Definition
Internal-use software
The posting
Internal-use software is software acquired or developed solely to meet an entity's internal needs, with no substantive plan to market it externally. It is the ASC 350-40 scope, and it is where most buyer-owned AI falls: internal copilots, eval harnesses and pipelines ASC 350-40-25. Software marketed to customers falls under ASC 985-20 instead.
Inside and outside the scope
- Inside: AI you build and run to operate your own business.
- Outside: AI embedded in a product you sell, which is governed by ASC 985-20.
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)
Ledger current as of 2026-10-23. A position and a citation, not accounting advice. See how we cite.