The line between
expense and asset.
Aleq draws the capitalization boundary straight from your project tracker — the development build becomes an asset, the rest is expensed, and the engineering time behind it is the evidence.
Three stages. Only the middle one is an asset.
ASC 350-40 splits a project into three stages and capitalizes only the development build. Aleq watches the stage in your tracker and moves the cost to the right side of the line.
The build, captured as it happens.
Aleq reads the work from Linear, prices the engineering time at a loaded rate, and capitalizes only the development-stage hours — no timesheet exercise at quarter-end. When the project goes live, it switches from capitalizing to amortizing on its own.
Where the line falls is yours to set.
When does scoping become development? When is the project substantially complete and capitalization stops? Is this release new capability or maintenance? These boundaries decide what becomes an asset. Aleq drafts each from your project milestones and holds it for your sign-off.
Preliminary activities — feasibility and architecture selection — closed on the SR-104 epic on 2026-02-14. Detailed design was approved and coding began the next day, so under ASC 350-40-25 capitalization starts 2026-02-15.
What you're building changes the rule.
Internal platforms, cloud implementations, websites, upgrades — each draws the capitalization line in a different place. Aleq applies the right one.
Capitalize the build. Expense the rest.
For software you build to run the business, the application-development stage is capitalized: coding, configuration, testing. The preliminary stage before it and the operation stage after it are expensed. Aleq draws the line from your project tracker.
- Preliminary stage scoping and evaluation — expensed.
- Development stage coding, config, testing — capitalized.
- Post-implementation training and maintenance — expensed.
Hosted software — the setup still capitalizes.
In a hosting arrangement that's a service, the subscription is expensed — but the implementation costs follow the same internal-use rules. Aleq separates configuration and integration work that capitalizes from the data conversion and training that doesn't.
- Subscription fees expensed over the service term.
- Implementation configuration & integration — capitalized.
- Same amortization over the hosting-arrangement term.
Build it to capitalize, run it to expense.
Website development splits the same way: graphics and application development capitalize, while planning and ongoing content updates are expensed. Aleq applies the 350-50 cuts so the marketing site doesn't quietly become an asset.
- Application & infrastructure development costs — capitalized.
- Planning & content ongoing operation — expensed.
- Graphics treated as part of the software build.
New capability capitalizes. Upkeep doesn't.
An upgrade that adds functionality is a fresh capitalizable project; maintenance that keeps the lights on is expensed. The line is a judgment, so Aleq drafts which work adds capability and which is upkeep, and holds it for your sign-off.
- Added functionality new project — capitalized and amortized.
- Maintenance bug fixes and upkeep — expensed.
- The split drafted per release, held for sign-off.
What controllers and auditors ask.
How does it know which stage a project is in?
Aleq maps your project tracker — Linear, Jira — to the three ASC 350-40 stages by epic and milestone, and capitalizes only the development-stage work. Where the boundary is a judgment, it drafts the date with its basis and holds it for sign-off.
How is engineering time valued?
Development-stage hours are priced at a loaded rate — salary plus benefits and employer taxes — and only the qualifying hours are capitalized. The hours trace back to the tickets and the people who logged them.
When does capitalization stop?
When the software is substantially complete and ready for its intended use. From that point Aleq stops capitalizing and begins amortizing over the estimated useful life — straight-line unless another pattern better reflects use.
How are cloud arrangements treated?
For a hosting arrangement that's a service, the subscription is expensed but implementation costs follow the internal-use rules. Aleq separates capitalizable configuration and integration from data conversion and training.
Is the capitalized-software roll-forward auditable?
Every period exports the roll-forward — additions by project, amortization, impairments, net book value — with the underlying tickets, hours, and rate, so it reviews from the evidence up.
Capitalize the build, not the guesswork.
Connect your project tracker. Watch Aleq draw the stage boundary, capitalize the development work at a loaded rate, amortize it over its useful life, and keep the roll-forward traced to the tickets — the boundary drafted for your sign-off.