Website Development Costs, ASC 350

Website Development Costs
EITF Issue No. 00-2
“Accounting for Web Site Development Costs”

“Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”

Activities to develop websites
1. Planning stage
2. Development stage
(1) Infrastructure development stage
(2) Application development stage
(3) Graphics development stage
(4) Content development stage
3. Operating stage

Planning stage costs
–> expensed

Internet domain name costs
–> capitalized

Development stage costs
–> apply the rules of AICPA SOP 98-1

Operating stage costs
–> apply the rules of AICPA SOP 98-1

Rules of AICPA SOP 98-1

Three stages to develop software
1. Preliminary project stage
2. Application development stage
3. Post-implementation/operation stage

Preliminary project stage
–> Costs are expensed as incurred

Application development stage
–> Costs to develop internal-use software
–> during the application development stage
–> are capitalized

Post-implementation/operation stage
–> Costs are expensed as incurred

Upgrades and enhancements to software
–> Costs may be capitalized
–> if “additional functionality” is added

Capitalized software costs
–> are amortized on a “straight line” basis
–> over the estimated useful life
–> should be reviewed for impairment


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