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When to expense or capitalize a business website.

Should a company's Web site be expensed or capitalized?

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Web site costs

The first assumption that has to be made is whether the cost of a Web site is capitalizable. The consensus of the Emerging Issues Task Force (EITF), at the March 2000 meeting regarding this issue, is that, under Financial Accounting Standards Board (FASB) Concepts Statement No. 6, Elements of Financial Statements, certain costs incurred in the development of a Web site should be capitalized. Web site costs, like the cost of most fixed assets, can be segregated into distinct groups: planning, development (construction or acquisition), graphics and content (lighting, furniture, and filing system), and the operating stage.

According to the EITF, those costs incurred in developing a software program should be capitalized in accordance with Statement of Position (SOP) 98-1, ...

Solution Summary

The first assumption that has to be made is whether the cost of a Web site is capitalizable. The consensus of the Emerging Issues Task Force (EITF), at the March 2000 meeting regarding this issue, is that, under Financial Accounting Standards Board (FASB) Concepts Statement No. 6, Elements of Financial Statements, certain costs incurred in the development of a Web site should be capitalized. Web site costs, like the cost of most fixed assets, can be segregated into distinct groups: planning, development (construction or acquisition), graphics and content (lighting, furniture, and filing system), and the operating stage. According to ...

By utilizing the recommendations of the AICPA, FASB, and Emerging Issues Task Force (EITF), I present formal justification on how to treat such a question faced by business owners.

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