AITB No. 39 Accounting for AI-Enhanced Retail Customer Experience Platforms
Issue: How should entities account for costs and benefits associated with the development and deployment of AI-enhanced retail customer experience platforms?
Background: Retailers are adopting AI-driven platforms to personalize shopping experiences, optimize inventory, predict trends, and enhance customer loyalty, leading to increased sales and operational efficiency.
Guidance:
- Capitalization of Retail Platform Costs: Expenses related to the development or acquisition of AI-enhanced retail customer experience platforms intended for long-term business optimization should be capitalized as an intangible asset.
- Expensing of Data Analytics and Marketing Tools: Costs associated with tools used to analyze customer behavior, purchase history, and market trends to personalize offers and promotions should be expensed as incurred.
- Amortization of Capitalized Platform Costs: The capitalized costs should be amortized over the platform's expected useful life, considering technological advancements and evolving retail trends.
- Benefit Recognition: Financial benefits arising from increased sales, improved inventory turnover, enhanced customer loyalty, and reduced marketing costs due to the AI-enhanced capabilities of the platform should be recognized in the income statement in the corresponding period.
Examples:
- Retailer M1 invests $3.5M in an AI-enhanced customer experience platform projected to provide benefits over a 6-year duration. They would capitalize the $3.5M and amortize it over the 6-year period.
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.