{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/350/40/#55-implementation-guidance-and-illustrations","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"350","topic_title":"Intangibles—Goodwill and Other","subtopic":"350-40","subtopic_title":"Internal-Use Software","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"350-40-55-1","para":"55-1","html":"
The following is a list of examples illustrating when computer software is for internal use:
  1. a
    A manufacturing entity purchases robots and customizes the software that the robots use to function. The robots are used in a manufacturing process that results in finished goods.
  2. b
    An entity develops software that helps it improve its cash management, which may allow the entity to earn more revenue.
  3. c
    An entity purchases or develops software to process payroll, accounts payable, and accounts receivable.
  4. d
    An entity purchases software related to the installation of an online system used to keep membership data.
  5. e
    A travel agency purchases a software system to price vacation packages and obtain airfares.
  6. f
    A bank develops software that allows a customer to withdraw cash, inquire about balances, make loan payments, and execute wire transfers.
  7. g
    A mortgage loan servicing entity develops or purchases computer software to enhance the speed of services provided to customers.
  8. h
    A telecommunications entity develops software to run its switches that are necessary for various telephone services such as voice mail and call forwarding.
  9. i
    An entity is in the process of developing an accounts receivable system. The software specifications meet the entity's internal needs and the entity did not have a marketing plan before or during the development of the software. In addition, the entity has not sold any of its internal-use software in the past. Two years after completion of the project, the entity decided to market the product to recoup some or all of its costs.
  10. j
    A broker-dealer entity develops a software database and charges for financial information distributed through the database.
  11. k
    An entity develops software to be used to create components of music videos (for example, the software used to blend and change the faces of models in music videos). The entity then sells the final music videos, which do not contain the software, to another entity.
  12. l
    An entity purchases software to computerize a manual catalog and then sells the manual catalog to the public.
  13. m
    A law firm develops an intranet research tool that allows firm members to locate and search the firm's databases for information relevant to their cases. The system provides users with the ability to print cases, search for related topics, and annotate their personal copies of the database.
","snippet":"The following is a list of examples illustrating when computer software is for internal use:\n(a) A manufacturing entity purchases robots and customizes the software that the robots use to function. The robots are used in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:300a4e984d0791756537871d0c7514211cfa546ec1bff6e6c0a64e9ed12c04ad","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-2","para":"55-2","html":"
The following list provides examples of computer software that is not for internal use:
  1. a
    An entity sells software required to operate its products, such as robots, electronic game systems, video cassette recorders, automobiles, voice-mail systems, satellites, and cash registers.
  2. b
    A pharmaceutical entity buys machines and writes all of the software that allows the machines to function. The pharmaceutical entity then sells the machines, which help control the dispensation of medication to patients and help control inventory, to hospitals.
  3. c
    A semiconductor entity develops software embedded in a microcomputer chip used in automobile electronic systems.
  4. d
    An entity purchases software to computerize a manual catalog and then sells the computer version and the related software to the public.
  5. e
    A software entity develops an operating system for sale and for internal use. Though the specifications of the software meet the entity's internal needs, the entity had a marketing plan before the project was complete. In addition, the entity has a history of selling software that it also uses internally and the plan has a reasonable possibility of being implemented.
  6. f
    An entity is developing software for a point-of-sale system. The system is for internal use; however, a marketing plan is being developed concurrently with the software development. The plan has a reasonable possibility of being implemented.
  7. g
    A telecommunications entity purchases computer software to be used in research and development activities.
  8. h
    An entity incurs costs to develop computer software for another entity under a contract with that other entity.
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The following list illustrates the various stages and related processes of computer software development:
  1. a
    Preliminary project stage:
    1. 1
      Conceptual formulation of alternatives
    2. 2
      Evaluation of alternatives
    3. 3
      Determination of existence of needed technology
    4. 4
      Final selection of alternatives.
