FASB ASU 2025-06 - Internal-Use Software (Subtopic 350-40)
Recognition (350-40-25 as amended) – FASB ASU 2025-06 - Internal-Use Software (Subtopic 350-40)

FASB ASU 2025-06 - Internal-Use Software (Subtopic 350-40) 25-12A: Significant development uncertainty defers the threshold until it is resolved

What does 25-12A require?

While significant development uncertainty remains, the probable-to-complete threshold cannot be met. Such uncertainty is present under either of two factors: the software relies on technological innovation, or on functions or features that are novel, unique or unproven, and coding and testing have not yet settled that uncertainty; or the entity has not yet pinned down what the software must do (its significant performance requirements), or keeps substantially revising what it has pinned down. For some projects the assessment is simple; for others, such as a project built around an unproven algorithm, it is complex. Once no significant uncertainty exists, or it has been resolved, the entity returns to 350-40-25-12 to fix the capitalisation start.

Maintained by Gerard Blokdyk

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