Capitalizing software costs

On the date of the balance sheet, software should be valued at the lower of: unamortized cost OR net realizable value. 'Unamortized cost' of software is similar to 'carrying amount' of depreciable assets. Take the total software cost and divide it by the economic life (useful life), and that is your amortization expense. Unamortized cost is simply original cost minus accumulated amortization. SFAS 142 tells all about intangible assets, while SFAS 86 talks about software development for sale or lease.