  2. b
    Application development stage:
    1. 1
      Design of chosen path, including software configuration and software interfaces
    2. 2
      Coding
    3. 3
      Installation to hardware
    4. 4
      Testing, including parallel processing phase.
  3. c
    Postimplementation-operation stage:
    1. 1
      Training
    2. 2
      Application maintenance.
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4Paragraph superseded by Accounting Standards Update No. 2025-06.
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This Subtopic recognizes that the development of internal-use computer software may not follow the order shown in the preceding list. For example, coding and testing are often performed simultaneously. Regardless, for costs incurred subsequent to completion of the preliminary project stage, the guidance shall be applied based on the nature of the costs incurred, not the timing of their incurrence. For example, while some training may occur in the application development stage, it should be expensed as incurred as required in paragraphs
350-40-25-2 through 25-6
.
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4This Subtopic recognizes that certain development activities such as coding and testing are often performed simultaneously. Regardless, for costs incurred subsequent to meeting the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
, the guidance shall be applied based on the nature of the costs incurred, not the timing of their incurrence. For example, while some training may occur subsequent to meeting the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
and before the software project is substantially complete and ready for its intended use, it should be expensed as incurred as required in paragraph 350-40-25-4.
","snippet":"This Subtopic recognizes that the development of internal-use computer software may not follow the order shown in the preceding list. For example, coding and testing are often performed simultaneously. Regardless, for co…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:880e403f3aeacbd84cdca0b7f0a64d70c81021ae60eb5a94f23d8a24f08d630f","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bd7bdd20b053fc8541948e8eedd3a19845ae5dbd3e7a4b961f908a05cd573387","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"350-40-55-5","para":"55-5","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4On February 1, 20X3, a professional services company starts internal discussions to transform its information technology by implementing an enterprise resource planning system to support finance, human resources, accounting, and client relationships.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4On February 1, 20X3, a professional services company starts internal discussions to transform its information technology by imple…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f74849071b5684e6db768ccaedb735af95a2741df3abd6c8d71eb740b233ca68","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-6","para":"55-6","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4After researching different solutions and performing its due diligence procedures, management executes a contract with a third party on August 1, 20X3, to implement and customize a hybrid solution that offers on-premises software and cloud computing services for the enterprise resource planning system. Within this solution, the third party offers different functionality and features, and the company will have to make customization decisions throughout the development process to select which functionality and features it wants included.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4After researching different solutions and performing its due diligence procedures, management executes a contract with a third pa…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f987c03be682c971174e9b362ab51af1cae5e8f2c76dd0ea62e3286620a650da","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-7","para":"55-7","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4The company assesses whether the internal and external costs to implement and customize the enterprise resource planning system meet the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
, as follows:
  1. a
    As part of its assessment under paragraph 350-40-25-12(c), the company evaluates whether there is significant development uncertainty in accordance with paragraph 350-40-25-12A. As of August 1, 20X3, the company determines that:
    1. 1
      It has identified the significant performance requirements and does not expect to continue to substantially revise those requirements because the only expected customization is selecting from existing functionality and features.
    2. 2
      The software being developed does not have technological innovations or novel, unique, or unproven functions or features because the company has selected a developed solution.
    Therefore, as of August 1, 20X3, the company determines that significant development uncertainty does not exist.
  2. b
    The company evaluates the requirements in paragraph 350-40-25-12 to determine when to begin capitalizing software costs:
    1. 1
      The company determines that management authorized and committed to funding the software project on August 1, 20X3, when it executed the contract with the third party.
