A fine-tuned support LLM
This is the buyer's exact case: an entity fine-tunes a base model into an internal support assistant. Below, each cost line is routed under both frameworks to show what lands on the balance sheet and what stays in the P&L. Every figure and fact here is an illustrative example, not client data.
The fact pattern
An entity licenses a base model and, over four months, fine-tunes it for internal support. The first month tests feasibility. In month two a prototype meets the target deflection rate on a held-out set, the project is funded and resourced, and the six criteria are met. Months two to four build the deployed modelIAS 38§57.
Routing the cost lines
The recognition date is the pivot: everything before it is expensed and cannot be reinstated; qualifying costs after it build the carrying amountIAS 38§71.
Of a $5M programme, the research month, exploratory RLHF and post-go-live hosting are expensed; the licensed base model is prepaid over its term; the qualifying labelling, fine-tuning compute and engineering from the recognition date form the capitalised model, amortised over a short useful life. Under US GAAP the same lines route through the probable-to-complete threshold to a similar result. 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
- S5ASU 2025-06 on internal-use software costs, BDO (US GAAP). https://arch.bdo.com/new-asu-on-internal-use-software-costs-guidance