Capitalize: token and compute spend as an asset
Capitalizing token or compute spend means recording it as a software asset on the balance sheet rather than an expense in the period. Under US GAAP only directly attributable costs incurred in the application-development stage of internal-use software qualify ASC 350-40-25; ASU 2025-06 removes the stages for annual periods beginning after 15 December 2027. The asset is measured at cost and amortized over its useful life once available for use.
Which costs enter the asset
- Directly attributable compute and engineering to build the software in the development window ASC 350-40-25.
- External direct costs of materials and services consumed in building it.
- Not: preliminary-stage evaluation, post-implementation operation, training, or general overhead.
Start and stop dates
Under the classic ASC 350-40 model, capitalization starts when the preliminary stage ends and the application-development stage begins, and stops when the software is substantially complete and ready for its intended use. Under ASU 2025-06, capitalization starts once the probable-to-complete threshold is met and no significant development uncertainty remains.
Which instruments land here
- Eval-suite build, integration code and the build portion of a prompt registry, vector DB or MLOps pipeline.
- One-off training and fine-tuning runs that produce an owned internal artifact, once the gate is cleared.
Instruments and standards that land here
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)
- [S5] IFRS Foundation: IAS 38 Intangible Assets (IFRS)
Ledger current as of 2026-10-23. A position and a citation, not accounting advice. See how we cite.