Third-party AI APIs
Metered access to an external model is a service the entity consumes in the period, not an asset it controls. The API fees are expensed as incurred. The only capitalisable element is qualifying implementation cost of a related cloud computing arrangement under ASU 2018-15, such as building durable integration to the API.
Routing by framework
Metered access to an external model is a service consumed in the period. The entity does not control an intangible, so the spend is expensed.
Usage-based API access is a service contract; the fees are expensed. Only qualifying implementation costs of a related CCA can be capitalised under ASU 2018-15.
Why it expenses
The entity does not control the model behind the API; it buys a right to send requests and receive responses. There is no intangible asset to recognise, so the metered fees are period costs ASU 2018-15350-40-15. This is the sharpest contrast with owning trained weights, where a controlled asset can exist.
The one capitalisable element
Where the entity builds durable integration to the API as part of a service-contract cloud arrangement, the qualifying implementation cost can be capitalised under ASU 2018-15 and amortised over the term. The usage fees never capitalise ASC 350-40350-40-25.
An entity routes support drafts through an external LLM API charged per token. The per-token fees are expensed monthly. A one-off project to build a resilient integration layer into internal systems is assessed for capitalisation under ASU 2018-15. All figures are illustrative.
- S4FASB Accounting Standards Codification, PwC Viewpoint (US GAAP). https://viewpoint.pwc.com/dt/us/en/fasb/GAAP/Codification/Codification/228073.html
- S5ASU 2025-06 on internal-use software costs, BDO (US GAAP). https://arch.bdo.com/new-asu-on-internal-use-software-costs-guidance