Note 5. Software

Amortization of acquired and internal use software is computed using the straight-line method over an estimated useful life of generally three to seven years. Amortization expense recognized on acquired and internal use software is reflected in depreciation and amortization in the consolidated statements of operations. Amortization expense was $0.4 million and $0.4 million for the years ended December 31, 2023 and 2024, respectively.

Amortization expense recognized on software to be marketed for external sale was $2.8 million and $3.9 million for the years ended December 31, 2023 and 2024, respectively, and is included in cost of revenues on the consolidated statements of operations.

As a result of the impairment triggers identified during the period ended September 30, 2024, the Company completed a quantitative assessment on the Company's long-lived assets for recoverability. As part of the restatement, the Company completed a quantitative assessment of the Company's long-lived assets using the cost approach, considering economic obsolescence, and recognized a $0.5 million impairment on its internal use software as of September 30, 2024 and is included in Impairment expense on the consolidated statement of operations. Refer to Note 2. Restatement of consolidated annual financial statements for additional information on the errors identified and refer to Note 19. Restatement of previously issued unaudited consolidated financial statements for the impact on the Company's previously issued unaudited consolidated interim financial statements as of September 30, 2024.

The Company completed the net realizable value test on its software to be marketed for external sale and compares the unamortized capitalized costs of each computer software product to its net realizable value of that product at each reporting period. The amount by which the unamortized capitalized costs of the computer software product exceeds the net realizable value of that assets shall be written off. The net realizable value was estimated using future gross revenues from that product and was reduced by the estimated future costs of completing and disposing of the product, including the costs of performing maintenance and customer support required to satisfy the Company's responsibility set forth at the time of sale. As a result of the net realizable value test, the Company identified one product where the net realizable value was below the unamortized capitalized costs of that product and recognized a $0.6 million impairment as of December 31, 2024. This amount is included in Impairment expense for the year ended December 31, 2024 on the consolidated statements of operations.