Is a website considered a fixed asset?

So, if you expect your website to help you generate revenue directly in the coming years, you can consider it as a fixed asset and put the cost of development on your balance sheet. Websites that provide general information about a company are not classified as fixed assets. UITF 29 applies the principles above in FRS 10 to website development costs (not website planning costs that cannot be capitalized), which requires that all of those costs be classified as tangible fixed assets Creating a completely new website, or creating new functionality significant to that website, will be included in capital expenditures. Typically, the cost incurred in creating, designing, developing, and programming a website will be treated as a capital asset.

It's also the time when the company can purchase all the hardware needed to support the website. These purchases will follow existing capitalization policies, will be included in the balance sheet and amortized. Whereas an accounting firm's website with details about the company and its services, would not be a fixed asset. Treating your website as a fixed asset means that the cost is capitalized on the balance and amortized over several years.

Once you have confirmed that your website is a fixed asset, you can include all the costs of launching the website to determine the cost of the website to be treated as a fixed asset. Once your website launches, the ongoing costs of hosting, maintenance, and product upgrades cannot be capitalized as a fixed asset. If you don't think driving new business is enough to turn your website into an asset, consider this; the terrain on which the building sits is an advantage. FRS 102 does not address the classification of software and website costs and, therefore, each entity must develop and apply an appropriate accounting policy to classify such costs as tangible fixed assets or as intangible assets.

Leave a Comment

Your email address will not be published. Required fields are marked *