Running head: EXPOSURE DRAFT 1EXPOSURE DRAFTExposure Draft: Proposed Accounting Standards Update, Intangibles-Goodwill and Other-Internal-UseSoftware (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in aCloud Computing Arrangement That Is a Service Contract; Disclosures for ImplementationCosts Incurred for Internal Use Software and Cloud Computing Arrangements.IntroductionThe aim of this exposure draft is to help institutions evaluate the accounting for fees paidby a customer in a cloud computing arrangement by providing guidance for determining whenthe arrangement includes a software license. If a cloud computing includes a license to internal-use software license, then the software license is accounted for by the customer. This basicallymeans that an intangible asset is recognized for the software license. Also, the extent that thepayments attributable to the software license are made over time, a liability is recognized. If acloud computing arrangement does not include a software license, then the entity should accountfor the arrangement as a service contract. This generally means that the fees associated with thehosting element (service) of the arrangement are expensed as incurred. (Dubos, 2017)Is it introduced to the ‘public Interest?’Yes, it is. The amendment aligns the requirements for capitalizing implementation costsobtained in a hosting arrangement that is a service contract with the requirements for capitalizingimplementation costs incurred to develop or obtain internal-use software. Thus, a customer isaware of the costs needed for their service contract. Also, the amendment requires a customer tofollow the guidance in Subtopic 350-40 on internal-use software to know which costs to employthe service contract and which costs will be expensed. Thus a customer has a guide on internal-

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