ASPE Accounting Insights - Accounting Guideline 20 (AcG-20)

Published on: Jan 18, 2023

With the continuous evolution of technology, the number of organizations transitioning from on-premise technology to cloud computing arrangements has increased rapidly. Cloud computing has many benefits, including increased scalability, higher system availability, disaster recovery optionality, and much more.

The accounting treatment related to cloud computing arrangements can be complicated, as the arrangements may have multiple elements with different accounting treatments such as internal use software, service agreements, or leases. The associated costs with implementing cloud computing software are often significant and the accounting outcomes can have a material impact on an entity’s financial results.

To provide additional guidance on the accounting for cloud computing arrangements, the Accounting Standards Board (“AcSB”) issued a new accounting guideline, AcG-20 Customer’s Accounting for Cloud Computing Arrangements (the “Guideline”) on November 15, 2022. The Guideline provides guidance on how expenditures such as implementation costs should be accounted for as well as determining whether an intangible exists in a cloud computing arrangement.

This publication highlights key accounting requirements for various cloud computing arrangements as required by the Guideline.


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