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Handbook: Software and website costs

Handbooks | April 2024

Latest edition: KPMG guide to accounting for software and website costs under ASC 350-40, ASC 350-50 and ASC 985-20.

Using Q&As and examples, this comprehensive handbook explains in detail the accounting for costs of internal- and external-use software, cloud computing arrangements, and website development. This April 2024 edition incorporates updated interpretations.


  • ASC 350-40, ASC 350-50, ASC 985-20
  • All entities

Relevant dates

  • Effective immediately

Key impacts

In 2015 and 2018, the FASB added guidance to US GAAP on customers’ accounting for hosting arrangements. In 2015, the FASB added guidance in Subtopic 350-40 (internal-use software) to determine whether hosting arrangements include a software license or are, instead, service contracts (i.e. cloud computing arrangements). In 2018, the FASB further amended Subtopic 350-40 to add guidance on customers’ accounting for implementation costs incurred in cloud computing arrangements.

In addition, in 2016, the FASB amended Subtopic 350-40 to clarify that acquired internal-use software licenses, perpetual or term, are intangible assets to be recognized, and that if an acquired software license will be paid for over time, the customer should recognize a liability for those fees it owes in the future.

Organized in a Q&A format, this book is intended to help you effectively and efficiently apply Subtopics 350-40, 350-50 and 985-20 on internal-use software, website development costs and external-use software, respectively.

We give examples and observations to explain key concepts. And while most of the guidance in these subtopics has not been revised recently, advances in technology, changes to how software is sold/purchased and the evolution/proliferation of agile software development have given rise to application issues not envisioned when that guidance was issued. We address many of those issues herein.

Report Contents

  • Executive summary
  • Scope
  • Initial recognition and measurement: Internal-use software and cloud computing implementation costs
  • Initial recognition and measurement: website development costs
  • Initial recognition and measurement: software to be sold, leased or marketed
  • Subsequent measurement
  • Presentation
  • Disclosure

Download the documents:

Software and website costs

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Meet our team

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Scott Muir
Partner, Dept. of Professional Practice, KPMG US
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P.K. Barot
Partner, Dept. of Professional Practice, KPMG US

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