Software Capitalization Glossary
The standards and terms behind capitalizing software costs — in plain English.
The accounting behind software capitalization comes wrapped in code names. Here’s what each one means and where it fits — for the business-level picture, start with the software capitalization guide.
ASC 350-40: Internal-Use Software
ASC 350-40 is the U.S. GAAP standard for capitalizing internal-use software — software built or bought to run your own business, not to sell.
ASC 350-50: Website Development Costs
ASC 350-50 is the U.S. GAAP standard for capitalizing website development costs — which build costs become an asset, and which are expensed.
ASC 720-45: Business and Technology Reengineering
ASC 720-45 governs the accounting for business-process and technology reengineering costs — which are expensed, even when bundled into a software project.
ASC 730: Research and Development
ASC 730 sets the default for research and development costs — expensed as incurred — the baseline the software-capitalization rules carve their exceptions out of.
ASC 985-20: Software to Be Sold
ASC 985-20 is the U.S. GAAP standard for capitalizing the cost of software you build to sell, lease, or market — keyed to technological feasibility.