HAWAIIAN AIRLINES, INC.
Software Capitalization “Cheat Sheet”
Accounting Categorization of Costs by Project Phases:
Phase Description
Accounting Treatment
Phase I – Initiation: creation of a project charter to define goals, objectives,
and scope of the project.
Phase II – Planning & General Requirements: creation of a project
schedule to detail all the timing of tasks and definition of general
requirements to produce the desired end product.
Phase III – Detailed Requirements: define what is to be delivered in detail
for the purpose of building the end product.
**Costs in this phase of the project qualify to be capitalized once the project
has been approved by IT Governance.
Phase IV – Design & Build: design of chosen path, including software
configuration, software interfaces, and coding.
Phase V – Test & Acceptance: test the various physical and software
components of the project product.
Phase VI – Deployment: plan and execute all the steps required to migrate
the tested Project Product into Production – known as the “Go-Live”,
replacing any preceding product.
Expensed (do not capitalize)
Expensed (do not capitalize)
Capitalized
Capitalized
Capitalized
Capitalized
*Note: To assure that the projects are capitalized in a timely manner and accounting standards are being followed,
costs incurred once a project has been deployed or “Gone Live” to correct errors or “fine tune” new functions that
have not been accrued for within two months of the project’s deployment will be expensed.
HA Software Capitalization Policy:
Expense
Capital
Cost
(license,
labor**,
design)
<$25,000
>$25,000
Expense
>$25,000
Capital
>$25,000
Type
All software
3rd party
software,
customization
by HA
3rd party
software,
customization
by Vendor
Internally
developed
software
Code
Ownership
Customization
Code
Ownership
Hosted
Amortization
period
3rd party
HA
on HA owned/
leased
equipment
5 years
3rd party
VENDOR
on VENDOR
owned
equipment
N/A
HA
HA
on HA
owned/leased
equipment
3 years
** Labor costs which qualify to be capitalized as part of a software project are:
 IT Development labor costs (internal & external)
 PMO labor costs
Examples of labor costs which do not qualify to be capitalized include training and labor costs related to initial
planning of a project.