the right to take possession of a copy of the software and run it on the company’s own or a third party’s computer infrastructure or.However, in some circumstances a company may reach a different conclusion features of a hosting arrangement that we believe may indicate the company obtains control of a software intangible asset include: The right to access the vendor’s software generally does not give rise to an intangible asset because that right does not in itself give the customer control over a software intangible asset that it can obtain the future economic benefits from and restrict others’ access to. They generally do not meet the definition of a lease, and frequently do not give rise to an intangible asset under IAS 38. In our experience, software hosting arrangements usually do not give rise to a software asset. a software lease), or instead solely receives SaaS.
The accounting framework outlined in the remainder of this article is consistent with these agenda decisions.ĭoes the software hosting arrangement give rise to a software asset?Īt the contract commencement date of a hosting arrangement, a question arises about whether a company receives a software asset, either under the guidance in IAS 383 or IFRS 164 (i.e. An April 2021 agenda decision includes guidance on customer accounting for implementation costs incurred in a SaaS arrangement.2.A 2019 agenda decision distinguishes hosting arrangements in which a customer receives a software intangible asset from those that do not, and therefore are service contracts (i.e.However, two IFRS IC agenda decisions provide a framework for the accounting. In others, no software intangible asset is obtained these arrangements are commonly referred to as SaaS arrangements.Įxisting guidance under IFRS Standards does not explicitly address customers’ accounting for fees paid to SaaS providers or implementation costs incurred in SaaS arrangements. In some hosting arrangements, the customer’s right to access the hosted software gives rise to a software intangible asset (i.e. In a software hosting arrangement, a customer obtains access to software hosted by the software vendor (or a third party on its behalf). A SaaS arrangement is also one type of software hosting arrangement. In this article we summarize financial reporting considerations and provide a framework for accounting for the related implementation costs.Ī SaaS arrangement, like those for platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS), is a cloud computing arrangement. Customers in software-as-a-service (SaaS) arrangements face complexity in determining the appropriate accounting under IFRS Standards for fees paid to the cloud service provider and related implementation costs. A recent agenda decision of the IFRS Interpretations Committee (IC) provides some clarity, and confirms differences with US GAAP.
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