# ASC 350-40-25: Intangibles—Goodwill and Other — Internal-Use Software — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/350/40/#25-recognition) 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): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:d5aa80b17a57759280fe22a34c62ac98d61aa4a083625a67809ddbfd6b6de15c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 350-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/350/40/#25-recognition) SEC content: no #### Preliminary Project Stage ##### [350-40-25-1](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:4d3f95bff65ad34d9a5b05b19912b4ca65d0f4426c362eddcd66fcae8ffa5a18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Internal and external costs incurred during the [preliminary project stage](https://asc.understandingaccounting.org/glossary/p/#preliminary-project-stage "When a computer software project is in the preliminary project stage, entities will likely do the following: Make strategic decisions to allocate resources between alternative projects at a given point in time. For example, should programmers develop a new payroll system or direct their efforts toward correcting existing problems in an operating payroll system? Determine the performance requirements (that is, what it is that they need the software to do) and systems requirements for the computer software project it has proposed to undertake. Invite vendors to perform demonstrations of how their software will fulfill an entity's needs. Explore alternative means of achieving specified performance requirements. For example, should an entity make or buy the software? Should the software run on a mainframe or a client server system? Determine that the technology needed to achieve performance requirements exists. Select a vendor if an entity chooses to obtain software. Select a consultant to assist in the development or installation of the software. (P) December 16, 2027; (N) December 16, 2027350-40-65-4Paragraph superseded by Accounting Standards Update No. 2025-06.") shall be expensed as they are incurred. 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)
Editor's Note: The content of paragraph 350-40-25-1 will change upon transition, together with a change in the heading noted below.
> Costs to Be Expensed as Incurred
Internal and external costs incurred prior to meeting the capitalization requirements in paragraphs [350-40-25-12 through 25-12A](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12) shall be expensed as they are incurred. #### Application Development Stage ##### [350-40-25-2](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-2) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:a9c1a8ca0542b3c4120b8197a5a29ed33db2653af789f070bbd26229836f339d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Internal and external costs incurred to develop internal-use computer software during the application development stage shall be capitalized. 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)
Editor's Note: Paragraph 350-40-25-2 will be will be superseded upon transition, together with its heading.
> Application Development Stage
[Paragraph superseded by Accounting Standards Update No. 2025-06.](https://asc.understandingaccounting.org/updates/asu-2025-06/) ##### [350-40-25-3](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-3) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:e2b6c0597aab9a701d0cfd121f932e3b95d6d4c2656157cad65aff7be62322b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs to develop or obtain software that allows for access to or conversion of old data by new systems shall also be capitalized. 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/) ##### [350-40-25-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-4) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:4d437b45a3a5dbed838437068865b4dff6c6254aa424b456785b059c28a41c69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Training costs are not internal-use software development costs and, if incurred during this stage, shall be expensed as incurred. 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)Internal and external training costs are not internal-use software development costs and shall be expensed as incurred. ##### [350-40-25-5](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:1c209d364054c1816fac40f0a514847248632f4bb0e564308d8530cca8e851a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Data conversion costs, except as noted in paragraph [350-40-25-3](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-3), shall be expensed as incurred. The process of data conversion from old to new systems may include purging or cleansing of existing data, reconciliation or balancing of the old data and the data in the new system, creation of new or additional data, and conversion of old data to the new system. 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)Data conversion costs, except as noted in paragraph [350-40-30-1(d)](https://asc.understandingaccounting.org/asc/350/40/#350-40-30-1), shall be expensed as incurred. The process of data conversion from old to new systems may include purging or cleansing of existing data, reconciliation or balancing of the old data and the data in the new system, creation of new or additional data, and conversion of old data to the new system. #### Postimplementation-Operation Stage ##### [350-40-25-6](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-6) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:4874f449d8062641ddecff57dd0808c3b823723ec8a2081aee48632f6a9649c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Internal and external training costs and maintenance costs during the postimplementation-operation stage shall be expensed as incurred. 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)
Editor's Note: Paragraph 350-40-25-6 will be will be superseded upon transition, together with its heading.
