Revenue recognition for cloud-based computing arrangements

Citation

(2011), "Revenue recognition for cloud-based computing arrangements", Strategic Direction, Vol. 27 No. 5. https://doi.org/10.1108/sd.2011.05627ead.004

Revenue recognition for cloud-based computing arrangements

Article Type: Abstracts From: Strategic Direction, Volume 27, Issue 5

Rashty J. and O’Shaughnessy J. The CPA Journal, November 2010, Vol. 80 No. 11, Start page: 32, No. of pages: 4

Discusses the revenue recognition issues regarding cloud-based computing arrangements, including software as a service (SaaS) systems. Examines existing cloud computing practices, where cloud computing allows IT-related facilities to be provided “as a service” via the Internet/Worldwide Web in such way that the user is not aware of the supporting technology infrastructure, recent Financial Accounting Standards Board (FASB) guidance, and the latest developments. Pays particular attention to the accounting issues arising from the use of cloud computing, and the state of revenue recognition guidance before and after Accounting Standard Update (ASU) 2009-13. Reports that, in June 2010, FASB and the International Accounting Standards Board (IASB) jointly issued an exposure draft to create a single, global revenue recognition model where the proposed model includes the following steps for revenue recognition: identification of the customer’s contract; identification of the separate performance obligations in the contract; determining the transaction price; allocating the transaction price to the separate performance obligations; and recognition of revenue when each performance obligation is satisfied. Provides several examples to illustrate the differences between pronouncements. Article type: Viewpoint ISSN: 0732-8435 Reference: 40AA756

Keywords: Accounting, Accounting standards, Communications technology, Financial management, Internet, Management accounting, United States of America