CAPEX classification
Hello everyone,
I was looking at the expenses of one of the competitors of my factious company and I see the following:
" Operations and support. Our operations and support expenses consist primarily of payroll and related costs, including bonuses and stock-based compensation, for those employees associated with installation, support and maintenance for our restaurant customers, as well as costs related to our outsourced call center. Operations and support expenses also include restaurant equipment costs, such as depreciation of restaurant-related hardware, shipping costs related to restaurant equipment, restaurant equipment costs that do not meet the capitalization threshold, referral payments and website connectivity costs. Operations and support expenses also include amortization of capitalized website and development costs (see "Critical Accounting Policies and Estimates—Website and Software Development Costs" below). Also included in operations and support expenses are travel and related expenses incurred by the employees providing installation and support services for our restaurant customers, plus allocated facilities costs."
Isn't Software development a capex number? Why are they including it in the income statement? Can you please explain ?
I am skeptical to mimic their expense classification when I am presenting my project to my professor and they might question my CAPEX classification.
Software dev costs before technological feasibility are expensed as incurred.
This provides a detailed overview of the accounting treatment and why they may be choosing to expense rather than capitalize: https://www.withum.com/kc/tech-companies-deal-software-development-cost…
It's not immediately clear what the software here is being developed for but see the last three list items under "INTERNAL-USE SOFTWARE" and also consult "WEB DEVELOPMENT COSTS"
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