Artificial Intelligence Capitalisation

Definition

The accounting treatment of expenditure on developing artificial intelligence systems, determining whether costs should be recognised as assets on the balance sheet or expensed immediately. Under IAS 38, AI development costs may be capitalised if they meet the criteria for technological feasibility, intention to complete, and probable future economic benefit. The capitalisation boundary between research-phase and development-phase AI projects is a significant area of judgement for preparers and auditors.