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Received: 2025-09-14 | Accepted: 2025-12-30 | Published: 2026-03-30

Title

Integrating IFRS 15 into budgeting and cost estimation for software companies

Abstract

In today’s digital economy, software projects, including customized development, software-as-a-service arrangements, and usage-based components, require financial planning mechanisms that ensure coherence between technical execution and financial reporting. Sustainability-oriented budgeting refers to a planning process that promotes transparency, financial stability, and long-term resilience. To be applied effectively in the software industry, it requires an explicit connection between cost estimation and the recognition of revenues in accordance with International Financial Reporting Standard 15. This operational link is essential, as technical project progress, mixed contract structures (licensing, customization, maintenance, usage), and the presence of variable consideration can generate discrepancies between managerial execution and accounting recognition. The paper develops and validates an integrated operational framework that connects cost estimation with revenue recognition under International Financial Reporting Standard 15, with the aim of supporting transparent and resilient budgeting in software projects involving variable consideration, such as usage-based royalties. The model addresses both cost-estimation challenges, driven by iterative development cycles, requirement changes, and resource intensity, and the difficulties associated with revenue recognition, especially in projects with progressive deliveries and compound pricing structures. The research methodology combines a bibliometric synthesis of recent literature with an in-depth case study of a two-year commercial software contract that includes licensing, customization, maintenance, and usage-based royalties. The results show that aligning cost estimation with revenue recognition reduces forecasting errors, improves execution discipline, and strengthens financial resilience, keeping project performance within stable limits even under varying user-consumption scenarios. The contribution of the study is threefold. First, it proposes a replicable operational framework that connects budgeting with financial reporting. Second, it provides empirical evidence based on a real contract from the software industry. Third, it formulates managerial and regulatory implications concerning transparency, internal control, and reporting quality in software projects.

Keywords

sustainability-oriented budgeting, software development, IFRS 15, cost estimation, variable consideration, financial sustainability

JEL classifications

M41 , M11 , M48 , L86 , O32 , Q56

URI

http://jssidoi.org/jesi/article/1399

DOI

DOI 10.9770/w8368992932

Pages

177-192

Funding

This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License