Accounting Standards 1-29 - Seth & Associates

and only if, an enterprise can demonstrate all of the following:
a. the technical feasibility of completing the internally generated software so that it will be available
for internal use;
b. the intention of the enterprise to complete the internally generated software and use it to
perform the functions intended. For example, the intention to complete the internally generated
software can be demonstrated if the enterprise commits to the funding of the software project;
c. the ability of the enterprise to use the software;
d. how the software will generate probable future economic benefits. Among other things, the
enterprise should demonstrate the usefulness of the software;
e. the availability of adequate technical, financial and other resources to complete the
development and to use the software; and
f. the ability of the enterprise to measure the expenditure attributable to the software during its
development reliably.
6. Examples of development activities in respect of internally generated software include:
a. Design including detailed program design - which is the process of detail design of computer
software that takes product function, feature, and technical requirements to their most detailed,
logical form and is ready for coding.
b. Coding which includes generating detailed instructions in a computer language to carry out the
requirements described in the detail program design. The coding of computer software may
begin prior to, concurrent with, or subsequent to the completion of the detail program design.
At the end of these stages of the development activity, the enterprise has a working model,
which is an operative version of the computer software capable of performing all the major
planned functions, and is ready for initial testing (“beta” versions).
c. Testing which is the process of performing the steps necessary to determine whether the coded
computer software product meets function, feature, and technical performance requirements set
forth in the product design.
At the end of the testing process, the enterprise has a master version of the internal use
software, which is a completed version together with the related user documentation and the
training materials.
Cost of internally generated software
7. The cost of an internally generated software is the sum of the expenditure incurred from the time when
the software first met the recognition criteria for an intangible asset as stated in paragraphs 20 and 21 of
this Statement and paragraph 5 above. An expenditure which did not meet the recognition criteria as