technological feasibility

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 730-985 is a "link" subtopic: it contains no substantive rules of its own but points readers from the research and development Topic to the software guidance. It directs users to 985-20-25-1 for costs incurred to establish the technological feasibility of software to be sold, leased, or otherwise marketed, and to 985-20-25-8 through 25-10 for the cost of purchased software to be marketed.

ASC 985-10 is the Overall subtopic of the Software Topic, which sets the scope umbrella for the industry-specific software guidance (costs of software to be sold, leased, or marketed; inventory; intangibles—goodwill and other; provision for losses; cost of sales and services; and research and development). The Topic provides only incremental industry-specific guidance—entities within its scope must also apply all other applicable GAAP (985-10-15-1). It applies to all entities and to computer software to be sold, leased, or otherwise marketed as a separate product or as part of a product or process (985-10-15-2 through 15-3).

ASC 985-20 governs the accounting for costs of computer software to be sold, leased, or otherwise marketed, whether internally developed or purchased. All costs incurred to establish technological feasibility are research and development expensed as incurred (985-20-25-1); costs of producing product masters after technological feasibility is established are capitalized (985-20-25-3) and capitalization ceases when the product is available for general release (985-20-25-6). Capitalized amounts are amortized product-by-product at the greater of the revenue-ratio or straight-line amount (985-20-35-1) and are written down to net realizable value at each balance sheet date (985-20-35-4).