CPATrader

Actually it would be material.

Scenario 1 - Capitalize 2010 software development costs (current accounting treatment)
- Capitalized amount = $2.5MM
- Amortization expense = $2.5MM
- Development expense = $0
- Total expense = $2.5MM

Scenario 2 - Expense 2010 software development costs (alternative accounting treatment)
- Capitalized amount = $0
- Amortized expense = Some portion of the $4.5MM in net capitalized software assets from previous periods. Notes say all amortization is straight line with a maximum lifespan of 5 years. Thus, at a minimum, the amortization expense will be $900k and could theoretically be as high as $4.5MM.
- Development Expense = $2.5MM
- Total expense = $3.4MM at a minimum to a theoretical max of $6MM

$3.4MM at a minimum vs. $2.5MM in the current scenario = material