Separating Fact from Fiction About Cloud Technology: Part 1
Is every company on the planet really migrating to “the cloud” – that magical place where data and applications live, so we mortals can have instant access to everything from trivia facts to client databases on our phones and laptops? Cloud computing has gone from being a trendy novelty to a necessity – even a way of life. We connect to the cloud every time we check social media, use GPS, or work on projects in Google Drive or Office 365. Cloud computing is popular, because it has some clear advantages for businesses and even makes day-to-day life a little. Read More.
Recap of Private Company Council’s July 11 Meeting
Private Company Council (“PCC”) and Financial Accounting Standards Board (“FASB”) members met Tuesday to discuss stakeholder feedback from the June 13 private company town hall meeting. In addition, the PCC offered input on the following FASB projects: Consolidation Targeted Improvements to Related Party Guidance for Variable Interest Entities Liabilities and Equity—Targeted Improvements Cloud Computing (EITF Issue No. 17-A) Nonemployee Share-Based Payment Accounting Improvements Invitation to Comment on Agenda Consultation Balance Sheet Classification of Debt Updates on these FASB projects and a full meeting recap are available on the PCC website.
Topics: Balance Sheet, Cloud Computing, Consolidation, FASB, FASB standard-setting agenda, Financial Accounting Standards Board "FASB", Invitation to Comment, liabilities and equity, nonemployee share-based awards, Private Company Council "PCC", Variable Interest Entity "VIE"
FASB Task Force to Address Cloud Computing
The Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task Force (“Task Force”) has been ordered to investigate how companies should account for cloud computing services. Announced on May 10, the Task Force must address whether businesses should consider cloud computing setup fees as assets that are amortized throughout the life of the contract, or should the fees be recognized as an expense during the period they are incurred. The FASB is pushing for clarity on a growing concern among businesses with cloud computing contracts for company-wide applications like enterprise resource planning and customer relationship management. Board member Harold Monk said. Read More.
FASB Could Take Up Cloud Computing Project
A cloud computing project could be in the works for the Financial Accounting Standards Board (“FASB”). During the April 4 Private Company Council meeting , most council members said they want implementation accounting for cloud computing software to be similar to the accounting for constructing on-site systems. Lining up the accounting for both would allow companies to potentially capitalize set-up costs, allowing them to postpone disclosing the expense as a long-term asset. David Hirsch, a council member, remarked that the current cloud computing guidance is confusing. In his opinion, cloud- and on-premises software implementation expenses must be recorded similarly.
Highlights from the Private Company Council’s Tuesday Meeting
The following is a recap of Financial Accounting Standards Board (“FASB”) projects discussed at Tuesday’s Private Company Council (“PCC”) meeting: Disclosure Framework. Numerous PCC members expressed support for the project, particularly the inventory exposure draft. The PCC also provided feedback on various portions of the project. Financial instruments—Hedge Accounting. Many PCC members favor the standard, including guidance to give private companies additional time to disclose hedge effectiveness. Liabilities and Equity—Targeted Improvements. Feedback received on the Exposure Draft was discussed, as well as the FASB’s research on an alternative to help streamline financial instruments accounting with “down round” features. The FASB was encouraged. Read More.
Topics: Cloud Computing, FASB, FASB Disclosure Framework Project, Financial Accounting Standards Board "FASB", Hedge Accounting, liabilities and equity, Private Company Council "PCC", Variable Interest Entity "VIE"
FASB Approves Technical Corrections to U.S. GAAP
A handful of routine corrections and clarifications to U.S. GAAP will soon be published as final amendments. Approved October 19 by the Financial Accounting Standards Board (“FASB”), two of changes were introduced in April as part of Proposed Accounting Standards Update (ASU) No. 2016-220, Technical Corrections and Improvements: Subtopic 820-10, Fair Value Measurement — Overall. The updated guidance clarifies the difference between a valuation approach and a valuation technique. An organization now must disclose when it changes to a valuation approach or valuation technique, and explain why the change occurred. ASU No. 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting. Read More.