The capitalizable share of an AI build
No standard sets a capitalizable percentage for a software build. The share is whatever directly attributable cost falls inside the development window, with preliminary evaluation and post-implementation running expensed ASC 350-40-25. Measure it per project; the ranges on this site are illustrations of the mechanics, not benchmarks.
How the share is built
A software project spends on evaluation and vendor selection before the development window (expensed) and on operation and maintenance after it (expensed). What is left, the directly attributable development-window cost, is the capitalizable portion. Its size is a fact about your project, measured from time records, compute logs and invoices, not a rate borrowed from anyone else.
What drives the share up or down
- Up: a long, well-defined development window with heavy directly attributable compute and engineering.
- Down: heavy upfront experimentation, significant development uncertainty, or a large ongoing run component.
Posts to
Primary sources
- [S7] FASB: ASU 2025-06, Intangibles, Goodwill and Other, Internal-Use Software (Subtopic 350-40): Targeted Improvements (issued September 2025; reproduces the amended ASC 350-40 text) (US GAAP)
- [S4] Weaver: Navigating internally developed software costs: U.S. GAAP vs tax treatment (US GAAP)
Ledger current as of 2026-10-23. A position and a citation, not accounting advice. See how we cite.