Middle Road Media: A Codification Research Case on the Accounting for Software Development Activities

The accounting for software development costs is a complex issue within the financial accounting curriculum. While intermediate-level texts address the relevant issues, this case provides a rich context for students to learn and apply knowledge of the topic while developing critical-thinking and professional research skills. The instructional case addresses a hypothetical scenario of a company's development of an internal-use software system that ultimately prompts the creation of a software product sold by the company to customers. Students are required to determine the appropriate recognition of the software development costs, as well as the presentation of those costs and proceeds from customers on the company's financial statements.