The following represents the transition and effective date information related to Accounting Standards Update No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software:
Effective date and early adoption
- a
All entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.
- b
Early adoption of the pending content that links to this paragraph is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. If an entity adopts the pending content that links to this paragraph in an interim reporting period, it shall adopt the pending content as of the beginning of the annual reporting period that includes that interim reporting period.
Transition methods
- c
An entity shall apply the pending content that links to this paragraph using one of the following transition methods:
- 1
Prospectively to new software costs incurred for all projects, including costs incurred for in-process projects, during annual reporting periods (and interim reporting periods within those annual reporting periods) beginning after the date that the pending content that links to this paragraph is adopted.
- 2
On a modified transition approach, as follows:
- i
Prospectively to new software costs incurred (for all projects, including costs incurred for in-process projects), excluding those described in (c)(2)(ii), during annual reporting periods (and interim reporting periods within those annual reporting periods) beginning after the date that the pending content that links to this paragraph is adopted.
- ii
For an in-process project that, as of the date that the pending content that links to this paragraph is adopted, the entity determines does not meet the capitalization requirements in paragraphs but had met the capitalization requirements before that date, the entity shall derecognize capitalized costs for that in-process project through a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the annual reporting period in which the pending content that links to this paragraph is adopted.
- 3
Retrospectively through a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the first period presented.
Transition disclosures
- d
An entity that applies the pending content that links to this paragraph prospectively in accordance with (c)(1) shall provide the transition disclosures required by paragraph 250-10-50-1(a) in both the interim reporting period (if applicable) and the annual reporting period of the change. - e
An entity that applies the pending content that links to this paragraph using a modified transition approach in accordance with (c)(2) shall provide the transition disclosures required by paragraph 250-10-50-1(a) and the cumulative effect of the change on retained earnings (or other components of equity or net assets in the statement of financial position) as of the beginning of the annual reporting period in which the pending content that links to this paragraph is adopted in both the interim reporting period (if applicable) and the annual reporting period of the change. - f
An entity that applies the pending content that links to this paragraph retrospectively in accordance with (c)(3) shall provide the transition disclosures required by paragraph 250-10-50-1(a) through (b)(1), (b)(2) for any prior periods retrospectively adjusted, and (b)(3) and (c)(2) in both the interim reporting period (if applicable) and the annual reporting period of the change.