ACCT 3341/5133: Intermediate/Financial Accounting I FASB Codification Exercises Exercise 5: Go to http://aaahq.org/ascLogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. High-Tech Company is a software company that was recently started by a two college friends (Ike and Mike) in their dorm rooms. They would like to have financial statements prepared so that they can receive a loan. Ike says he took an accounting course in high school and heard that research and development costs must be recorded as an expense. Therefore, he believes that software development costs cannot be recorded as an asset. Mike says he has heard that some software development costs can be recorded as an asset. They have come to you for guidance on this issue. Instructions (use Codification references in answering these questions) 1. What computer software development costs can be capitalized (recorded as assets)? 2. What computer software research and development costs must be expensed? 3. What software costs should be recorded as inventory