Absolutely! However, you must meet a few requirements in order to do so. According to Governmental Accounting Standards Board Statement No. 51 (GASB), “intangible assets are considered internally generated if they are created or produced by the government or an entity contracted by the government.” So, whether you have the IT department develop the website or an outside contractor, it can still be considered an internally generated intangible asset. GASB 51 also outlines activities commonly involved in developing and installing assets as follows:
- Preliminary Project Stage – Activities in this stage include the conceptual formulation and evaluation of alternatives, the determination of the existence of needed technology, and the final selection of alternatives for the development of the software.
- Application Development Stage – Activities in this stage include the design of the chosen path, including software configuration and software interfaces, coding, installation to hardware, and testing, including the parallel processing phase.
- Post-Implementation/Operation Stage – Activities in this stage include application training and software maintenance.
To be clear, while all of what is mentioned above relates to the development of an intangible asset, anything in the Preliminary Project Stage must be expensed as incurred.
For more information on capitalizing websites or other intangible assets, visit www.gasb.org and search for Statement 51.
By Andrew Gill