Technology and Health & Life Sciences
Accounting for Cloud Computing Fees Amended
As part of its generally accepted accounting principles (U.S. GAAP) simplification efforts, the Financial Accounting Standards Board has issued an amendment to clarify accounting for fees when buying cloud computing services. Complementing the intangible assets guidance in the Accounting Standards Codification, Accounting Standards Update No. 2015-05, Intangibles: Goodwill and Other: Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, helps entities and other organizations determine if a software license is part of a cloud computing agreement or should be recognized as a service agreement.
Public entities must implement the new requirements for fiscal years, including interim periods within, beginning after December 15, 2015. Changes must be applied in 2016 first-quarter financial statements. Additionally, private entities and nonprofits must implement the changes for fiscal years beginning after December 15, 2016. Changes must be applied to quarterly financial statements, and the interim periods within annual periods, beginning after December 15, 2017. Early adoption will be permitted.
For assistance with accounting for cloud computing fees, the experienced professionals of our Technology and Health & Life Sciences industry group are available to be your guide forward.