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Platform development and technology costs

Platform development and technology costs

28 July 2023

Recently, there has been a significant increase in companies making material investments in platform development and technology costs. How a company accounts for such costs, i.e., whether they are expensed or capitalized, can significantly impact the reporting company’s operating results. In most cases, the decision about which costs need to be capitalized and which costs need to be expensed is subject to critical evaluation of accounting literature and application of accounting judgments.

We have observed that companies follow different approaches while accounting for platform development and technology costs in their financial statements. Also, there is a difference between Ind AS / IFRS and US GAAP in this area. In this publication, we assess the considerations related to platform development and technology costs and the possible approaches to accounting for such costs.

In recent times, along with capital investments in tangible assets, there has also been a significant increase in the number of companies making material investments in platform development and technology costs. With increasing spending related to platform development and technology costs, there is always a question whether such costs being incurred can be capitalized as Intangibles rather than expensed in the income statement. This publication provides insights from an accounting and reporting perspective on this matter.