Simplifying the Accounting for Hosting Arrangements

Most entities utilize software to manage their operations, or provided services to customers. Some entities purchase software licenses that are accounted for as a capitalized asset, while others access software through a hosting arrangement which is accounted for as an expense.

The Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (ASU) to simplify how an entity distinguishes between the purchase of software that should be capitalized and obtaining software as a service through a hosting arrangement.

Learn more about ASU 2014-05 in this MHM Messenger.

%d bloggers like this: