Application development stage

Capitalisable costs in this stage include external direct costs of materials and services consumed in developing the software, payroll and payroll-related costs for employees directly associated with and devoting time to the project, and interest costs where they meet the relevant criteriaASC 350-40350-40-25^S2. For an AI build, directly attributable engineering and the compute consumed to develop the qualifying software can enter the asset.

Qualifying development costs → CAPITALISE

Training, data conversion performed manually, general and administrative costs, and overhead are expensed even during this stage ^S2. The test is whether the cost is a direct cost of developing the software, not merely concurrent with it.

Capitalisation starts when the stage begins and stops when the software is substantially complete and ready for its intended use. ASU 2025-06 removes the stage label and instead keys the start to the probable-to-complete threshold, with capitalisation deferred while significant development uncertainty remainsASU 2025-06. The economic effect is similar, but the trigger is judgement-based rather than stage-based.