Is a Website a Fixed Asset?

When it comes to accounting, the question of whether a website is considered a fixed asset or not can be a tricky one. Generally speaking, if you expect your website to help you generate revenue directly in the coming years, then it can be classified as a fixed asset and the cost of development can be put on your balance sheet. On the other hand, websites that provide general information about a company are not usually classified as fixed assets. The UITF 29 applies the principles of FRS 10 to website development costs (not website planning costs that cannot be capitalized).

This requires that all of those costs be classified as tangible fixed assets. This means that if you are creating a completely new website or adding new functionality to an existing one, then these costs will be included in capital expenditures. The cost incurred in creating, designing, developing, and programming a website is typically treated as a capital asset. This is also the time when the company can purchase all the hardware needed to support the website.

These purchases will follow existing capitalization policies and will be included in the balance sheet and amortized. If you decide to treat your website as a fixed asset, then the cost will be capitalized on the balance sheet and amortized over several years. This includes all the costs associated with launching the website. However, once your website is up and running, the ongoing costs of hosting, maintenance, and product upgrades cannot be capitalized as a fixed asset.

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.

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