    2. 2
      Considering all other relevant facts and circumstances (for example, the company has engaged an established and experienced third party to implement and customize the software), as of August 1, 20X3, the company determines that it is probable that the software project will be completed and the software will be used to perform the function intended.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4The company assesses whether the internal and external costs to implement and customize the enterprise resource planning system m…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5162c5952eb04568bcbf3e1cad1e55bacfdb200e12e6605437835953480e2b12","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-8","para":"55-8","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4As a result, on August 1, 20X3, the company determines that the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
are met, and it begins capitalizing eligible software costs, including those related to implementation and customization of the on-premises software license and those related to implementation of the cloud computing service features of the hybrid solution.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4As a result, on August 1, 20X3, the company determines that the capitalization requirements in paragraphs 350-40-25-12 through 25…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:92fa5bf0f8cdb53ae326a3c0e962a01a9ec249c5e65054d767366bd9f79f4bf6","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-9","para":"55-9","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4A company is in the process of internally developing X-Crowd, which is a mobile application that will allow users to see how crowded a restaurant or store is on the basis of a user’s real-time input. An internet connection is required to be able to access the application.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4A company is in the process of internally developing X-Crowd, which is a mobile application that will allow users to see how crow…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:89960eaa1af16e49e7190d576269079067e03d34e7bdce716cda7daec4c86da9","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-10","para":"55-10","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4On February 1, 20X1, management approved funding for internal development of the application. However, the company has not yet identified what functions and features would be included in the application. Through November 30, 20X1, the company continues to develop the functions and features of the application, including getting feedback on preliminary product versions from user groups and modifying the development of those functions and features to incorporate the feedback. On December 1, 20X1, management determines that it has identified the significant performance requirements (the significant functions and features it needs the application to have), and it does not anticipate substantial changes to those requirements. Throughout the development of X-Crowd, management determines that the application does not have technological innovations or novel, unique, or unproven functions or features.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4On February 1, 20X1, management approved funding for internal development of the application. However, the company has not yet id…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f33a38a3eb7e4a5f9c3fe369cd73665c97cfd0e16bb9d1db6997ce1552ab0bf","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-11","para":"55-11","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4The company assesses whether the internal and external costs to develop the application meet the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
, as follows:
  1. a
    As part of its assessment under paragraph 350-40-25-12(c), the company evaluates whether there is significant development uncertainty in accordance with paragraph 350-40-25-12A. As of February 1, 20X1, the company determines that:
    1. 1
      It has not yet identified the significant performance requirements.
    2. 2
      The software being developed does not have technological innovations or novel, unique, or unproven functions or features.
    Therefore, as of February 1, 20X1, the company determines that significant development uncertainty exists and, in accordance with paragraph 350-40-25-12A, the software project does not meet the requirements to begin capitalizing software costs in paragraph 350-40-25-12(c).
  2. b
    As of December 1, 20X1, the company determines that:
    1. 1
      It has identified the significant performance requirements and does not expect to continue to substantially revise those requirements.
    2. 2
      The software being developed does not have technological innovations or novel, unique, or unproven functions or features.
    Therefore, as of December 1, 20X1, the company determines that significant development uncertainty has been resolved.
  3. c
    As of December 1, 20X1, the company evaluates the requirements in paragraph 350-40-25-12 to determine when to begin capitalizing software costs:
    1. 1
      The company determines that management authorized and committed to funding the software project on February 1, 20X1, when it approved funding for internal development of the application.
