Commercial SW Association to hold forum on the 19th
To disclose accounting standards and other drafts
"Efforts to proceed with consultations with new government"

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Directions for software (SW) asset value evaluation, such as accounting standards for commercial SW R&D expenses intangible assets, are to be presented.

The Korea Commercial Software Association will hold the '2022 1st KOSW Forum' on the 19th under the theme of 'Establishing SW R&D cost accounting standards and asset value of SW products'.

Byung-han Yoo, chairman of the Korea Software Property-Right Council, will present the SW asset value theme, and discuss it with participants.

SW companies are discussing with the association to recognize development costs invested in the SW development stage as an intangible asset.

If SW development costs are recognized as intangible assets, company values will rise, which will be beneficial to the entire process of corporate activities, such as financing and attracting investment.

However, Chairman Yoo explained that the development cost as well as the market potential and market value of software should be evaluated and capitalized in the development stage.
Chairman Yoo said, “The time and manpower invested in development is fundamental, and we should evaluate the growth potential and market ripple power of SW and turn it into an asset," adding, “If there is an evaluation model for this, it will become the standard for investments in the financial sector."

SW organizations such as the Korea Software Property-Right Council have been discussing the SW asset value evaluation model for over a year. Some details will be revealed in the forum.

The SW group plans to prepare evaluation models and accounting processing supervision guidelines (tentative name) and present it to related organizations, such as the Ministry of Science and ICT and the Financial Services Commission, for consultation. Prior to this, on the 25th, the Korea Software Industry Association, the Korea Software Property-Right Council, and the Korea Commercial Software Association exchanged MOUs for cooperation.

Chairman Yoo said, “It will take more than a year to introduce the SW asset value evaluation model," furthermore, “We will make efforts to ensure that relevant consultations can proceed under the new government."

In other industries, development costs for pharmaceutical and bio industries have already been recognized as intangible assets since 4 years ago, through long-term efforts. In September 2018, the Financial Services Commission and the Financial Supervisory Service announced the 'Supervisory Guidelines for the Accounting of R&D Expenses for Pharmaceutical and Bio Companies' after collecting corporate opinions.

Although there are 'requirements for recognition of development costs as intangible assets' in the International Financial Reporting Standards (IFRS) and the Korean International Financial Reporting Standards (K-IFRS), there are no specific details for each industry, so guidelines for the pharmaceutical and bio fields were introduced.

If SW's intangible assets are recognized, the entire information industry, including games, is expected to see relevant movement.

By Staff Reporter Ho-cheon Ahn