Fine-tuning run
Fine-tuning spend is capitalizable when it produces a buyer-owned artifact used as internal-use software and the probable-to-complete threshold is met ASC 350-40-25. Exploratory fine-tuning with no probable usable output is expensed, and routine fine-tuning that sustains a live paid product is cost of revenue. The framework choice can move the same run between capitalize and expense.
When the artifact reads as an owned asset
A fine-tuned checkpoint you own, deploy and control can be internal-use software. The directly attributable development cost, the compute and engineering to produce that checkpoint, is capitalizable once the ASU 2025-06 gate is cleared. If the fine-tuning is embedded in a product you sell, ASC 985-20 applies instead, with a later technological-feasibility start.
Under IFRS
IAS 38 capitalizes development-phase fine-tuning only when all six recognition criteria are met, including demonstrable technical feasibility IAS 38-57. Research-phase fine-tuning is expensed IAS 38-54.
Posts to
Primary sources
- [S1] KPMG: Hot Topic: Accounting for internal-use software (ASC 350-40) (US GAAP)
- [S5] IFRS Foundation: IAS 38 Intangible Assets (IFRS)
Ledger current as of 2026-07-24. A position and a citation, not accounting advice. See how we cite.