product masters

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).

ASC 350-985 is a link-only subtopic: it contains no substantive rules of its own but points readers to Subtopic 985-20 for the capitalization of computer software costs as intangible assets. Specifically, it directs users to 985-20-25-3 (costs of producing product masters incurred after technological feasibility is established) and 985-20-25-10 (purchased software having an alternative future use).

ASC 705-985 is a "links only" subtopic that points to the authoritative guidance elsewhere in the Codification on cost of sales and services for computer software. Its content is that amortization of capitalized software development costs for products marketed to others is charged to cost of sales or a similar expense category (per 985-20-45-1), while duplication/packaging costs are inventory costs under 985-330 and costs to keep software current with hardware revisions are addressed in 985-20-55-11 through 55-12.