SIC-6
Historical
Costs of Modifying Existing Software
Addressed whether costs of modifying existing computer software should be expensed or capitalised, treating modifications the same way as new software development. Withdrawn in 2004.
Historical Reference
SIC-6 was withdrawn in March 2004 when the IASB issued a revised IAS 38 Intangible Assets, which incorporated software modification guidance directly into the standard and eliminated the need for the interpretation.
This page is retained for historical and comparative reference. Entities should refer to the current standard that superseded this interpretation for authoritative guidance.
Current Standard
IAS 38 Intangible Assets 1
What SIC-6 Addressed (Historical)
What SIC-6 addressed
SIC-6 addressed whether costs incurred to modify existing computer software should be expensed as incurred or capitalised as an intangible asset. It clarified whether such modification costs should be treated the same way as costs of developing new software from scratch.
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The Conclusion It Reached (Historical)
The conclusion it reached
SIC-6 concluded that costs of modifying existing software should be accounted for in the same way as costs of developing new software. If the modification meets the criteria for recognition as an intangible asset–such as enhancing future economic benefits or enabling the software to generate additional inflows–the costs should be capitalised. Otherwise, they should be expensed as incurred.
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Where This Guidance Lives Today
Where this guidance lives today
Superseded byIAS 38 Intangible Assets
Why withdrawnThe 2004 revision incorporated software modification guidance directly into IAS 38
Current statusWithdrawn
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Glossary
Intangible asset
An identifiable non-monetary asset without physical substance, controlled by the entity and expected to generate future economic benefits.
Software modification
Alterations made to existing computer software to improve functionality, extend useful life, or adapt it for new uses, as distinct from routine maintenance.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows
History & Development
Jan-1998
In January 1998 the Standing Interpretations Committee issued SIC-6 Costs of Modifying Existing Software.
Apr-2001
In April 2001 the International Accounting Standards Board adopted SIC-6.
Minor consequential amendment to SIC-6
Mar-2004
In March 2004 the Board issued a revised IAS 38 Intangible Assets which superseded SIC-6.
Superseded by revised IAS 38