Amortisation and useful life
An intangible with a finite useful life is amortised on a systematic basis over that life, and the life and method are reviewed at least at each year end . For a capitalised AI model, rapid obsolescence usually makes a short useful life the defensible position, and the judgement must be evidenced, not assumed.
Finite life, systematic amortisation
IAS 38 requires the depreciable amount of a finite-life intangible to be allocated on a systematic basis over its useful life, beginning when the asset is available for use IAS 38§97. A straight-line method is used unless another pattern better reflects consumption of the asset's benefits.
Defending a short life
AI models are superseded quickly by better base models, changing data and shifting requirements. A useful life measured in months to a small number of years is typically more defensible than a multi-year technology life. The chosen life should be supported by the entity's own release cadence and retirement history, and reviewed at least annually IAS 38§104.
An entity capitalises a fine-tuned model and, given its history of replacing models roughly every 18 months, amortises it straight-line over 18 months from the date it goes live. The life is reviewed at year end against the actual replacement plan. All figures are illustrative.
- S1IAS 38 Intangible Assets, IFRS Foundation (IFRS). https://www.ifrs.org/issued-standards/list-of-standards/ias-38-intangible-assets/
- 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