What is SOP 98-1?
Note: This article discusses facilitating SOP 98-1 using Lotus Notes. For a discussion of managing SOP 98-1 with 100% Web based solutions, see this page. Under SOP 98-1, companies are required to capitalize and amortize the costs associated with developing or purchasing software for internal use. The capitalization of costs depends upon the stage of the project and only certain, specific costs may be capitalized. For example, during the preliminary stage of an internal software development project there is typically research of the technology to build the software. Any costs incurred in this activity must be expensed, as they are not a direct cost of the softwares development. Once the project moves past the preliminary stage into development, costs may begin to be capitalized. However, only external direct costs of materials and services utilized in developing or purchasing the software can be capitalized, not costs such as overhead. For example, if the organization contracts outside
