Accounting treatment for software development

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sandeep choudhury (Querist)

06 March 2012 Dear Experts

We are a software development company. I want to know what is the accounting treatment for expenses relating to software development.We are developing the software now and it will take sometime for the software to come to market. As the financial year is closing i have to classify the expenses in the financial statements. After the software is developed we will be selling licenses to various customers and customise it according to the requirements of the clients.

Krishna Mohan

Krishna Mohan (Expert)

06 March 2012 capitalize the development expenses till the software is ready to move into the market. Show the same as R&D as on 31st March, 2012. Once it touches the market, you can transfer the amount to P&L and claim the same as expenditure in that year.

sandeep choudhury

sandeep choudhury (Querist)

06 March 2012 Thank you Sir

Is this under Miscellaneous Expenses in the Balance Sheet. Also please tell me the related accounting standard

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