Capitalized platform development

Costs of developing the core payment platform, apps and risk/fraud engines can only be capitalized as internally generated intangible assets once strict development-phase criteria are met (technical feasibility, intention and ability to complete and use, probable future economic benefits, ability to measure cost reliably); research and routine maintenance are expensed, and over-capitalizing engineering spend inflates assets and understates current-period expense, masking the true cost of running the platform.

Has the specific engineering initiative moved from exploratory research into a development phase with a defined technical design? Can the entity evidence, at that point, technical feasibility, intention, and financial/technical ability to complete and use the feature? Is developer time tracked (e.g., via sprint allocation) to separate capitalizable development from non-capitalizable maintenance and bug-fixing?

1) Map each engineering initiative to a project and classify it as research (exploratory, no defined technical design) or development (defined design, moving toward build). 2) Expense all research-phase and exploratory spend as incurred. 3) For development-phase work, test all six IAS 38 criteria together: technical feasibility, intention to complete, ability to use/sell, how it will generate probable future economic benefits, availability of resources to complete, and ability to measure cost reliably. 4) Capitalize only from the point all criteria are met (not retrospectively) until the feature is ready for its intended use. 5) Track developer time via timesheets or sprint allocation between capitalizable development and non-capitalizable maintenance/bug-fixing. 6) Begin amortizing once the asset is available for use, and reassess useful life periodically given fast technology cycles.

Measure at cost including directly attributable payroll and infrastructure costs (e.g., cloud compute directly tied to building the feature, not general hosting); exclude general overheads, training costs, and post-launch operating costs; amortize over the useful life once available for use, reassessing useful life as technology and product cycles evolve quickly in fintech; test for impairment if a capitalized feature is later abandoned, replaced, or a major re-platforming supersedes it.

Disclose: the accounting policy for distinguishing research from development; amounts capitalized during the period by major project/platform component; the amortization method and useful lives applied to platform intangibles; impairment losses recognized on abandoned or superseded features; and the total R&D expense recognized (research plus expensed development).

• Capitalizing all engineering payroll regardless of project phase
• capitalizing ongoing maintenance, bug fixes and minor UI changes
• failing to reassess or impair capitalized costs for features later abandoned or replaced
• capitalizing time spent on agile sprints without a documented methodology separating new-feature development from maintenance
• continuing to capitalize after the feature is technically ready for use but before formal '
• go-live'
• (should stop at technical readiness, not launch date)
• capitalizing general R&
• D overhead and management time not directly attributable to a specific project.