    2. 2
      Considering all other relevant facts and circumstances, as of December 1, 20X1, the company determines that it is probable that the software project will be completed and the software will be used to perform the function intended.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4The company assesses whether the internal and external costs to develop the application meet the capitalization requirements in p…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d57833dfacef73273ea75fd76d8f9016db2d64df5d104e30e0f2ff827dea822","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-12","para":"55-12","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4As a result, on December 1, 20X1, the company determines that the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
are met, and it begins capitalizing eligible software costs.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4As a result, on December 1, 20X1, the company determines that the capitalization requirements in paragraphs 350-40-25-12 through …","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fec456a66bd4fe325fa3bdfb6464ebcb27ccd53595f9f2574be7e96902a71eb8","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-13","para":"55-13","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4On January 1, 20X1, a software development company starts discussions to develop software with novel functionality.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4On January 1, 20X1, a software development company starts discussions to develop software with novel functionality.","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6071d0f12e221b922eeb09b464c8f8d6ca6a8e013965521d17abf695e2a7ad3b","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-14","para":"55-14","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4On February 1, 20X1, management completes its due diligence procedures, approves a budget to internally develop the software, and allocates an internal development team to start developing the novel software. At the time that the company started discussions and management approved a budget, the software still had novel functionality.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4On February 1, 20X1, management completes its due diligence procedures, approves a budget to internally develop the software, and…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a18a6983fc11961886a927a4e6c2b94966708f2b8de8b99cb1d5faf520206122","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-15","para":"55-15","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4On March 1, 20X3, the company resolves the uncertainty related to the novel functionality through coding and testing. Additionally, on March 1, 20X3, the company determines that it does not expect substantial changes to the identified significant performance requirements (the significant functions and features) included in the software. On April 1, 20X3, the company determines that all substantial testing is completed.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4On March 1, 20X3, the company resolves the uncertainty related to the novel functionality through coding and testing. Additionall…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e2ae23bad0437039d459ee8a8cc60ed59caa3804f994204b1139514d871056ba","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-16","para":"55-16","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4The company assesses whether the internal and external costs to develop the software meet the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
, as follows:
  1. a
    As part of its assessment under paragraph 350-40-25-12(c), the company evaluates whether there is significant development uncertainty in accordance with paragraph 350-40-25-12A. As of February 1, 20X1, the company determines that:
    1. 1
      It has not yet identified the significant performance requirements.
    2. 2
      The software being developed has novel functionality and that functionality has not been resolved through coding and testing.
    Therefore, as of February 1, 20X1, the company determines that significant development uncertainty exists and, in accordance with paragraph 350-40-25-12A, the software project does not meet the requirements to begin capitalizing software costs in paragraph 350-40-25-12(c).
  2. b
    As of March 1, 20X3, the company determines that:
    1. 1
      It has identified the significant performance requirements and does not expect to continue to substantially revise those requirements.
    2. 2
      The uncertainty related to the novel functionality has been resolved through coding and testing.
    Therefore, as of March 1, 20X3, the company determines that significant development uncertainty has been resolved.
  3. c
    As of March 1, 20X3, the company evaluates the requirements in paragraph 350-40-25-12 to determine when to begin capitalizing software costs:
    1. 1
      The company determines that management authorized and committed to funding the software project on February 1, 20X1, when it approved a budget and allocated an internal development team.
    2. 2
      Considering all other relevant facts and circumstances, as of March 1, 20X3, the company determines that it is probable that the software project will be completed and the software will be used to perform the function intended.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4The company assesses whether the internal and external costs to develop the software meet the capitalization requirements in para…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:901f67bf59b38ceea97e5a087c1a42dd54276249b48ac78210383bc6d08775d3","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-17","para":"55-17","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4As a result, on March 1, 20X3, the company determines that the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
are met, and it begins capitalizing eligible software costs. On April 1, 20X3, the company determines that the software project is substantially complete and ready for its intended use because all substantial testing has been completed. Therefore, the company ceases capitalizing eligible software costs on April 1, 20X3, in accordance with paragraph 350-40-25-14.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4As a result, on March 1, 20X3, the company determines that the capitalization requirements in paragraphs 350-40-25-12 through 25-…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dbd1ee88828f1fcc75e36cbc582c36ab633a631ecbf818e86f7798add5849217","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-18","para":"55-18","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4An animal rescue organization starts discussions on June 15, 20X5, to develop a website that will be used to share information with users of the organization, including hours of operation, contact details, animals available for adoption, and standard adoption procedures.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4An animal rescue organization starts discussions on June 15, 20X5, to develop a website that will be used to share information wi…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e0db9963a20b0ab13a0ea5037f8105b9be772ebc742d3177b460ccf60081a22","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-19","para":"55-19","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4After researching different website developers and performing its due diligence procedures, management executes a contract with a third party on August 1, 20X5, to develop a website for the organization. The third party is an established website developer and offers different templates that the organization can use to create its website. In addition to website development fees paid to the third party, the organization incurs costs:
  1. a
    To obtain and register an internet domain
  2. b
    To input content into the website
  3. c
    To develop initial graphics for the website
  4. d
    To register the website with internet search engines
  5. e
    For ongoing website hosting fees.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4After researching different website developers and performing its due diligence procedures, management executes a contract with a…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:53a7ae467507a8b62c29ba203005a662df152846dca61229320d2a7f37f8bbd3","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-20","para":"55-20","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4The organization assesses whether the internal and external costs to develop the website meet the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
, as follows:
  1. a
    As part of its assessment under paragraph 350-40-25-12(c), the organization evaluates whether there is significant development uncertainty in accordance with paragraph 350-40-25-12A. As of August 1, 20X5, the organization determines that:
    1. 1
      It has identified the significant performance requirements and does not expect to continue to substantially revise those requirements because the website will be created from existing templates that the organization can use to share the information described in paragraph 350-40-55-18.
