Hi all.
SIC-32 applies to website development - in most instances internal development costs on websites are expensed. It's not clear however (to me) whether if outsourced (i.e. external) development costs, where an entity pays a third party to develop the content of its website, also falls within scope of SIC-32. Generally, separate acquisitions of intangible assets are recognised as such as the probability criterion (of the expected future economic benefits) is assumed to be met and so the 6 PIRATE criteria one needs to meet capitalise such costs if such costs were incurred internally are not relevant in these instances.
Any ideas - does SIC-32 still apply if you pay someone else to develop the website for you? SIC-32 states that "An entity may incur internal expenditure on the development and operation of its own web site for internal or external access.", so there's that, but maybe the application shouldn't be so narrow-scope in mind.
Thanks!
SIC-32 - website development outsourced
Re: SIC-32 - website development outsourced
I think SIC32 just serves as a clarification of how IAS 38 applies, so all the same good stuff applies like in SIC32 para 8 as to how you'll demonstrate economic benefits, etc, whether internally capitalised or purchased..
Re: SIC-32 - website development outsourced
So the PIRATE criteria should still appy then, whether internally developed or purchased separately (outsourced)? I looked at the Big 4 guidance books and although they don't spell it out, one of them states "This [development cost criteria] applies equally to internal and external costs".
Re: SIC-32 - website development outsourced
TO me it's still an 'internally generated' intangible even if you used outsourced support, eg you didn't buy the asset, you constructed/developed it.
Re: SIC-32 - website development outsourced
That's true I suppose! Thanks for your feedback
Re: SIC-32 - website development outsourced
I agree with JRSB
Re: SIC-32 - website development outsourced
Thanks Marek!