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The Grant Thornton International IFRS team has published IFRS Viewpoint – Configuration or customisation costs in a cloud computing arrangement.
The IFRS Viewpoint series provides insights on applying IFRS in challenging situations. Each edition will focus on an area where the standards have proved difficult to apply or there is a lack of specifics.
This edition provides guidance on the accounting for costs of configuring or customising a supplier’s application software in a cloud computing or Software as a Service (SaaS) arrangement.
The issue
The International Financial Reporting Interpretations Committee (IFRIC) received a request addressing how a customer should account for costs of configuring or customising a supplier’s application software in a cloud computing or SaaS arrangement. Significant diversity in practice had developed and the IFRIC determined it was appropriate for an agenda decision to be issued.
The IFRIC determined sufficient guidance exists within the relevant accounting standards and therefore no amendments to accounting standards were required. The rationale for arriving at this conclusion, which forms part of the interpretation of IFRS, is set out in the agenda decision.