When it comes to creating, designing, developing, and programming a website, the costs associated with it are considered capital assets. This includes any hardware purchases that are necessary to support the website's development. These purchases must follow existing capitalization policies. From an accounting standpoint, the question is whether the costs of developing a custom website should be recorded as a current expense or capitalized as an asset and amortized. Generally Accepted Accounting Principles (GAAP) dictate that some of the costs must be spent and others must be capitalized, depending on the stage of the website development project.
Additionally, when a company builds assets such as a website that require a period of time to prepare them for use and interest costs are incurred during that period, those interest costs must be capitalized as part of the cost of the asset. GAAP also outlines the capitalization of initial costs and website development costs.
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