As more companies incorporate generative artificial intelligence (GenAI) software into their products, the more they should consider additional GenAI costs. Fees paid for third-party models, labor, and training are examples of costs that should be considered when calculating the accounting effects of GenAI. To understand how the costs of your GenAI application should be accounted for, explore this Technology Spotlight, which examines how software-related costs might be subject to different accounting guidance.
Leading practices for GenAI accounting
GenAI is essentially a form of software. This means that general software development accounting considerations apply to GenAI costs and are dependent on whether the project will be used for internal purposes (including being sold as a service) or sold or marketed externally. Regardless of whether an entity is developing its own foundation model or utilizing an application that leverages an existing model, similar costs may be incurred.
For a more detailed look at the considerations and guidance limitations surrounding each classification of GenAI use case, read this full Technology Spotlight on accounting for the development of GenAI software products.