# ASC 985-20-35: Software — Costs of Software to Be Sold, Leased, or Marketed — 35 Subsequent Measurement

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/985/20/#35-subsequent-measurement)

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): 2026-09-10T02:28:40.274Z to 2026-09-10T02:28:40.274Z

Record version: sha256:6ac3f4fade182b3e601f13d783d1d7c8e23bbba93ab46a7648b45aa4b9f4d282

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 985-20-35: 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/985/20/#35-subsequent-measurement)

SEC content: no

#### Amortization of Capitalized Software Costs

##### [985-20-35-1](https://asc.understandingaccounting.org/asc/985/20/#985-20-35-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T02:28:40.274Z to 2026-09-10T02:28:40.274Z

Record version: sha256:0cd7f3735058ed8301a69e3f80d9827e54eeb59297b0fdfa84e744f7d2935bf9

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Capitalized software costs shall be amortized on a product-by-product basis. The annual amortization shall be the greater of the amounts computed using the following:

1.  a
    
    The ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product
    
2.  b
    
    The straight-line method over the remaining estimated economic life of the product including the period being reported on.

##### [985-20-35-2](https://asc.understandingaccounting.org/asc/985/20/#985-20-35-2)

Pending content: no

Source downloaded (UTC): 2026-09-10T02:28:40.274Z to 2026-09-10T02:28:40.274Z

Record version: sha256:81e58179773217f2dd39092659f6c0755fab4713db6d50c658e6675e347f7920

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Because a net realizable value test, which considers future revenues and costs, must be applied to capitalized costs (see paragraph [985-20-35-4](https://asc.understandingaccounting.org/asc/985/20/#985-20-35-4)), amortization shall be based on estimated future revenues. In recognition of the uncertainties involved in estimating revenue, amortization shall not be less than straight-line amortization over the product's remaining estimated economic life.

##### [985-20-35-3](https://asc.understandingaccounting.org/asc/985/20/#985-20-35-3)

Pending content: no

Source downloaded (UTC): 2026-09-10T02:28:40.274Z to 2026-09-10T02:28:40.274Z

Record version: sha256:724eeb3160612d961faf830a0034c87914614b2f0fd00b657ce29e8bd417c88b

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


Amortization shall start when the product is available for general release to customers.

#### Net Realizable Value of Capitalized Software Costs

##### [985-20-35-4](https://asc.understandingaccounting.org/asc/985/20/#985-20-35-4)

Pending content: no

Source downloaded (UTC): 2026-09-10T02:28:40.274Z to 2026-09-10T02:28:40.274Z

Record version: sha256:9b6fae47f9fade3edf881f350c609549dbb41a9b7454da5e79a3428b4df713e0

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


At each balance sheet date, the unamortized capitalized costs of a computer software product shall be compared to the net realizable value of that product. The amount by which the unamortized capitalized costs of a computer software product exceed the net realizable value of that asset shall be written off. The net realizable value is the estimated future gross revenues from that product reduced by the estimated future costs of completing and disposing of that product, including the costs of performing [maintenance](https://asc.understandingaccounting.org/glossary/m/#maintenance "Activities undertaken after the product is available for general release to customers to correct errors or keep the product updated with current information. Those activities include routine changes and additions.") and [customer support](https://asc.understandingaccounting.org/glossary/c/#customer-support "Services performed by an entity to assist customers in their use of software products. Those services include any installation assistance, training classes, telephone question and answer services, newsletters, on-site visits, and software or data modifications.") required to satisfy the entity's responsibility set forth at the time of sale. The reduced amount of capitalized computer software costs that have been written down to net realizable value at the close of an annual fiscal period shall be considered to be the cost for subsequent accounting purposes, and the amount of the write-down shall not be subsequently restored.