Capitalize or expense? Accountants need guidance on software developed for internal use
Article Abstract:
A standard method of accounting for the costs of developing computer software for internal use has yet to be determined. The difficulty of clarifying the accounting treatment of such costs can be attributed in part to the complexity of the nature of the software development process. Some steps in the process resemble R&D activities while others are similar to product development. The main problem is knowing which costs to capitalize and which to expense. There is no clear guidelines on this matter, but the Financial Accounting Standards Board did issue Interpretation No 6, 'Applicability of Statement No 2 to Computer Software.' The Institute of Management Accountants has also released a paper entitled 'Accounting for Software Used Internally.' The two papers, however, express different opinions on the issue of software development. Against this background, a survey was conducted to determine how firms account for computer software development costs.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1993
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Pay-for-performance in a service firm: how management accountants created an objective financial measure for compensation
Article Abstract:
Management accountants are increasingly being required to devise pay-for-performance programs for the management group of their companies. Behind the rising popularity of this pay structure is its ability to justify executive bonuses or motivate managers to give their optimum performance. One company that has implemented a pay-for-performance plan is the engineering and architectural design firm Short-Elliott-Hendrickson Inc. which has about 250 employees in five offices. The new program was designed with the intention of creating one that is easy to understand and track, fair to everyone, controllable by the individual employees and able to motivate teamwork among the several departments and offices. Under the system, the bonus of each individual would depend on three factors: financial results, client satisfaction and process improvement. The process involved in developing the pay-for-performance program is discussed.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1995
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