ASC 350-40-15-2A states that internal-use software is “acquired, internally developed, or modified solely to meet the entity’s internal needs.” This includes software intended to be used in connection with delivering a service (e.g., software as a service (SaaS)). In addition, implementation costs incurred for cloud computing arrangements are within the scope of ASC 350-40. Web site development costs are subject to the guidance in ASC 350-50.
This example is for illustrative purposes only. There is significant management judgment involved in the determination of which costs can be capitalized, and they should be evaluated on a case-by-case basis.
See ASC 350-40-35-6.