FASB Simplifies Accounting for Cloud Computing Service Arrangements

In August 2018, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that reduced complexity for the accounting for costs of implementing a cloud computing service arrangement.
 
Existing U.S. Generally Accepted Accounting Principles (GAAP) were deemed unnecessarily complex by stakeholders and were updated to reflect emerging transactions in cloud computing arrangements that are service contracts. The standard now aligns the accounting for implementation costs of hosting arrangements – regardless of whether they convey a license to the hosted software.

Depending on company type, the changes will be effective for annual periods – including interim periods within those annual periods, in 2020, 2021 or 2022.

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