Cloud computing implementation costs post-ASU 2018-15

This Hot Topic addresses questions about customers’ accounting for hosting arrangements that are service contracts (i.e. do not contain a software license) after adopting ASU 2018-15.

Applicability

• Customers in hosting arrangements that are service contracts

Relevant dates

Mandatory effective dates and early adoption provisions:

Key impacts

• ASU 2018-15 was issued in August 2018 based on a consensus of the EITF.
• ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that does not include a license to internal-use software (a cloud computing arrangement) with one that does.
• ASU 2018-15 requires companies to defer potentially significant implementation costs incurred in a cloud computing arrangement that were often expensed as incurred under legacy US GAAP and recognize them as expense over the term of the arrangement.
• Application questions have arisen about the new guidance.

Report contents

• Applicability
• Background
• Effective dates and transition
• Concepts and definitions
• Questions and answers

Related content

Defining Issues: ASU on accounting for implementation costs of cloud computing