Source of record

The five standards that govern AI capitalisation

Head note

Five standards decide whether AI spend is capitalised or expensed. IFRS routes internally generated AI intangibles through IAS 38. US GAAP splits by use: ASC 350-40 for internal-use software, ASC 985-20 for software sold or marketed, ASU 2018-15 for cloud arrangements, and ASU 2025-06, which replaces the ASC 350-40 stage model with a probable-to-complete threshold from 2028.

How to read this index

Each standard below is the authoritative text an auditor will expect you to quote. This site paraphrases and routes; the linked IFRS Foundation and FASB pages are the source. Where a treatment turns on judgement, the standard page names the specific paragraph and the defensible default.

2.1

IAS 38IFRS

Intangible assets, including internally generated intangibles.

Effective: In force. Source: IAS 38 Intangible Assets. Open primary text

2.2

ASC 350-40US GAAP

Internal-use software.

Effective: In force; amended by ASU 2025-06. Source: Handbook: Software and website costs (ASC 350-40 internal-use software). Open primary text

2.3

ASC 985-20US GAAP

Software to be sold, leased or marketed.

Effective: In force. Source: Applying ASC 985-20 and ASC 350-40 to software costs. Open primary text

2.4

ASU 2018-15US GAAP

Cloud computing arrangements that are service contracts.

Effective: In force. Source: FASB Accounting Standards Codification. Open primary text

2.5

ASU 2025-06US GAAP

Targeted improvements to internal-use software (ASC 350-40).

Effective: Annual periods beginning after 15 December 2027; early adoption permitted. Source: ASU 2025-06 on internal-use software costs. Open primary text

Sources of record

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
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
S5ASU 2025-06 on internal-use software costs, BDO (US GAAP). https://arch.bdo.com/new-asu-on-internal-use-software-costs-guidance