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Shane Delaney Senior Group Accountant

Capitalizing Investment in E-Commerce and Website Development

Asked on July 24, 2016

Hi, Our Marketing manager just brought up the fact that we are looking to redevelop our current website and expand it into an e-commerce suite for our customers. We are a retail supermarket. My question is how much of this work would pertain to a Capital Expense? And how much should be written off as regular expenses? Thanks, Shane.

Answers

John Herndon Senior Director of Revenue Recognition. • July 28, 2016

The basic concept behind capitalization beyond the initial inception point is that incremental cost are allowed to be added if 'they significantly extent the useful life of the asset'.

Under these general guidelines and, as long as you can support the assertion, the costs would have to be evaluated to determine if they meet the criteria.

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