Development Costs Related to Computer Software That Is to Be

question 112

Multiple Choice

Development costs related to computer software that is to be sold, leased, or otherwise marketed should be accounted for in which of the following ways?

• A) All software development costs should be recorded as R&D expense.
• B) All software development costs should be capitalized.
• C) All software development costs should be recorded as R&D expense until technological feasibility is established.
• D) All software development costs should be recorded in R&D expense until the product is available for general release to customers.

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Definitions:

Self-employment Income

Income generated from conducting business as an independent contractor, freelancer, or business owner, rather than as an employee.

Ordinary Income

Income earned from standard operations, including wages, salaries, tips, and interest, subject to regular taxation rates.

S Corporations

A type of corporation that meets specific Internal Revenue Code requirements, allowing it to pass income directly to shareholders and avoid double taxation.

Royalties

Payments made to the owner of certain types of intellectual property, rights, or assets for the use of said property by others.