We understand the specialized markets in which you operate and provide tailored solutions to meet your unique business needs.
Our comprehensive suite of business services combines industry expertise, market knowledge and professional insights.
MNP is a leading national accounting, tax and business consulting firm in Canada.
Suite 2000, 330 5th Ave. S.W.
Submit an RFP
MNP careers are Different by Design. As an entrepreneurial firm, we truly believe there are no limits to where your career can go.
On August 29, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-15 Intangibles – 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. The ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.
The amendments require an entity in a hosting arrangement that is a service contract to apply the guidance on internal-use software to determine which implementation costs should be recognized as an asset and which costs should be expensed. The entity will need to determine whether an implementation activity relates to the application development stage, the preliminary project stage, or the postimplementation stage. The implementation cost incurred in the application development stage will be capitalized as an asset related to the service contract depending on the nature of the costs. The costs incurred during the preliminary stage and postimplementation stage will be expensed immediately. The capitalized implementation costs in the application development stage will be amortized over the term of the hosting arrangement.
An entity that has capitalized implementation costs will apply existing impairment guidance in Subtopic 350-40 as if the costs were long-lived assets. An entity will also apply the existing abandonment guidance in Subtopic 360-10 Property, Plant, and Equipment to the capitalized implementation costs related to each module or component when it ceases to be used.
The ASU also provides the guidance regarding the presentation of capitalized implementation costs for a hosting arrangement that is a service contract.
The amendments are effective as follows:
Early adoption is permitted for all entities.
To access the full script of ASU No. 2018-15, click here.
For more information on the financial reporting library, contact a local MNP Assurance Professional, or Jody MacKenzie, Director, Assurance Professional Standards.
This communication contains a general overview of the topic and is current as of August 29, 2018. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional, who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2018. All rights reserved.
Suite 2000, 330 5th Ave. S.W.
Find an office near me