Control the internal-use software standards clock

Linden Peak's automation project has an approved budget, working code, an unresolved integration risk, and a 2027 reporting date. Those facts are not enough until the workpaper says whether ASU 2025-06 has been adopted.

Prove the purpose first

Record who uses the software, whether it will be marketed, whether customers receive software or a service, which component is analyzed, and what rights Linden Peak controls. Internal workflow support points toward internal-use scope; a customer product or unresolved cloud delivery requires another lane.

Put four fields above the ledger

Annual period:        2027
Entity/adoption:      ASU 2025-06 not early adopted
Transition method:    not applicable
Content lane:         current Subtopic 350-40

Under the supplied current lane, classify the actual activities within the preliminary-project, application-development, and post-implementation-operation architecture. In the example, $45,000 preliminary alternatives work is expensed, $180,000 application-development work is capitalized, and $30,000 training is expensed. The entries follow the dated activity evidence, not the IT department's project code.

Compare—but do not blend—the pending lane

For an adopted period, ASU 2025-06 uses authorization and commitment to fund, probable completion and intended use, and significant unresolved development uncertainty to control when capitalization begins. Website-specific development guidance moves into Subtopic 350-40. The update is mandatory for annual periods beginning after December 15, 2027, including interim periods within; early adoption is permitted.

Two adjacent analysis columns can explain the change. One journal entry cannot begin capitalization under the current model's activity-stage trigger and stop it under the pending model's unresolved-uncertainty condition. If adoption status is absent, the correct output is an evidence request.

The paired example makes the comparison numerical. The $45,000 preliminary work precedes authorization and commitment to fund. The first $60,000 of application-development work occurs while a significant integration uncertainty remains unresolved. The remaining $120,000 follows resolution, when completion and intended use are probable. Training is $30,000. Under the supplied current lane, $180,000 is capitalized and $75,000 is expensed. In the hypothetical early-adopted pending lane, $120,000 is capitalized and $135,000 is expensed. The $60,000 slice moves to expense in that pending comparison because significant unresolved development uncertainty means the pending capitalization-onset condition has not yet been met, even though application-development activity has begun. The two lanes use different triggers, not merely different stage names. Only the current lane feeds the 2027 entry.

Costs that still need their own facts

Training, data conversion, maintenance, upgrades, enhancements, mixed vendor contracts, abandoned components, AI training, and website work are not resolved by writing “application development.” State who performed the service, what changed, whether separate functionality exists, and which guidance applies.

Exit check

Given identical project costs in two periods, complete one current-content and one early-adopted pending-content cover sheet. Identify the capitalization start under each supplied fact pattern, show any outcome difference, and reject a third schedule that mixes the triggers.