United States

How are you accounting for cloud implementation costs incurred?

ASU 2018-15 provides clarity

INSIGHT ARTICLE  | 

As business and professional services companies grow, many are using software and cloud-based platforms to enhance and deliver their services. From law firms to engineering firms, organizations are using technology platforms and the cloud to serve their clients better and faster, improve efficiencies throughout the enterprise and to remain competitive in a fast-paced marketplace. Related to this new cloud platform integration and appropriate financial reporting, however, is some confusion on the treatment of associated costs. Some companies could be overlooking key financial reporting standards related to software-based resources and cloud platforms, as well as subsequent tax considerations and credits.

The Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2018-15Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), last year to provide further clarity related to the accounting treatment of cloud computing implementation costs incurred by a customer. Under the guidance, for instance, an engineering firm that implemented a cloud-based field service management platform to track projects can capitalize certain costs of the technology implementation. In addition, the organization could take advantage of a research and development (R&D) tax credit, if applicable. Some organizations simply may not be aware of this accounting guidance or the resulting tax opportunities.

It’s important to learn more about ASU 2018-15 and its impact on your business. To get started, read our white paper Customer’s accounting for cloud computing implementation costs. In addition, you should also assess and track new technology implementation costs, categorize those costs, determine the appropriate costs to capitalize and apply ASU 2018-15 accordingly in financial reporting.


YOU MAY ALSO BE INTERESTED IN

New tax rates increase value of reduced R&D credit election

TAX ALERT

New tax rates increase value of reduced R&D credit election

The reduced corporate tax rate enables a pass through entity to increase net R&D credit benefit by making a section 280C(c)(3) election.

  • John Deininger, Tom Windram
  • |
  • April 12, 2019
Tax reform’s impact on business and professional services firms

ARTICLE

Tax reform’s impact on business and professional services firms

Business and professional services firms face challenges due to tax reform, but there are opportunities to maximize the benefits, too.

  • Sean Keating
  • |
  • December 12, 2018
Tax Efficient Business Growth

RESOURCE CENTER

Tax Efficient Business Growth

Strong corporate growth strategies strive for tax efficiency. Discover how the tax landscape can affect your ability to achieve desired growth.

INSIGHT ARTICLE

Automation's impact on margin and efficiency in professional services

Professional services automation streamlines processes and efficiencies, and can improve margins and reporting.

  • Kyle Pochini
  • |
  • May 08, 2019

AUTHORS


How can we help you?

To discuss how our team can help your business, contact us by phone 800.274.3978 or



Contact

Dan Whelan
National Practice Leader
410.246.9124