If a company is internally developing software to be sold, when can expenses be capitalized?
As you can see in the visual below, all expenses incurred prior to achieving technological feasibility should be expensed. Only expenses incurred between technological feasibility and the release of the product for sale should be capitalized.
Now, the subjective part is determining when technological feasibility has been achieved. Technological feasibility is achieved when the company has completed the planning, design, coding, and testing phases of product development.
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