Can costs of new product be capitalized during Beta testing

Software is the more difficult one to answer. Under GAAP, R&D costs are expensed as incurred until the software reaches a stage of commercial or technological viability. Thereafter expenses are capitalized until you start selling then most additional R&D expenses are expensed. Here is a nice summary from the FASB - Codification Topic 985-20 Costs of software to be sold, leased, or marketed:

Two points on the timeline:
(A) When the technological feasibility is established
(B) When the product is available for general release to customers

Costs of software to be sold
1. Up to (A) --> expensed
2. After (A) up to (B) --> capitalized
3. After (B) --> expense

Costs of purchased software
1. Software that has alternative future use
--> capitalized
2. Software without alternative future use
--> treated same as internal development costs

Capitalized software costs
1. Amortized on a "product-by-product" basis
2. Amortization starts at (B)
3. Amortization amount is the higher of (1) or (2)
(1) straight-line method amortization
(2) amount based on the ratio of current revenue and total expected revenue

Impairment test
1. If (a) is less than (b), (b) is written down to (a)
(a) net realizable value of the product
(b) unamortized balance
2. The difference is recognized as an expense
3. Write-down is not reversed in subsequent periods

Judgement is required in most cases to determine when technological feasibility occurs

Good Luck!