Accounting & Auditing Conference - Virtual-1 - Nach

1 - Nach - Accounting-Update

Pdf Summary

The presentation reviews upcoming U.S. GAAP changes and focuses on <strong>ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software</strong>, issued September 18, 2025. The update modernizes rules built around sequential development stages, which often do not fit iterative methods such as agile.

Under the new model, entities begin capitalizing eligible software costs only when <strong>both</strong> conditions are met: management has authorized and committed to funding the project, and it is probable the project will be completed and the software used as intended. Capitalization is not appropriate while significant development uncertainty remains, such as unresolved technological challenges or substantially changing performance requirements. The former development stages are eliminated, and website development costs use the same framework.

Existing rules on which costs qualify for capitalization generally remain unchanged. The presentation also discusses cloud-computing arrangements, upgrades and enhancements, project delays or abandonment, impairment, and revised disclosures. Capitalized internal-use software disclosures will follow the ASC 360-10 property, plant, and equipment model rather than certain intangible-asset disclosures.

The standard applies to annual reporting periods beginning after December 15, 2027, including interim periods within those years; early adoption is permitted at the start of an annual reporting period. Entities may apply prospective, modified-transition, or retrospective transition methods. Auditors should scrutinize management authorization, project-completion assessments, cost eligibility, impairment indicators, and disclosure completeness.

The broader implementation timeline lists other standards taking effect in later years, including changes addressing income-tax disclosures, credit losses, business combinations, share-based consideration, interim reporting, environmental credits, and government grants.

Keywords

ASU 2025-06

internal-use software

U.S. GAAP

capitalization criteria

agile development

website development costs

cloud computing arrangements

software impairment

ASC 360-10

financial reporting