Software Accounting Revamp Aligns Rules With Modern Development

Businesses developing apps and other software tools for in-house use gained modernized rules from a US standard-setter on how to account for development costs.

The Financial Accounting Standards Board issued a final update Thursday to better align financial reporting guidance with current software development methods that prioritize iterative updates. The accounting update specifies when companies should start to capitalize, or report on their balance sheets, the costs to make internal-use software.

Many businesses have shifted away from using a sequential method of developing software. That’s made it challenging for them to apply guidance that partly depends on the project ...