Project Update

EITF Issue No. 17-A: Customer’s Accounting for Implementation, Setup, and Other Upfront Costs (Implementation Costs) Incurred in a Cloud Computing Arrangement That Is Considered a Service Contract

Last updated on September 28, 2017. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)


The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective and Background
Decisions Reached at Last Meeting
Next Steps
EITF/Board Meeting Dates
*Contact Information

Project Objective and Background


In April 2015, the FASB issued Accounting Standards Update 2015-05, which provides guidance about a customer’s accounting for fees paid in a cloud computing arrangement (also known as a hosting arrangement). The overall premise of that guidance is that an entity evaluates a cloud computing arrangement to determine whether the arrangement provides the entity with control of a license to internal-use software. Examples of cloud computing arrangements include software-as-a-service (SaaS), platform as a service, infrastructure as a service, and other similar hosting arrangements. A SaaS arrangement uses internet-based application software hosted by a service provider or third party and is the most common cloud computing arrangement.

In comment letters on the exposure draft that resulted in Update 2015-05, several stakeholders expressed concerns about the scope of the amendments, and requested additional guidance on accounting for implementation costs associated with cloud computing arrangements that do not meet the criteria listed above and, therefore, are considered service contracts. Stakeholders explained that without explicit guidance, diversity in practice would continue in accounting for these implementation costs. Implementation costs include setup and other upfront fees to get the arrangement ready for use. Other implementation costs can include training, creating or installing an interface, reconfiguring existing systems, and reformatting data. Entities have looked at different areas of the Codification for guidance on how to account for these other implementation costs incurred in a cloud computing arrangement that is considered a service contract because there is currently no explicit guidance on them.

After Update 2015-05 was issued, several stakeholders separately contacted the FASB staff requesting that the Board provide additional guidance on accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract, due to the diversity in practice.

Decisions Reached at Last Meeting (July 20, 2017)

At the July 20, 2017 EITF meeting, the Task Force discussed different alternatives to address a customer’s accounting for implementation, setup, and upfront costs (implementation costs) incurred in a cloud computing arrangement that is considered a service contract. The EITF members did not reach a consensus and have requested that further research be conducted by the FASB staff.

Next Steps

The EITF will discuss this issue at the October 12, 2017 EITF meeting.

EITF/Board Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Boards' deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

July 20, 2017
EITF Meeting
Meeting Materials and Minutes
May 10, 2017
Board Meeting
Agenda Prioritization Meeting Minutes
November 16, 2016
Board Meeting
Agenda Prioritization Meeting Minutes

*Contact Information

Thomas Faineteau
EITF Coordinator
tfaineteau@fasb.org

Jason Bond
Practice Fellow
jbond@fasb.org

John Schomburger
Postgraduate Technical Assistant
jschomburger@fasb.org