Corporates Brace For Cloud Computing Accounting Changes
The Financial Accounting Standards Board (FASB), which establishes accounting standards in the U.S., has released new guidance on computing costs for cloud computing to take effect for public businesses in 2020. It also provides a new standard for companies that struggle with the implementation of the technology, according to a report by Compliance Week.
The new information was released in Accounting Standards Update No. 2018-15, called the “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.”
The purpose of the release is to help find a more common ground for accounting costs, one that is more uniform when service contracts for cloud computing services are implemented.
The previous guidance neglected to address hosting agreements that didn’t have software licenses, but the new guidance takes this information into account, whether the license to the hosting software is conveyed or not.