Software Development Costs (Notes)

12 Months Ended

Dec. 31, 2015

Research, Development, and Computer Software Disclosure [Text Block]

SOFTWARE DEVELOPMENT COSTS

Software development costs consists of the following:



	December 31, 2015			December 31, 2014
Software development costs	$	1,021,446		$	568,875
Less accumulated depreciation and amortization	(207,514		)	(85,331		)
Software development costs, net	$	813,932		$	483,544

The Company determined that on April 15, 2013, its project to create IZEAx became technologically feasible and the development phase began. Throughout 2013 and the first quarter of 2014, the Company developed its new web-based advertising exchange platform, IZEAx. On March 17, 2014, the Company launched a public beta of IZEA.com powered by IZEAx. This platform is being utilized both internally and externally to facilitate native advertising campaigns on a greater scale. In 2015 and throughout 2016, Company began adding features and additional functionality to IZEAx that will facilitate the contracting, workflow and delivery of direct content. In accordance with ASC 350-40, Internal Use Software and ASC 985-730, Computer Software Research and Development, research phase costs should be expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs may be capitalized. As a result, the Company has capitalized $1,021,446 in direct materials, consulting, payroll and benefit costs to software development costs in the consolidated balance sheet as of December 31, 2015. The Company estimated the useful life of its developed software to be 5 years, consistent with the amount of time its legacy platforms were in-service.

Amortization expense on software development costs recorded in general and administrative expense in the accompanying consolidated statements of operations was $122,183 and $85,331 for the twelve months ended December 31, 2015 and 2014, respectively. Future estimated amortization expense related to software development costs over the next five years is set forth in the following schedule:



Year ending December 31:	Software Amortization Expense
2016	$	204,289
2017	204,289
2018	204,289
2019	118,958
2020	82,107
	$	813,932

- Definition

The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.

+ References + Details