tony bonn
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Joined: 12 Nov 2009
Location: United States
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Posts: 1
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| Posted: 12 Nov 2009 at 02:05 | IP Logged
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when i asked a general manager of a software publisher (usa) what his cogs were i was told 0. it goes to show that i am not an accountant.
but it raises the question of the conceptual aspect of cogs - whether or not it has a proper place in cost accounting of software production or publishing.
if i sell a good - real or intangible - i expect to have a cost associated with it - or more specifically a cost of goods sold. costs were incurred to produce it. if software does not have a cogs, then how do we calculate margin and profitability of sales? costs of sales are not development costs which are the core of producing software.
my conceptual understanding was to posit that development costs - labor, software, hardware - were essentially cogs....some discussions have stated that they may be cost of sales, cost of revenue, or possibly some operating expense.
could a knowledgeable accountant please indicate what accounting category should be used for identifying the cost basis of software sales if development costs are not included? where should they go in terms of broad cost categorization? thank you.
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Topic: cogs and software production
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