AITB No. 23 Accounting for AI-Enhanced Virtual Reality (VR) Training Programs
Issue: How should entities account for costs and benefits associated with the deployment of AI-enhanced virtual reality (VR) systems for employee and client training?
Background: VR training programs, enhanced with AI, provide immersive experiences that can significantly improve the retention and understanding of complex subjects. These programs are being adopted across sectors, from healthcare to manufacturing.
Guidance:
- Capitalization of VR Training System Costs: Expenses related to the development or acquisition of AI-enhanced VR training systems intended for long-term instructional use should be capitalized as an intangible asset.
- Expensing of Content Creation and System Updates: Costs associated with creating specific training content or regular system updates to incorporate new AI algorithms should be expensed as incurred.
- Amortization of Capitalized System Costs: The capitalized costs should be amortized over the system's expected useful life, considering technological advancements and evolving training needs.
- Benefit Recognition: Financial benefits arising from reduced training time, decreased errors due to better-trained staff, and increased customer satisfaction resulting from superior training should be recognized in the income statement in the respective period.
Examples:
- Company W spends $4M on an AI-enhanced VR training system expected to be effective for 9 years. They would capitalize the $4M and amortize it over the 9-year span.
Note: This is a fictional representation and does not represent any real-world standard for AI. The development of such standards would involve extensive consultations with experts, stakeholders, and the public. Fictional representations simplify complex AI concepts, stimulate discussion, envision future scenarios, highlight ethical considerations, encourage creativity, bridge knowledge gaps, and set benchmarks for debate in fields like accounting.