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FASB proposes ASU to simplify accounting for cloud computing fees paid by customers

  • FASB (US Financial Accounting Standards Board) Image

Aug 20, 2014

The FASB has issued a proposed ASU, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which would amend ASC 350-40 to provide guidance on a customer’s accounting for fees paid in a cloud computing arrangement. This is the third proposal released under the FASB’s new simplification initiative, which is intended to reduce the costs and complexity of financial statement preparation.

Under current U.S. GAAP, there is guidance on a vendor’s accounting for fees in a cloud computing arrangement but not on a customer’s accounting. As a result, some diversity in practice has occurred. For example, entities’ views may differ about whether and, if so, when such arrangements are accounted for under ASC 340-10 (other assets and deferred costs), ASC 350-30 (general intangibles), or ASC 350-40 (internal-use software).

The proposed ASU would be effective for public business entities in interim and annual periods beginning after December 15, 2015; for other entities, the effective date would be deferred. Early adoption would be permitted for all entities. An entity adopting the proposed ASU could apply it either prospectively to new cloud computing arrangements or retrospectively. The comments on the proposed ASU are due by November 18, 2014.

For more information, see the related Deloitte Accounting Journal as well as the press release and proposed ASU on the FASB’s Web site.

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