Handbook: Software and website costs
Handbooks | February 2026
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 February 2026 edition incorporates updated interpretations, including for ASU 2025-06 and accounting for AI software development (including data costs).
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Applicability
- ASC 350-40, ASC 350-50, ASC 985-20
- All entities
Relevant dates
- Effective immediately
Key impacts
In September 2025, the FASB issued ASU 2025-06, marking the first major update to the internal-use software guidance in over two decades. These amendments to ASC 350-40 better align the rules with modern agile software development practices and more closely align the accounting for development of software that will be licensed to customers and software that will be sold via the cloud (e.g. via SaaS arrangements).
In addition to updates for ASU 2025-06, this edition tackles new accounting questions stemming from the rapid advancement of AI, particularly concerning AI data costs.
Organized in a Q&A format with detailed examples and observations, this updated handbook is intended to help you effectively and efficiently apply ASC 350-40, ASC 350-50 and ASC 985-20 on internal-use software, website development costs and external-use software, respectively, both before and after adopting the FASB’s new guidance.
Report Contents
- Executive summary
- Scope
- Initial recognition and measurement: Internal-use software and cloud computing implementation costs (pre-ASU 2025-06)
- Initial recognition and measurement: Internal-use software and cloud computing implementation costs (post-ASU 2025-06)
- Initial recognition and measurement: website development costs
- Initial recognition and measurement: software to be sold, leased or marketed
- Subsequent measurement
- Presentation
- Disclosure
- Transition to ASU 2025-06
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