The line between
expense and asset.
Aleq applies the capitalization boundary to every cost you log against a project — the development-stage build becomes an asset, everything else is expensed, by cost type as much as by stage.
Three stages. Only the middle one is an asset.
ASC 350-40 splits a project into three stages and capitalizes only the development build. Aleq reads the stage on the project and moves the cost to the right side of the line.
The stage isn't the whole test.
It's tempting to assume everything logged during the build capitalizes. It doesn't — the cost type matters as much as the stage. Three costs, same project, same sprint.
Coding, configuration, and testing of new capability during the application-development stage is the asset. The hours are priced at a loaded rate and capitalized to internal-use software.
What you're building changes the rule.
Internal platforms, cloud implementations, websites, upgrades — each draws the capitalization line in a different place. Aleq applies the right one.
Capitalize the build. Expense the rest.
For software you build to run the business, the application-development stage is capitalized: coding, configuration, testing. The preliminary stage before it and the operation stage after it are expensed. Aleq draws the line from your project tracker.
- Preliminary stage scoping and evaluation — expensed.
- Development stage coding, config, testing — capitalized.
- Post-implementation training and maintenance — expensed.
Hosted software — the setup still capitalizes.
In a hosting arrangement that's a service, the subscription is expensed — but the implementation costs follow the same internal-use rules. Aleq separates configuration and integration work that capitalizes from the data conversion and training that doesn't.
- Subscription fees expensed over the service term.
- Implementation configuration & integration — capitalized.
- Same amortization over the hosting-arrangement term.
Build it to capitalize, run it to expense.
Website development splits the same way: graphics and application development capitalize, while planning and ongoing content updates are expensed. Aleq applies the 350-50 cuts so the marketing site doesn't quietly become an asset.
- Application & infrastructure development costs — capitalized.
- Planning & content ongoing operation — expensed.
- Graphics treated as part of the software build.
New capability capitalizes. Upkeep doesn't.
An upgrade that adds functionality is a fresh capitalizable project; maintenance that keeps the lights on is expensed. The line is a judgment, so Aleq drafts which work adds capability and which is upkeep, and holds it for your sign-off.
- Added functionality new project — capitalized and amortized.
- Maintenance bug fixes and upkeep — expensed.
- The split drafted per release, held for sign-off.
What controllers and auditors ask.
Under ASC 350-40, internal-use software costs are capitalized only during the application-development stage. Costs in the preliminary stage — feasibility studies, vendor evaluation, architecture options — are expensed, as are post-implementation costs like training and maintenance once the software is live. Capitalization begins when the preliminary stage is complete, management has committed funding, and completion is probable; it ends when the software is ready for its intended use. In Aleq, your team sets which stage a project is in, and Aleq applies the capitalize-or-expense rule to every cost logged against it automatically — by stage and by cost type — so nothing gets re-sorted at quarter-end.
Capitalize the build, not the guesswork.
Bring one project. Watch Aleq apply the stage-and-cost-type rule to every cost logged against it, capitalize the development work at a loaded rate, and amortize it over its useful life once it's live — every determination drafted for your sign-off.