One of the key challenges in accounting for software development costs stems from the continuous technological changes in software development practices, which now largely follow agile development principles. An agile development process uses sprints for planning and execution in which a larger project is typically broken down into smaller increments and feedback is used to continuously iterate the development process, resulting in features and functionalities that are individually developed and continuously changing. This is in contrast to a linear development process, which typically involves the development of a detailed program design, a development plan, and a sequential approach to coding.

Reporting entities using an agile development process are nevertheless subject to the guidance in ASC 985‑20. Specifically, capitalization of costs commences once technological feasibility is established. In practice, reporting entities that employ an agile development process typically do not complete a detailed program design sufficient to establish technological feasibility. Thus, these reporting entities will often utilize a working model to establish technological feasibility, which generally results in costs being capitalized later in the development process.