A proprietary data-labelling pipeline
An entity builds an in-house annotation pipeline to label data for its models. This scenario separates two assets: the pipeline software itself, which can be internal-use software or a development-phase intangible, and the labels it produces, which follow the build they serve. Every figure here is an illustrative example, not client data.
Two assets, assessed separately
The pipeline software is assessed as internal-use software under ASC 350-40 or a development-phase intangible under IAS 38: its scoped, funded, feasible build can be capitalised ASC 350-40350-40-25. The labels the pipeline outputs are a cost of preparing whichever model they train, and follow that model's phase or stage.
What expenses
Exploratory work deciding how to build the pipeline is preliminary or research and is expensed. Running and maintaining the pipeline once live is a period cost, as is labelling done to test unproven use cases IAS 38§54.
The pipeline build, once funded and feasible, is capitalised as internal-use software and amortised over its useful life. Labels produced for a qualifying model build are capitalised into that model; labels produced to test an unproven idea are expensed. Ongoing pipeline operation is expensed. All figures are illustrative.
- 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