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Pateel Papazian
Pateel Papazian,
Category: Finance
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Experience:  Financial Trainer and Consultant at Pateel Papazian
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What is the cost?

Customer Question

What is the cost?
Submitted: 6 months ago.
Category: Finance
Expert:  Pateel Papazian replied 6 months ago.
Hi, in order to provide a cost Just Answer will need to know the scope of the services. Can you clarify further please?Also, please contact the Customer Service department at for assistance. You have an option in the upper right corner of the page to contacting them via email, chat, or phone.
Customer: replied 6 months ago.
I need to know information on fixed assets. What specific types of costs can be capitalized with regard to leasehold improvements by tenant. I would also like specific types of cost that can be capitalized on in-house development of software for a new billing/customer service implementation. I have read GAAP but no specific examples of specific cost were mentioned.
Expert:  Pateel Papazian replied 6 months ago.
Do you use USGAAP? I assume you live in the states.
Expert:  Pateel Papazian replied 6 months ago.
Assuming US GAAP, the answer to your first question regarding L/H improvements is this:Types of costs that can be capitalized as leasehold improvements by a tenant are: - Interior walls and ceilings - Electrical and plumbing additions - Built­in cabinetry - Carpeting and tilesOf course it depends on the materiality level of the expenditure. Meaning, if your organization’s capitalization policy is to capitalize expenditures over USD5,000 let’s say, then anything below that figure should be expensed, even if it is in one of the above categories.
Expert:  Pateel Papazian replied 6 months ago.
The answer to your second question regarding capitalization of software development is this:The accounting for internally developed software varies, depending upon the stage ofcompletion of the project. The relevant accounting is:Stage 1: Preliminary. All costs incurred during the preliminary stage of adevelopment project should be charged to expense as incurred. Thisstage is considered to include making decisions about the allocation ofresources, determining performance requirements, conducting supplierdemonstrations, evaluating technology, and supplier selection.Stage 2: Application development. Capitalize the costs incurred todevelop internal­use software, which may include coding, hardwareinstallation, and testing. Any costs related to data conversion, usertraining, administration, and overhead should be charged to expense asincurred. Only the following costs can be capitalized:Materials and services consumed in the development effort, suchas third party development fees, software purchase costs, andtravel costs related to development work.The payroll costs of those employees directly associated withsoftware development.The capitalization of interest costs incurred to fund the project.Stage 3. Post­implementation. Charge all post­implementation costs toexpense as incurred. Samples of these costs are training andmaintenance costs.Any allowable capitalization of costs should begin after the preliminary stagehas been completed, management commits to funding the project, it isprobable that the project will be completed, and the software will be used forits intended function.The capitalization of costs should end when all substantial testing has beencompleted. If it is no longer probable that a project will be completed, stopcapitalizing the costs associated with it, and conduct impairment testing on thecosts already capitalized. The cost at which the asset should then be carried isthe lower of its carrying amount or fair value (less costs to sell). Unless there isevidence to the contrary, the usual assumption is that uncompleted softwarehas no fair value.
Expert:  Pateel Papazian replied 6 months ago.
If you're happy with the answers please rate me, thx
Expert:  Pateel Papazian replied 6 months ago.
I had forgotten to click the "I am ready to be rated" box, I just did, now you can rate me, thx.

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