# ASC 350-40-30: Intangibles—Goodwill and Other — Internal-Use Software — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/350/40/#30-initial-measurement) 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): 2026-09-10T00:02:28.885Z to 2026-09-10T00:02:28.885Z Record version: sha256:3177c19c6fb7c383d3f0ddd4c580e4893c45de777554f8f739f73646cb44665c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 350-40-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/350/40/#30-initial-measurement) SEC content: no #### Capitalizable Cost ##### [350-40-30-1](https://asc.understandingaccounting.org/asc/350/40/#350-40-30-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:02:28.885Z to 2026-09-10T00:02:28.885Z Record version: sha256:39582da305f66e5e8fe960d7e6617add333cba034997605819a032d028518943 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs of computer software developed or obtained for internal use that shall be capitalized include only the following: 1. a External direct costs of materials and services consumed in developing or obtaining internal-use computer software. Examples of those costs include but are not limited to the following: 1. 1 Fees paid to third parties for services provided to develop the software during the application development stage 2. 2 Costs incurred to obtain computer software from third parties 3. 3 Travel expenses incurred by employees in their duties directly associated with developing software. 2. b Payroll and payroll-related costs (for example, costs of employee benefits) for employees who are directly associated with and who devote time to the internal-use computer software project, to the extent of the time spent directly on the project. Examples of employee activities include but are not limited to coding and testing during the application development stage. 3. c Interest costs incurred while developing internal-use computer software. Interest shall be capitalized in accordance with the provisions of Subtopic 835-20. 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 350-40-30-1 will change upon transition, together with a change in the heading noted below.
> Capitalizable Costs
Costs of computer software developed or obtained for internal use that shall be capitalized include only the following: 1. a External direct costs of materials and services consumed in developing or obtaining internal-use computer software. Examples of those costs include but are not limited to the following: 1. 1 Fees paid to third parties for services provided to develop the software 2. 2 Costs incurred to obtain computer software from third parties 3. 3 Travel expenses incurred by employees in their duties directly associated with developing software. 2. b Payroll and payroll-related costs (for example, costs of employee benefits) for employees who are directly associated with and who devote time to the internal-use computer software project, to the extent of the time spent directly on the project. Examples of employee activities include but are not limited to design of chosen path, including software configuration and software interfaces, coding, installation to hardware, and testing, including parallel processing phase. 3. c Interest costs incurred while developing internal-use computer software. Interest shall be capitalized in accordance with the provisions of Subtopic 835-20. 4. d Costs to develop or obtain software that allows for access to or conversion of old data by new systems. ##### [350-40-30-2](https://asc.understandingaccounting.org/asc/350/40/#350-40-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:28.885Z to 2026-09-10T00:02:28.885Z Record version: sha256:6df9d2b67c703fd4e81b1738c29dca4db50e048d7816785f4fd2a25a3e97c886 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the entity suspends substantially all activities related to the software developed or obtained for internal use, interest capitalization shall cease until activities are resumed. ##### [350-40-30-3](https://asc.understandingaccounting.org/asc/350/40/#350-40-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:28.885Z to 2026-09-10T00:02:28.885Z Record version: sha256:1a644eec59ebd1c44602961cb327fe709edb7428d5c81e8b382308560c41e75a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. General and administrative costs and overhead costs shall not be capitalized as costs of internal-use software. #### Multiple-Element Arrangements Included in Purchase Price ##### [350-40-30-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:28.885Z to 2026-09-10T00:02:28.885Z Record version: sha256:a2fce733f48dcae9033c891191e1e79ca362ac17577610162fb75dc0469717c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities may purchase internal-use computer software from a third party or may enter into 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."). In some cases, the price includes multiple elements, such as the license or hosting, training for the software, maintenance fees for routine maintenance work to be performed by the third party, data conversion costs, reengineering costs, and rights to future upgrades and enhancements. Entities shall allocate the cost among all individual elements. The allocation shall be based on the relative [standalone price](https://asc.understandingaccounting.org/glossary/s/#standalone-price "The price at which a customer would purchase a component of a contract separately.")of the elements in the contract, not necessarily separate prices stated within the contract for each element. Those elements included in the scope of this Subtopic shall be accounted for in accordance with the provisions of this Subtopic. ### Implementation Costs of a Hosting Arrangement That Is a Service Contract ##### [350-40-30-5](https://asc.understandingaccounting.org/asc/350/40/#350-40-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:02:28.885Z to 2026-09-10T00:02:28.885Z Record version: sha256:361c9d08154105812bd35b2bdcf44e0a9288f1ad513b6b11a213656941d32136 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.