FASB simplifies accounting for cloud costs
This month FASB has issued a new standard that is designed to reduce difficulty for the accounting for costs of applying a cloud computing service procedure. The standard aligns the requirements for capitalizing implementation costs acquired in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.
FASB Chairman Russell Golden said that existing U.S. GAAP resulted in unnecessary complexity and needed to be updated to reflect developing transactions in cloud.
The change takes effect for public entities for the fiscal year beginning after December 15, 2019. And temporary periods within those fiscal years. For all other entities, the amendments take effect for annual reporting periods beginning after Dec. 15, 2020, and interim periods within annual periods beginning after Dec. 15, 2021.