80db55d609afe

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 330-985: Inventory — Software

### Machine-generated study aids

```json
{
  "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).",
  "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"
  ]
}
```

Source downloaded (UTC): 2026-09-09T23:53:59.630Z to 2026-09-09T23:53:59.630Z

Record version: sha256:eb1dc616c7071b66e7501e82eba65add7007deeb1f71e94d3b79a06eb1226c13

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 330-985-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/330/985/#05-overview-and-background)

SEC content: no

##### [330-985-05-1](https://asc.understandingaccounting.org/asc/330/985/#330-985-05-1)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:53:59.630Z to 2026-09-09T23:53:59.630Z

Record version: sha256:6d5dee2f04171cc1821fa71b1a7cba7f5de06606528516aabb667f08940e50e8

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


This Subtopic provides guidance on inventory costs of computer software.

Source downloaded (UTC): 2026-09-09T23:54:02.015Z to 2026-09-09T23:54:02.015Z

Record version: sha256:60b0ab29f22e3ec994e69681b442f2a429a720813a88b4fcc56be320decc499e

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 330-985-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/330/985/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [330-985-15-1](https://asc.understandingaccounting.org/asc/330/985/#330-985-15-1)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:54:02.015Z to 2026-09-09T23:54:02.015Z

Record version: sha256:bf22ec9f1e4d6602c21a9f59de270d4ad83f3f3dc424997e91e39834bc5bba7f

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 985-10-15.

Source downloaded (UTC): 2026-09-09T23:54:08.959Z to 2026-09-09T23:54:08.959Z

Record version: sha256:1381f369bbe054a639aa4dcda369e99fd3f3f5c32e5f743c6714c4ca452be833

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 330-985-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/330/985/#25-recognition)

SEC content: no

##### [330-985-25-1](https://asc.understandingaccounting.org/asc/330/985/#330-985-25-1)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:54:08.959Z to 2026-09-09T23:54:08.959Z

Record version: sha256:c8639d7bc9ee45d7ba3a1b46f6376b0840ff2d798b16999cc4ebaf1d80332d5a

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The costs incurred for duplicating the computer software, documentation, and training materials from the [product masters](https://asc.understandingaccounting.org/glossary/p/#product-master "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.") and for physically packaging the product for distribution shall be capitalized as inventory on a unit-specific basis.

Source downloaded (UTC): 2026-09-09T23:54:12.400Z to 2026-09-09T23:54:12.400Z

Record version: sha256:2f0ee26171efab9e80a5d369d9720c65c488178f396cbcf83500c5101f5b7bfe

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 330-985-40: 40 Derecognition

[Read section](https://asc.understandingaccounting.org/asc/330/985/#40-derecognition)

SEC content: no

##### [330-985-40-1](https://asc.understandingaccounting.org/asc/330/985/#330-985-40-1)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:54:12.400Z to 2026-09-09T23:54:12.400Z

Record version: sha256:21b2ed7fcd6f45af62a84e29fd8505df1d0ccc8b9509c404010a42ab60c47e90

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The costs incurred for duplicating the computer software, documentation, and training materials from the [product masters](https://asc.understandingaccounting.org/glossary/p/#product-master "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.") 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.