# ASC 350-40-05: Intangibles—Goodwill and Other — Internal-Use Software — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/350/40/#05-overview-and-background) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:ae7ffd07a123765a4d5399a722b37d2e9e717bd0c75dfea3a9897b315bbd6670 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 350-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/350/40/#05-overview-and-background) SEC content: no ##### [350-40-05-1](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:d3f58cd08636cd6161d56243843960de4d2a30e5261f416c33633e18c52533c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-15](https://asc.understandingaccounting.org/updates/asu-2018-15/). ##### [350-40-05-1A](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-1A) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:4d8d80ecf309ac2abfb8d67fc9c30445ed31e612da437adacdbedb923446cd7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-15](https://asc.understandingaccounting.org/updates/asu-2018-15/). ##### [350-40-05-1B](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-1B) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:2de95055716ad0ea151a3080d08bfe5796f3e5220253ec0b6eb63789c51ebabf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-15](https://asc.understandingaccounting.org/updates/asu-2018-15/). ##### [350-40-05-1C](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-1C) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:aee579452e07f526af94057ff28a3a86a61756e7efbb52f7801bd6d312f9a26a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Internal-Use Software Subtopic presents guidance in the following Subsections: 1. a General 2. b Implementation Costs of a Hosting Arrangement That Is a Service Contract. ##### [350-40-05-1D](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-1D) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:b966760bf607d7409b2489c52eea677738ac884ba99ec9dac80282f6062ae0a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain costs incurred for computer software developed or obtained for internal use should be capitalized depending on the nature of the costs and the project stage during which they were incurred in accordance with the guidance in Section 350-40-25. Computer software to be sold, leased, or otherwise marketed externally is not considered to be for internal use. Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance: [350-40-65-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-65-4)Certain costs incurred for computer software developed or obtained for internal use should be capitalized in accordance with the guidance in Section 350-40-25. Computer software to be sold, leased, or otherwise marketed externally is not considered to be for internal use. ##### [350-40-05-1E](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-1E) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:ecbf0555c18eee00aea100dae8d5e755f455f5064f6b8a71094b33b95cd3c39a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 350-40-30 includes guidance on the types of costs that should be capitalized, including costs for the purchase of internal-use software in a multiple element transaction. ##### [350-40-05-1F](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-1F) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:cfaeb93d89584f6ec063d141b9d0303bd744239edf9e9ac1f09431abfd8a51dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 350-40-35 includes guidance on the following: 1. a How to test the internal-use software for impairment 2. b How to amortize the asset 3. c How to account for software that previously was considered for internal use, but subsequently was marketed. ##### [350-40-05-2](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:ebfae1965569a1098dae088824162647079491988b6a929c844f6bb0eb545887 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-04](https://asc.understandingaccounting.org/updates/asu-2017-04/). ##### [350-40-05-3](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:b664c84b040977eea7cbddca3760926f84d32a93500cc7924d731b53b3ac02fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-04](https://asc.understandingaccounting.org/updates/asu-2017-04/). ##### [350-40-05-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:082c41aac2eebf34b107732d1ee309036157fbc4a1c2a7b1153162404a7c0938 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-04](https://asc.understandingaccounting.org/updates/asu-2017-04/). ##### [350-40-05-5](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:d62a753509604bdac41e7b3c89735a50c725ee4f7ff279e68e56c7c59846d398 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-04](https://asc.understandingaccounting.org/updates/asu-2017-04/). ##### [350-40-05-6](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:cdba6c79b491ba17dc8e91172ae785d52522e455a56a24bae9f0f311ad4dbc85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [350-40-55-1 through 55-2](https://asc.understandingaccounting.org/asc/350/40/#350-40-55-1) provide examples of when computer software is and is not for internal use. ##### [350-40-05-7](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-7) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:7462e3a599a7fd5db5b0136e8c064d23ee519f24625aa8007ca24808a19ec6a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [350-40-55-3](https://asc.understandingaccounting.org/asc/350/40/#350-40-55-3) illustrates the various stages and related processes of computer software development. Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance: [350-40-65-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-65-4)[Paragraph superseded by Accounting Standards Update No. 2025-06.](https://asc.understandingaccounting.org/updates/asu-2025-06/) ##### [350-40-05-8](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:fd28c05a7896153ca5ae9fd8fdd4dc93276b8b47c4dc258b2dbd4d727917a9f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-04](https://asc.understandingaccounting.org/updates/asu-2017-04/). ##### [350-40-05-9](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:ea75078429a213cf3d664e57b016d4c491e68235db54dc677acfc02b5dc90eec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-04](https://asc.understandingaccounting.org/updates/asu-2017-04/). ### Implementation Costs of a Hosting Arrangement That Is a Service Contract ##### [350-40-05-10](https://asc.understandingaccounting.org/asc/350/40/#350-40-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:17.711Z to 2026-09-10T00:02:17.711Z Record version: sha256:90133af9a56217c1a655db33784f02f71ddb3b3211f367f096b6ff775a388258 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Implementation Costs of a Hosting Arrangement That Is a Service Contract Subsections of this Subtopic address the accounting for the implementation, setup, and other upfront costs (implementation costs) incurred in a [hosting arrangement](https://asc.understandingaccounting.org/glossary/h/#hosting-arrangement "In connection with accessing and using software products, an arrangement in which the customer of the software does not currently have possession of the software; rather, the customer accesses and uses the software on an as-needed basis.") that does not meet the criteria in paragraph [350-40-15-4A](https://asc.understandingaccounting.org/asc/350/40/#350-40-15-4A).