> Postimplementation-Operation Stage
[Paragraph superseded by Accounting Standards Update No. 2025-06.](https://asc.understandingaccounting.org/updates/asu-2025-06/) #### Upgrades and Enhancements ##### [350-40-25-7](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-7) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:0ac87e25a471356773fb81339d78fb06f8bdc620b07921fe3e0ee16a045c450c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Upgrades and enhancements are defined as modifications to existing internal-use software that result in additional functionality—that is, modifications to enable the software to perform tasks that it was previously incapable of performing. Upgrades and enhancements normally require new software specifications and may also require a change to all or part of the existing software specifications. In order for costs of specified upgrades and enhancements to internal-use computer software to be capitalized in accordance with paragraphs [350-40-25-8 through 25-10](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-8) , it must be probable that those expenditures will result in additional functionality. 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)
Editor's Note: Paragraph 350-40-25-7 will be will be superseded upon transition, together with its heading.
> Upgrades and Enhancements
[Paragraph superseded by Accounting Standards Update No. 2025-06.](https://asc.understandingaccounting.org/updates/asu-2025-06/) ##### [350-40-25-8](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-8) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:fa1868968f36b53092a01aa4075ea84a0754b54a7303b912e44a68210d5dc8a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Internal costs incurred for upgrades and enhancements shall be expensed or capitalized in accordance with paragraphs [350-40-25-1 through 25-6](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-1) . 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/) ##### [350-40-25-9](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-9) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:0c527784efa6316c2b1395cc4b7a61282db6d588fed707385ca5f423efefa896 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Internal costs incurred for maintenance shall be expensed as incurred. 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/) ##### [350-40-25-10](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-10) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:a3ddd3e64dc30ab3ae3afd299fe1a36f346e6bbfc0f3758431870ef9f071508b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities that cannot separate internal costs on a reasonably cost-effective basis between maintenance and relatively minor upgrades and enhancements shall expense such costs as incurred. 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/) ##### [350-40-25-11](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-11) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:9a4b539e41169df094d05c275be534a8e7350b7fa4dbafc1557906643344dd14 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. External costs incurred under agreements related to specified upgrades and enhancements shall be expensed or capitalized in accordance with paragraphs [350-40-25-1 through 25-6](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-1) . If maintenance is combined with specified upgrades and enhancements in a single contract, the cost shall be allocated between the elements as discussed in paragraph [350-40-30-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-30-4) and the maintenance costs shall be expensed over the contract period. However, external costs related to maintenance, unspecified upgrades and enhancements, and costs under agreements that combine the costs of maintenance and unspecified upgrades and enhancements shall be recognized in expense over the contract period on a straight-line basis unless another systematic and rational basis is more representative of the services received. 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/) #### Capitalization of Cost ##### [350-40-25-12](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:a09a47fbb309b5538e684242efddba804069bcdb962180f39c8d9e5b64f3ced0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Capitalization of costs shall begin when both of the following occur: 1. a Preliminary project stage is completed. 2. b Management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project and it is probable that the project will be completed and the software will be used to perform the function intended. Examples of authorization include the execution of a contract with a third party to develop the software, approval of expenditures related to internal development, or a commitment to obtain the software from a third party. 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)
Editor's Note: The content of paragraph 350-40-25-12 will change upon transition, together with a change in the heading noted below.
