Assumption:

• The agency’s accounting software will record Contractor developed software directly to account 1832 (Internal Use Software-inDevelopment). For software internally developed the agency initially records expense accounts and reclassifies items to account

1832.

• For simplicity, this example will not include postings for other direct and indirect expenses related to internally developed

software.
YEAR 19X1

EVENT DESCRIPTION PROPRIETARY ACCOUNTS BUDGETARY ACCOUNTS

1) An agency receives an

appropriation and it is apportioned

and allotted.

1010 FBWT 12,000

 3100 Unexp App 12,000

4119 Other Appro Realiz 12,000

 4450 Unapportion Auth ava 12,000

4450 Unapportion Auth Ava 12,000

4510 Apportionment 12,000

4510 Apportionment 12,000

 4610 Allotments 12,000

2) An agency records payroll and

other expenses related to Internally

developed Software-in-Progress to

expense accounts.

6100 Op Exp 8,000

6400 Benefit Exp 2,000

 1010 FBWT 10,000

3100 Unexp App 10,000

 5700 Appro Used 10,000

4610 Allotments 10,000

 4902 Exp Auth -pd 10,000

3) An agency reclassifies expenses

related to software development to a

capital asset account (Internal Use

Software-in Development)

1832 Int Use Soft-in-Dev 5,000

 6600 App Ovrhd 1,000

6610 Dir Cost Cap Offset 4,000

None

4) An agency records Contractor

developed Software -in-Development

directly to a capital asset account.

1832 Int Use Soft-in-Dev 2,000

 1010 FBWT 2,000

3100 Unexp App 2,000

5700 Appro Used 2,000

4610 Allotments 2,000

 4902 Exp Auth -pd 2,000

5) An agency determines that some

projects classified as Software-inDevelopment are now in Production.

1830 IT Software 3,000

 1832 Int Use Soft-in-Dev 3,000

None

6) An agency records depreciation

expense on “in-production” software.

6710 Dep Exp 500

 1839 Accum Amor- Soft 500

None

7) An agency writes-off Software-inDevelopment project that has been

abandoned.

7210 Losses Disp of Assets 100

 1832 Int Use Soft-in-Dev 100

None
YEAR 19X1 PRECLOSING TRIAL BALANCE AND CLOSING ENTRIES

Proprietary Budgetary

Preclosing Trial Balance Preclosing Trial Balance

1830 IT Software 3,000

1832 Int Use Soft-in-Dev 3,900

1839 Accum Amor- Soft 500

5700 Appropriation Used 12,000

6100 Op Exp 8,000

6400 Benefit Exp 2,000

6710 Dep Exp 500

7210 Losses Disp of Assets 100

6600 Applied Overhead 1,000

6610 Dir Cost Cap Offset 4,000

 17,500 17,500

4119 Other Appro Realized 12,000

4902 Exp Auth –pd 12,000

Closing Entries Closing Entries

5700 Appropriation Used 12,000

 3310 Cumulative Results 12,000

3310 Cumulative Results 5,600

 6710 Dep Exp 500

 7210 Losses Disp of Assets 100

 6400 Benefit Exp 2,000

 6100 Op Exp 8,000

6600 Applied Overhead 1,000

6610 Dir Cost Cap Offset 4,000

4902 Exp Auth –pd 12,000

 4201 Total Act Resources 12,000

4201 Total Act Resources 12,000

 4119 Other Appro Realized 12,000
YEAR 19X1 – STATEMENTS

Statement of Net Cost

6100 Op Exp 8,000

6400 Benefit Exp 2,000

6710 Dep Exp 500

6600 Applied Overhead (1,000)

6610 Dir Cost Cap Offset (4,000)

7210 Losses Disp of Assets 100

Net Cost 5,600

Balance Sheet

Plant, Property and Equipment 6,400

Net Position 6,400

Statement of Change in Net Position

Net Cost 5,600

Financing Sources

5700 Appropriation used (12,000)

Net Result of operation (6,400)

Unexpended Appro

3100 0

Net Position Beginning of the Period 0

Net Position End of Period (6,400)

Statement of Financing

Obligation Incurred

 4902 Exp Auth –pd 12,000

 

Total Obligations as Adjusted Nonbudget Res 12,000

Cost Capitalized on the Balance Sheet

 1830 IT Software (3,000)

 1832 Int Use Soft-in-Dev (4,000)

Total Resources that Do Not Fund Net Cost (7,000)

 6710 Dep Exp 500

 7210 Losses Disp of Assets 100

Total Costs that Do Not Require Resources 600

Net Cost 5,600