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Should the firm treat all the expenditures the same

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Question - FARS Research Case - VTech is an Enterprise Resource Planning (ERP) software development corporation that specializes in providing technological solutions for firms to better manage their businesses. Being in the technology industry, research, and development (R&D) is one of the largest expenditures. For example, in the second quarter of the fiscal year 2020 alone, VTech's internal books reveal that the company has generated the following R&D expenditures directly attributable to the software they plan to develop and sell:

- Incurred $5,000,000 as an effort to establish technological feasibility of an ERP software

- Incurred $3,000,000 in production costs, after they had decided that the software is a viable product

In addition to the development of software for sale, VTech also developed specialized software that will help with their internal accounts payable system. During the fiscal quarter, the company spent $1,000,000 on the software which will be for internal use only and not for resale.

An accounting intern at the firm approaches you, the senior manager, and asked for your advice on how to properly record and recognize these expenditures. Should the firm treat all the expenditures the same? Differently?

Reference no: EM132707717

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