Technological feasibility
Technological feasibility is the point under ASC 985-20 at which the entity has completed the planning, design, coding and testing needed to establish that a product can be produced to meet its design specifications, including function, features and technical performance. It gates capitalisation for software that is sold or marketed.
Before and after the point
Costs incurred before technological feasibility are expensed as research and development; costs after it, until the product is available for general release, may be capitalised ASC 985-20985-20-25. The point is therefore the pivot of the whole standard.
Applying it to a novel AI model
For an AI model where performance requirements settle late, establishing feasibility is a documented judgement supported by evidence the model meets its specification, not a date on a plan. Where that evidence is absent, the defensible position is that feasibility has not been reached and costs continue to be expensed.
- S3Applying ASC 985-20 and ASC 350-40 to software costs, Crowe (US GAAP). https://www.crowe.com/insights/how-to-apply-asc-985-20-asc-350-40-software-costs
- S4FASB Accounting Standards Codification, PwC Viewpoint (US GAAP). https://viewpoint.pwc.com/dt/us/en/fasb/GAAP/Codification/Codification/228073.html