Option #2: Codification to Research a Complex Accounting Issue: Accounting for Software Development Activities Note : For this Portfolio Project, please check with your instructor for instructions,...

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Option #2:Codification to Research a Complex Accounting Issue: Accounting for Software Development Activities



Note: For this Portfolio Project, please check with your instructor for instructions, including the user name and password, which CSU-Global pays for and provides for access to the FASB Accounting Standards Codification (ASC) which you will need.


Read theAccounting for Software Development Activities
Case Study(link below). After reading the case study, answer the questions provided.


While Ms. Larson is confident with the U.S. GAAP reporting of the CRM system developed in 2018 and used by MRM, she is less certain of the accounting for the software product developed for customers in 2019 due to the unique nature of the transaction as it relates to the company's business. You have been asked to research the relevant guidance to determine the proper course of action for the 2019 financial statements. Specifically, Ms. Larson is interested in how the fees paid to ZD for the activities from March 1 to August 31 should be accounted for and how these costs, along with the fees generated from the three customers, should bepresentedon the 2019 financial statements.


As part of this task, perform the following activities:


First, consult the Financial Accounting Standards BoardAccounting Standards
Codification®to find appropriate guidance on the issues presented in the case.


Next, prepare the following three responses in paper format:



  1. Prepare a detailed 3-page minimum double-spaced memorandum and analysis to Ms. Larson that includes the relevant issues for this situation, the appropriate financial reporting guidance, and your conclusion regarding the treatment of the fees generated and costs incurred for the software sold in 2019.

  2. Prepare a detailed 3-page minimum double-spaced memorandum and analysis of Ms. Larson's accounting for the CRM system in 2018. Specifically, determine whether her decisions regarding the (1) capitalization versus expensing of costs and (2) amortization of the CRM system are supported by U.S. GAAP. Address the specific evidence from the case, the relevant guidance from the Financial Accounting Standards BoardAccounting Standards
    Codification®,and make adjustments, if any, to the 2018 financial statement.

  3. After reviewing the following additional details, prepare a 3-page double-spaced memorandum and analysis summarizing the issues identified, and then providing guidance and a conclusion with appropriate treatment of each issue.


Additional details:


MRM management felt that its first three software clients could play a crucial role in MRM's future strategy to create market awareness for its software product. Through discussions with the three companies, MRM management learned that each company was scheduled to participate in industry conventions in the first quarter of 2020.


According to the clients, these conferences typically provide companies and their employees the opportunity to interact with industry association members and competitors and discuss industry-specific developments.


Companies normally receive booth space in the main convention area, and some of the industry participants give presentations in adjacent conference rooms on topics of interest.


MRM management believed that these conferences would be a strategic venue to market their software products. However, admission to the conferences was exclusive to industry participants who paid significant association dues, and thus MRM had no way of attending the conferences independently, nor did they have established business connections with other companies within these industries.


Because of the significant opportunity, though, MRM management asked the three initial clients if they would promote the product at their respective conventions. Specifically, MRM wanted the companies to offer a demonstration of the software to other conference attendees and devote booth space to marketing pamphlets for the software.


Each company agreed to MRM's request, but demanded a substantial fee given the significance of the promotional efforts and the uniqueness of such activity at the conferences. As such, MRM's sales contracts for each of the three customers included an agreement for the customers to provide the software demonstrations and display pamphlets in exchange for a fee of $15,000 (for a total of $45,000), payable on December 19, 2019.


Considering the evidence from the case, including the additional information provided, identify the revenue recognition issues that potentially impact the accounting for the sales contracts in 2019. In the process, research the appropriate guidance from the Financial Accounting Standards BoardAccounting Standards Codification®to determine how these issues should be addressed.



Requirements:



  • Be sure to discuss and reference concepts taken from the required and recommended readings throughout the course and also from your own relevant research.

  • Include a title page and reference page.

  • Your paper should be a minimum of 9 pages in length, not including a cover sheet and reference page. Submissions in excess of 9 pages in length are acceptable.

  • Either submit a separate Excel file to support your findings or include exhibits as part of your paper.

  • Include a minimum of six credible, academic, or professional references beyond the course text, required and recommended readings, or other course materials.

  • Format according to theCSU Global Writing Center(Links to an external site.).

  • Review the grading rubric to see how you will be graded for this assignment.

act506portfoliooption2-c5wltfid.docx act506portfoliooption2-3ap3px0p-cxvsjidh.docx accounting-for-software-development-costs-y1yrw1yb-xnrsdctl.pdf accouunting-for-intangibles-kmt4iytx-hs3yxggz.pdf
Answered 9 days AfterSep 25, 2021

Answer To: Option #2: Codification to Research a Complex Accounting Issue: Accounting for Software Development...

Neha answered on Oct 05 2021
127 Votes
Memorandum and Analysis
Revenue recognition has always been a very important aspect of correct presentation of final statements and profits a loss of the business. It is very important to know that when and where the income generated and the expenses incurred should be recognized in the financials. This all includes showing the income and expenses in the correct financial year and the bifurcation of the amount in to the correct period or distributing it accordingly. Here the problem in that the recognition of income to be done when and for what amount. Ms Larson needs to know the recognition of the amount to be kept in the year when the income was generated and to bifurcate it and amortize it for the coming years until when the nice and expenses are generated. The income and evenness are to be shown as prepaid or outstanding in the current ear blanace sheet. The income and expenses then are to be amortized and expensed off every year at a particular rate. Here the important attention is to be given as to when the income generation or expenses made is completed. Is it when the services are started or when the balances are shown in the books. By finding answers to the entire questions one can know when the amount is to be shown in the financial statements and also the extent t which the amount be considered to be able to calculate the profit or loss for the year.
It also knees to understand that the income and expense amount includes in itself the mints that are incurred or done to be able to make the income or expense happen. These amounts form a part of the total income o expense. To be able o com to a right amount it’s important to understand the expenses that were incurred alongside to make the income or expense generating actions and activities. After one is aware of the timelines nod the expense and additional incomes or expenses taken to be able to reach to the amount the the same is to be shown in the financial statements and the same be shown in the right statement of financial statements. The bifurcation and understanding of assets, liabilities, income and evenness is important to know what and where the things are to be shown in the financial statements. The depreciation on assets is charged not only the tangible assets that can be touched but also on intangible assets. We need to know the depreciation rates to be charged as per the taxation law of the country nod the depreciation charged in the books of accounts to understand f there is under valuation or over valuator of assets. So in the given case Ms. Larson knees to know the various aspects of the fees and expenses that reforming art of the transaction to be able to understand the income and assets and liabilities and expenses that are to be shown in the financial statists of this year and the years to come of the organization to avoid and material misstatements and to avoid and legal issues if there ends up having an wrong showing of financial stamens in any case whatsoever.
In the given scenario the problem is regarding the revenue recognition and value of the asset to be recognized. The CRM software in use and the Revenue gated is to be able to understand dot be able to recognize the right amount in the financial statements.
It is important to inkstand as to when the cop nay will start showing that it has started using the software and recognize accordingly. The point in time when the company can start racings the same in the finical statements is to be addressed. In the given case the date from when the organization starts using the software in the company is the day when the transaction will get affected.
Another thing is to be able to understand the amount that do not are a part of the read transition but will get added into the transaction a they help in making the transition complete. In the given scenario the additional activities are
    System planning
    $110000
    Dynamic fees for...
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