Within the planning component of Phase 1 of the project, costs related to researching available technologies, selecting service providers, allocating resources, and determining performance requirements would be expensed as incurred. In the Wi-Fi launch component costs related to Wi-Fi infrastructure such as acquiring and installing wireless ports or routers in stores would be capitalized. In the application development component costs related to the development of these new tools including coding, hardware installation, product testing, materials and services consumed, travel and development fees facilitating the work, software purchase costs, interest costs incurred to fund the project, and associated payroll costs would be capitalized. The costs of securing a domain name and developing the graphic components of the website or application would also be capitalized. All capitalized software costs should be amortized on a straight line basis over the useful life of the technology. In the first phase of the project, the costs to be expensed are content development costs, Wi-Fi service costs, and web or server hosting fees. .
The succeeding two phases of the project which include the product launch, marketing campaign, and observation of customer usage and data are expensed as incurred. ASC 340-20 provides that marketing and advertising costs should be expensed as incurred or deferred and expensed when the advertising first takes place over the period of benefit. Additional post-implementation costs to account for are the payment processing costs associated with the Wallet application and the treatment of the coupons provided via the Help application. ASC 605-50 provides that discount coupons be treated as discounts against revenue and free items be treated as costs of sales given their intent to increase consumer spending. In the case of coupons included with purchases, appropriate accounting treatment is to recognize the value of the amount expected to be redeemed as deferred revenue.
