Hit your CapEx target without the audit anxiety.
It’s close week and the capitalization number is short again. Teams default to OpEx because the rules are too complicated to remember at ticket level. Capitalizable work goes uncapitalized and the CFO finds out last.
Flowstate classifies every piece of effort against ASC 350-40, splits creation from maintenance automatically, and ends the backdated reclassification scramble. We also cover UK FRS 102 and IFRS for teams reporting in more than one jurisdiction.
The rules changed. Most companies haven’t.
ASC 350-40 was redrawn in September 2025. The capitalization question is no longer about development stages. It’s about whether your effort tracking is precise enough to support a defensible split.
All references to “development stages” are gone. Two new criteria: management authorization, and probable completion. Effective for annual periods after Dec 15, 2027. Early adoption permitted.
FASB, Accounting Standards Update 2025-06 (PDF) →“Many companies fail to allocate engineer hours with sufficient precision, leading to either undercapitalization or overcapitalization.” The new principles-based regime makes that gap more visible, not less.
CFO commentary on ASC 350-40 reform, 2025 →Auditors increasingly expect contemporaneous evidence, not a backdated allocation built in March. Flowstate captures the classification at the moment the effort happens.
KPMG, FASB final ASU on software cost accounting →One UK customer moved £300k a month from P&L to balance sheet within two months of going live.
The modules that solve this
Two products that turn capitalization from a year-end exercise into a daily output.
Stop reclassifying at close
Book a demo. We'll show your capitalization rate, your splits, and the rationale your auditor will accept, running continuously on your data.