ASU 2025-06: Probable-to-Complete Threshold
The ASU 2025-06 threshold for capitalizing internal-use software — capitalize once funding is committed and the project is probable to be completed and used as intended.
In plain terms: you start capitalizing once the project is funded and likely to actually ship and work.
The probable-to-complete threshold is the recognition test ASU 2025-06 put in place of the old three-stage model. Capitalization of internal-use software begins when both are true:
- management has authorized and committed to funding the project, and
- it is probable the project will be completed and the software used for its intended function.
“Probable” carries its FASB Master Glossary meaning — the outcome is likely, not merely possible. The threshold can’t be met while significant development uncertainty remains: novel technology still unproven, or significant performance requirements still unsettled.
See also: ASU 2025-06, significant development uncertainty.
Capitalize software development costs in Jira — without the manual work
Quantify turns Jira activity into audit-ready software-capitalization data automatically — no manual timesheets.