    2. 2
      The website being developed does not have technological innovations or novel, unique, or unproven functions or features because it will be developed from existing templates.
    Therefore, as of August 1, 20X5, the organization determines that significant development uncertainty does not exist.
  2. b
    The organization evaluates the requirements in paragraph 350-40-25-12 to determine when to begin capitalizing costs:
    1. 1
      The organization determines that management authorized and committed to funding the development of the website on August 1, 20X5, when it executed the contract with the third party.
    2. 2
      Considering all other relevant facts and circumstances (for example, the organization has engaged an established and experienced third party to develop the website), as of August 1, 20X5, the organization determines that it is probable that the project will be completed and the website will be used to perform the function intended.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4The organization assesses whether the internal and external costs to develop the website meet the capitalization requirements in …","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:538bd2c8946dd25fb29b513db95ab838bd43e3b51c1513ee69a3769c75956671","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},{"citation":"350-40-55-21","para":"55-21","html":"
Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:
350-40-65-4As a result, on August 1, 20X5, the organization determines that the capitalization requirements in paragraphs
350-40-25-12 through 25-12A
are met, and it begins capitalizing eligible costs. In evaluating which costs are eligible for capitalization, the organization determines the following:
  1. a
    Fees paid to the third party for services to develop the website are evaluated for capitalization in accordance with paragraph 350-40-30-1.
  2. b
    Costs incurred to obtain and register the internet domain are evaluated for capitalization in accordance with paragraph 350-40-25-17J.
  3. c
    Costs incurred to input content into the website are expensed as incurred in accordance with paragraph 350-40-25-17G.
  4. d
    Costs incurred to develop initial graphics for the website are evaluated for capitalization in accordance with paragraph 350-40-25-17H.
  5. e
    Costs incurred to register the website with internet search engines are expensed as incurred in accordance with paragraph 350-40-25-17I.
  6. f
    Ongoing website hosting fees are expensed over the period of benefit in accordance with paragraph 350-40-25-17F.
","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance:350-40-65-4As a result, on August 1, 20X5, the organization determines that the capitalization requirements in paragraphs 350-40-25-12 throu…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:70539ea92dd381345e291fb25922739ef8f77333f0404e1da4ff90458e742fb0","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:08e05190cdb7b9961cd479c5f7a66ae73b57eebbc3c10b0dafbc1ae363a506da","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:907fec2ed60a3ccf9bc457f1019581911a37cbd5480de4d1dcfdd62cb3eedc30","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:907fec2ed60a3ccf9bc457f1019581911a37cbd5480de4d1dcfdd62cb3eedc30","downloaded_from":"2026-09-10T00:02:39.961Z","last_downloaded_at":"2026-09-10T00:02:39.961Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482538","source_sha256":"b2cf79b67c71a571ab953e339b5bb8a0463b4c46eb53cba0959cf15bed9a8a4e"}}