IFRS versus US GAAP on the same AI build
On identical facts, IFRS and US GAAP reach similar destinations by different routes. IAS 38 uses a research-versus-development phase test with six recognition criteria; ASC 350-40 uses a stage model, reframed by ASU 2025-06 as a probable-to-complete threshold. Both expense early exploration and both restrict capitalising novel, unproven models.
Side by side
| Dimension | IFRS | US GAAP |
|---|---|---|
| Governing standard | IAS 38 Intangible Assets | ASC 350-40 (internal-use), ASC 985-20 (sold) |
| Capitalisation gate | Development phase, all six §57 criteria met | Application-development stage / probable-to-complete threshold |
| Research or preliminary | Expensed | Expensed |
| Novel-model uncertainty | Fails technical-feasibility criterion | Blocked by significant development uncertainty (ASU 2025-06) |
| Reinstating expensed cost | Prohibited | Prohibited |
| Basis of measurement | Directly attributable cost from recognition date | Qualifying costs from threshold onward |
Scroll sideways for the US GAAP column →
Where they actually diverge
The frameworks differ most in mechanism and timing, not direction. IFRS requires all six criteria simultaneously, which can move the recognition date; US GAAP's probable-to-complete threshold turns on completion probability and development uncertainty ASU 2025-06. A group reporting under both may reach the same treatment on slightly different dates, so the recognition date should be reconciled deliberately.
Which applies to you
The applicable framework follows the entity's reporting basis, not a choice. A dual-reporting group must satisfy both, evidencing the criteria under IAS 38 and the threshold under ASC 350-40 for the same buildIAS 38§57.
- S1IAS 38 Intangible Assets, IFRS Foundation (IFRS). https://www.ifrs.org/issued-standards/list-of-standards/ias-38-intangible-assets/
- S2Handbook: Software and website costs (ASC 350-40 internal-use software), KPMG (US GAAP). https://kpmg.com/us/en/frv/reference-library/2026/handbook-software-website-costs.html
- S4FASB Accounting Standards Codification, PwC Viewpoint (US GAAP). https://viewpoint.pwc.com/dt/us/en/fasb/GAAP/Codification/Codification/228073.html