Standards-anchored reference to primary IFRS and FASB text. Not accounting advice.
AI Capitalisation
Definition

Capitalise versus expense

IAS 38§57ASC 350-40350-40-25
Head note

Capitalising records qualifying cost as an intangible asset on the balance sheet, released to profit or loss over time through amortisation. Expensing charges the cost to the P&L in the period it is incurred. For AI spend, the recognition tests in IAS 38 or ASC 350-40 decide which applies, and most experimentation is expensed.

1

The routing consequence

The choice is not free: it follows the facts. Where the recognition tests are met, the cost is capitalised; where they are not, it is expensedIAS 38§57. The consequence is a different profile of earnings and assets from the same cash, which is why the distinction is the whole subject of this reference.

Sources of record
  1. S1IAS 38 Intangible Assets, IFRS Foundation (IFRS). https://www.ifrs.org/issued-standards/list-of-standards/ias-38-intangible-assets/
  2. 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
Standards-anchored reference · not accounting adviceRevised 2026-07-24