PPE Case: Surfing tl"e Starcerds Case 5: Software Development Costs Companies will sometimes develop software for either external use [for example, to sell to customers] orfor internal use. Should a companv expense or capitalize internallv developed software? U.S. [3MP provides specific guidance regarding software and, furthermore, has separate guidance for software developed for internal use versus software developed for external use. a. Does U.S. GAAP require that software development costs related to externalUuse software be expensed or capitalized? Please explain. Use the Codification for support. [3. Does U.S. GAAP require that software development costs related to internaluse software be expensed or capitalized? Please explain. Use the Codification for support. II J: L.\" Companies will sometimes develop software for either external use [for example, to sell to customers] orfor internal use. Should a company expense or capitalize internallv developed software? 3:.5- does not provide specific rules for software; the accounting for software development costs falls under the general guidance for intangible assets. Does -.:- require that software development costs be expensed or capitalized? Please explain. Use the international authoritative literature for support. Letni Letni is a calendaryear corporation that manufactures microprocessors. Letni produced 9.5 million microprocessor in 2920 and incurred fixed production overhead costs of $2 million. In the past 5 years, it has produced the following number of microprocessors: 2919 9.? million 2918 9.? million 2917 9.1 million 2916191 million 2915191 million The decline in production in 201? was due to an employee strike. Read ABC 33040-30 and determine what amount of fixed production overhead costs should be allocated to inventory and what amount should be included in current-period expenses. Outline your thought process as well as the judgmentts) you made in reaching this conclusion using the memo to the le format