Overview

This Guideline provides guidance on:

(a) accounting for a customer's expenditures in a cloud computing arrangement; and

(b) determining whether a software intangible asset exists in the arrangement.

The main features of AcG-20 are to:

• clarify that an enterprise may determine a method on a rational and consistent basis for allocating arrangement consideration to significant separable elements in a cloud computing arrangement;
• clarify that an enterprise applies Goodwill and Intangible Assets, Section 3064, to account for the significant elements unless the elements are tangible assets or rights to use tangible assets;
• provide an optional simplification approach to permit an enterprise to expense as incurred the expenditures related to the elements in the arrangement within the scope of Section 3064;
• provide factors to assist an enterprise that does not apply the simplification approach to determine whether the arrangement includes a software intangible asset or is a software service;
• provide an accounting policy choice to either capitalize directly attributable expenditures on implementation activities when the arrangement is a software service or expense such expenditures as incurred; and
• require an enterprise to disclose information on how the arrangement is accounted for in its financial statements.

History of AcG-20

Note: The above summary does not include details of consequential amendments made as the result of other projects.