> Capitalization of Costs
Capitalization of costs shall begin when both of the following occur: 1. a [Paragraph superseded by Accounting Standards Update No. 2025-06.](https://asc.understandingaccounting.org/updates/asu-2025-06/) 2. b Management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project.Examples of authorization and commitment to funding a computer software project include the execution of a contract with a third party to develop the software, approval of expenditures related to internal development, or a commitment to obtain the software from a third party. 3. c It is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the project will be completed and the software will be used to perform the function intended (referred to as the probable-to-complete recognition threshold). In evaluating whether the probable-to-complete recognition threshold has been met, an entity shall assess whether there is significant uncertainty associated with the development activities of the software (referred to as significant development uncertainty) in accordance with paragraph [350-40-25-12A](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12A). ##### [350-40-25-12A](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12A) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:0441a899145e6a39aa38d8629701eb3e1abcd5c53aa8e201ea03efd898b420a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)If significant development uncertainty exists, the probable-to-complete recognition threshold in paragraph [350-40-25-12(c)](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12) is not met until that significant development uncertainty has been resolved. Significant development uncertainty exists if either of the following factors is present: 1. a The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing. 2. b The significant [performance requirements](https://asc.understandingaccounting.org/glossary/p/#performance-requirements "(P) December 16, 2027; (N) December 16, 2027 350-40-65-4 Performance requirements are what an entity needs the software to do (for example, functions or features).") of the software have not been identified, or the identified significant performance requirements continue to be substantially revised. For some types of software projects, the assessment of whether significant development uncertainty exists will be straightforward, such as illustrated in Example 1 (see paragraphs [350-40-55-5 through 55-8](https://asc.understandingaccounting.org/asc/350/40/#350-40-55-5) ). For other types of software projects, the assessment will be more complex, such as illustrated in Example 3 (see paragraphs [350-40-55-13 through 55-17](https://asc.understandingaccounting.org/asc/350/40/#350-40-55-13) ). If significant development uncertainty does not exist or if there was significant development uncertainty that has been resolved, an entity shall evaluate the requirements in paragraph [350-40-25-12](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12) to determine when to begin capitalizing costs. ##### [350-40-25-13](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-13) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:478d56a82fbeee04dc864ed934573fd1d61f265b7b3a2f17098ad96585e7102c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When it is no longer probable that the computer software project will be completed and placed in service, no further costs shall be capitalized, and guidance in paragraphs [350-40-35-1 through 35-3](https://asc.understandingaccounting.org/asc/350/40/#350-40-35-1) on impairment shall be applied to existing balances. 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)If the capitalization requirements in paragraphs [350-40-25-12 through 25-12A](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12) are no longer met for software being developed, no further costs shall be capitalized, and guidance in paragraphs [350-40-35-1 through 35-3](https://asc.understandingaccounting.org/asc/350/40/#350-40-35-1) on impairment shall be applied to existing balances. ##### [350-40-25-14](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:82351f22cade0b321c9ce39ae128b805476c5c8f1aa101ee370526f9cf45d7ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Capitalization shall cease no later than the point at which a computer software project is substantially complete and ready for its intended use, that is, after all substantial testing is completed. ##### [350-40-25-15](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:b39ed1f2cf7093ba22667efff0e414a8fba0d7541e4b3f82a55687b2e4dd0dc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. New software development activities shall trigger consideration of remaining useful lives of software that is to be replaced. When an entity replaces existing software with new software, unamortized costs of the old software shall be expensed when the new software is ready for its intended use. ##### [350-40-25-16](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:55a2330de36015af27aae5e6a9447482b0a28df324475e5faa5e89b1996a7ba7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-05](https://asc.understandingaccounting.org/updates/asu-2015-05/). ##### [350-40-25-17](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:878b16aa38b581c0af767945e75d48b9b6e8a21ca7df669db4a15c74c1005ee6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities often license internal-use software from third parties. A software license within the scope of this Subtopic (see paragraphs [350-40-15-1 through 15-4C](https://asc.understandingaccounting.org/asc/350/40/#350-40-15-1)) shall be accounted for as the acquisition of an intangible asset and the incurrence of a liability (that is, to the extent that all or a portion of the software licensing fees are not paid on or before the acquisition date of the license) by the licensee. The intangible asset acquired shall be recognized and measured in accordance with paragraphs [350-30-25-1](https://asc.understandingaccounting.org/asc/350/30/#350-30-25-1) and [350-30-30-1](https://asc.understandingaccounting.org/asc/350/30/#350-30-30-1), respectively. #### Upgrades and Enhancements ##### [350-40-25-17A](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17A) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:bf4f25279ab0e8652f2daf37973616f6ac29c15f41a4391f14d28ef7936de478 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Upgrades and enhancements are defined as modifications to existing internal-use software that result in additional functionality—that is, modifications to enable the software to perform tasks that it was previously incapable of performing. Upgrades and enhancements normally require new software specifications and may also require a change to all or part of the existing software specifications. In order for costs of specified upgrades and enhancements to internal-use computer software