Accounting for internal-use software costs

PwC's accounting podcast

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We continue our miniseries on software costs. They are accounted for using two different models depending on whether the software is used internally or externally. In this episode, we discuss the internal-use model applicable to software developed or obtained to meet the reporting entities’ internal needs.
In this episode, we discuss:

• 3:24 – The scope of internal-use software
• 10:29 – The three stages of software development
• 14:07 – Cloud computing arrangements
• 17:50 – Practical challenges in applying this model
• 25:05 – An overview and update on the FASB's current software costs project

For more information, see chapter 3 of our Software costs guide. Also, check out our other episode in this miniseries, Accounting for the cost of externally marketed software. Additionally, follow this podcast on your favorite podcast app for more episodes.
Mike Coleman is a partner in PwC's National Office who specializes in accounting for revenue and software arrangements and has served technology clients for much of his career. In addition, Mike has represented the firm on the AICPA Software Task Force.
Pat Durbin is a Deputy Chief Accountant in PwC’s National Office. He has over 30 years of experience consulting with our clients and engagement teams on complex accounting matters, including issues related to revenue, compensation, income taxes, and inventory under both US GAAP and IFRS.
Heather Horn is the PwC National Office Sustainability & Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s quarterly webcast series.
Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [e-mail].

Capitole

1. Accounting for internal-use software costs (00:00:00)

2. The scope of internal-use software (00:03:24)

3. The three stages of software development (00:10:29)

4. Cloud computing arrangements (00:14:07)

5. Practical challenges in applying this model (00:17:50)

6. An overview and update on the FASB's current software costs project (00:25:05)