In accordance with ASC 985-20-25-4, the reporting entity will need to assess whether all R&D activities for the product have been completed prior to capitalizing software development costs, regardless of whether technological feasibility has been established for the software. The reporting entity could have remaining R&D activities to complete leading up to or even after the regulatory approval event. Therefore, judgment may be required to assess when R&D activities are completed. To determine whether R&D activities are completed prior to regulatory approval, the reporting entity should consider whether the approval is a complex process that could require additional R&D or essentially a formality, resulting in no additional R&D.

Yes. As discussed in SW 2.5, the cost of purchased software to be externally marketed that has no alternative future use is accounted for in the same manner as costs incurred to develop such software internally. Therefore, if all R&D activities for the other components of the product in which the software will be embedded have not yet been completed, the cost to acquire the software would be expensed as R&D.