Both motion picture companies and software companies engage in the development and marketing of entertainment and educational software (EE) products such as computer games, interactive videos, and other multimedia products. EE products may include film content taken directly from an existing film or filming that occurred solely for inclusion in the software product. Motion picture companies generally capitalize the film production and software costs associated with the development of EE applications as film cost inventory under Statement 53. Conversely, software companies traditionally have expensed film production and software costs incurred in the development of EE applications until technological feasibility is reached based on the accounting principles of Statement 86. Additionally, some software companies have begun separating the film content from the computer software content when accounting for EE applications. The issue is how companies should account for the film and software costs associated with developing EE products. Copyright © 1996, Financial Accounting Standards Board Not for redistributio
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