Hot Topic | May 2020



Cloud computing implementation costs post-ASU 2018-15

Updated: Q&As for customers applying the new guidance on cloud computing implementation costs.

Scott Muir

Scott Muir

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5073

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.


  • Customers in hosting arrangements that are service contracts

Relevant dates

Mandatory effective dates and early adoption provisions:

Effective date: Public business entities All other entities

Annual periods – Fiscal years beginning after

Dec. 15, 2019

Dec. 15, 2020

Interim periods – In fiscal years beginning after

Dec. 15, 2019

Dec. 15, 2021

Early adoption allowed in annual and interim periods?



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

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