Lesson: Software Created for Internal Company Use

In this lesson, delve into the intricate accounting rules for software developed not for sale, but for a company's internal use—a frequent practice in many businesses. Nick Palazzolo, CPA, crisply unpacks the process of differentiating between expenses for development, maintenance, and training, and the capitalization of costs post-technological feasibility, as well as for upgrades and enhancements. The lesson further navigates the waters of amortization, highlighting its straight-line method typical for intangible assets. Lastly, Nick explains a unique scenario: how to account for revenue when internally developed software is later sold externally, a practice exemplified by major tech firms. This insightful overview offers valuable comprehension of a complex area of accounting that intertwines technological innovation with financial practice.