Strictly speaking, code is both an asset and a liability (as in double entry book keeping, you can’t have one without the other). It depreciates over time. A

Strictly speaking, code is both an asset and a liability (as in double entry book keeping, you can’t have one without the other). It depreciates over time. A simple tool like a hammer is rarely treated like an asset as it is expensed up front. Code can generate cash flow through its replication and exchange, or its application. Whether this is higher than its depreciation and maintenance costs determines whether you’re losing money on it. The above is an analogy of course, In actual financial accounting we typically see only see code or “knowledge capital” on the books after acquiring another company, usually as a fat chunk of “goodwill”.