Question
Which of the following does not accurately describe the presentation of software development costs on the statement of cash flows? The presentation of software
Which of the following does not accurately describe the presentation of software development costs on the statement of cash flows? The presentation of software development costs is based upon the determination of technological feasibility. GAAP contains bright-line criteria for determining technological feasibility which provides an opportunity for management to distort or manipulate results. Reclassifying software development costs from the investing to the operating section of the cash flow statement improves interfirm comparability. Reclassifying software development costs undoes the misleading effects for any firm that attempts to improve operating cash flows by lowering the technological feasibility threshold in the current period relative to prior periods.
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