The New England Accounting Advisor

Most entities utilize software to manage their operations, or provide services to customers. Some entities purchase software licenses that are accounted for as a capitalized asset, while others access software through a hosting arrangement which is accounted for as an expense. The Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (ASU) to simplify how an entity distinguishes between the purchase of software that should be capitalized and obtaining software as a service through a hosting arrangement.

The Treasury and IRS have released proposed regulations governing the credit for increasing research activities (the research and development or R&D credit) with respect to computer software for internal use. The proposal also withdraws a prior advanced notice of proposed rulemaking, and asks for public comments.