to be evaluated for capitalization in accordance with paragraphs[350-40-25-17B through 25-17E](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17B) , it must be probable that those expenditures will result in additional functionality. ##### [350-40-25-17B](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17B) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:92f61936a219917310dcff7787a228c01082e8090c0f00925c81b3821606210e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Internal and external costs incurred for upgrades and enhancements shall be expensed or capitalized in accordance with paragraphs [350-40-25-1](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-1), [350-40-25-4 through 25-5](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-4) , [350-40-25-12 through 25-14](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12) , and [350-40-25-17](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17). ##### [350-40-25-17C](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17C) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:11112373adecbf4341605405d6fbb0be29242fddcaa5906146f0da3f1de41624 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Internal and external costs incurred for maintenance shall be expensed as incurred. ##### [350-40-25-17D](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17D) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:2e2c6d3cba75e1db143b0892aaf7090f148f5646882bda0a84ba0e4fe3aaa811 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Entities that cannot separate internal costs on a reasonably cost-effective basis between maintenance and relatively minor upgrades and enhancements shall expense such costs as incurred. ##### [350-40-25-17E](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17E) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:83e1ffa631b699820b0399255025b04126d13d1c78fb38e271ff6aeb79486edd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)External costs incurred under agreements related to specified upgrades and enhancements shall be expensed or capitalized in accordance with paragraphs [350-40-25-1](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-1),[350-40-25-4 through 25-5](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-4) , [350-40-25-12 through 25-14](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-12) , and [350-40-25-17](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17). If maintenance is combined with specified upgrades and enhancements in a single contract, the cost shall be allocated between the elements as discussed in paragraph [350-40-30-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-30-4) and the maintenance costs shall be expensed over the contract period. However, external costs related to maintenance, unspecified upgrades and enhancements, and costs under agreements that combine the costs of maintenance and unspecified upgrades and enhancements shall be recognized in expense over the contract period on a straight-line basis unless another systematic and rational basis is more representative of the services received. #### Additional Considerations for Website Development Costs ##### [350-40-25-17F](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17F) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:b7f1006ed0660e4755a0c1bd487c004ba53a91f6c1c6ceddbdc5fda54347aa1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Fees incurred for website hosting, which involve the payment of a specified, periodic fee to an internet service provider in return for hosting the website on its server(s) connected to the internet, generally are expensed over the period of benefit. ##### [350-40-25-17G](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17G) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:64f74b9c1eb7c1a8fa23225d99042d28dc3be3e6ce4b655a0230be206dd0ce32 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Accounting for website content involves issues that also apply to other forms of content or information that are not unique to websites. Costs to input content into a website shall be expensed as incurred. Content refers to information included on the website, which may be textual or graphical in nature (although the specific graphics described in paragraph [350-40-25-17H](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17H)are excluded from content). For example, articles, product photos, maps, and stock quotes and charts are all forms of content. Content may reside in separate databases that are integrated into (or accessed from) the web page with software, or it may be coded directly into the web pages. ##### [350-40-25-17H](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17H) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:cca96db433f84743b4d0cf489b816eeae25e23cdb929fb0642ab50db7ba0350b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Graphics are a component of software. The costs of developing initial graphics shall be evaluated for capitalization under this Subtopic for internal-use software, and Subtopic 985-20 for software marketed externally. For purposes of this Subtopic, graphics involve the overall design of the web page (use of borders, background and text colors, fonts, frames, buttons, and so forth) that affect the look and feel of the web page and generally remain consistent regardless of changes made to the content. ##### [350-40-25-17I](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17I) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:2a3fc948c4cb1109989c6eaee91b0c6124a3669059fe6a7761de0aa226825d42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Costs to register the website with internet search engines represent advertising costs and shall be expensed as incurred under paragraph [720-35-25-1](https://asc.understandingaccounting.org/asc/720/35/#720-35-25-1). ##### [350-40-25-17J](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-17J) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:5ccd6d42989742a41ebd8024f2ca60af70a863ad88dd7b1d82d6494259d18c08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)Costs to obtain and register an internet domain shall be evaluated for capitalization under Section 350-30-25. ### Implementation Costs of a Hosting Arrangement That Is a Service Contract ##### [350-40-25-18](https://asc.understandingaccounting.org/asc/350/40/#350-40-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:26.447Z to 2026-09-10T00:02:26.447Z Record version: sha256:bf20a678d36b25c7a061363d2a0531d69b728b1e9d94b279a3a1dbc8180b57ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall apply the General Subsection of this Section as though the [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 is a service contract were an internal-use computer software project to determine when implementation costs of a hosting arrangement that is a service contract are and are not capitalized.