Software Development Cost Analysis

Pologeorgis (2012) stated that the diversity of accounting principle has an essential impact on the stock markets, corporate management, and financial reporting. He pointed that when people seeking for international capitals, varies of dissimilar accounting principles create discrepancies in their financial reporting. If people cannot understand the differences between IFRS and GAAP, they may have the chance to make the wrong decisions and loss money in the capital markets. Pologeorgis (2012) also mentioned that international investors have to relearn the new principal in order to be more familiar with the international standards. Based on above, there is a keen motivation for people to understand the differences and similarities of GAAP and IFRS. This research will show business people the main similarities and differences of GAAP and IFRS.

2007/2008 Edition This PricewaterhouseCoopers publication is for those who wish to gain a broad understanding of the key similarities and differences between IFRS, US GAAP and Swiss GAAP FER. No summary publication can do justice to the many differences of detail that exist between IFRS, US GAAP and Swiss GAAP FER. Even if the guidance is similar, there can be differences in the detailed application, which could have a material impact on the financial statements. It needs to be stressed that this brochure deals with the main differences only. Many more pages would be needed to be

Refer to AASB138 (54), (2015, p. 13) research expense should be expensed when it occurred. Whereas development expense could be capitalised as an intangible asset when the entity demonstrates the ability to use or sell (AASB 138 57 c 2015, p. 13). As a technology-driven business, R&D is the core competence for MYX to differentiate its products and gain sustainable profits. Hence, adjustments should be made to transfer R&D expenses to an intangible asset.

Implementing GAAP and IFRS will reduce huge transition cost that may occur in the future. Due to this difference between GAAP and IFRS, the transition cost from GAAP to IFRS is very high. If a company wants to change accounting reporting method, it must report the current year, pervious year or years depend on the situation and the first year started to report financial statements using the new-implemented method (Kieso Et al., Chap. 5, ETB). It cost a lot for the company to do so.

The key difference of revenues and expenses recognition is obvious. According to IFRS, the income statement records the increasing of future economic benefit as revenues, such as sales, interests, dividends, and rents, and the recognition of revenues and expenses are combined directly in the same transaction (Matching principle). But ASPE standards state that the income statement only records the existing or realizing performance as revenues. Same situation in the expenses, in IFRS’s income statement, they are recognized by a decrease in the asset or an increase in the liability for future position. In addition, under ASPE, we do not recognize an expense as a provision unless the benefit does qualifies as an asset (CICA, 2011, Section 1000).

“Internal and external costs incurred during the development stage shall be capitalized.” (FASB ASC 350-40-25-2)

This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This

Rationale: If the project is an R & D project, R&D costs must be expensed under GAAP unless they have alternative future uses. If not, then the asset should be depreciated over the life of the project. If these assets do, indeed, have alternative future uses, they will be capitalized and depreciated over their normal useful life.

Under-IFRS (IAS-38), important to distinguish research-costs from development-costs. Development costs capitalized as assets, research costs expensed. Carroway-cool-top is in research-stage, as products developed haven't been successful, so cost $975,000 should be record as expense instead of deferred-development-cost.

There are several differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP). The IFRS is considered more of a "principles based" accounting standard in contrast to U.S. GAAP which is considered more "rules based." By being more "principles based", IFRS, arguably, represents and captures the economics of a transaction better than U.S. GAAP. As a team me collaborated to answer the following seven questions.

The intangible asset will generate probable future economic benefits for the organization which can either be in the form of costs reduction or in the form of increasing revenue in the future for the organization.

There are two major similarities or points of convergence between US GAAP and IFRS. The first similarity is with regards to objectives of financial. In this case, both IFRS and US GAAP take the same general position with regards to objectives of financial reporting. The two main objectives shared by the two accounting bodies are relevancy of

18. Companies that expense R&D costs to the income statement rather than capitalize them on the balance sheet would have:

With complete notion and awareness of how each country has their set of rules, “the goal of IFRS is to provide a global framework for how public companies prepare and disclose their financial statements” (Rouse, 2011). This view is meant to provide general guidelines, as well as international comparisons through conventional and edifying means. To bring broader and vivid objectives, IFRS replaced IAS, the older standards, in order to bring a more comprehensive and simplified accounting procedures.

Some accounting committees and countries prefer expensing the R&D expenditure to capitalization, they concern about the conservatism rule, future economic benefit uncertainty and avoiding profit manipulated of R&D expenditure. However, expensing R&D expenditure also cannot perfectly deal with these problems as they expected. As the rapidly development of technology, especially in high-tech industry, intangible asset take up large number of the overall assets, whether the firm is successful or not largely relay on these intangible assets, therefore, simple expensing all R&D expenditure is apparently inaccurate.