Capitalizing Software & Cloud Costs Self Study Webinar

To help CPAs and finance professionals understand how to properly and effectively capitalize or expense internal-use software costs, cloud costs, and technology investments. The self-study webinar will also focus on practical issues and areas of judgment in applying the accounting guidance. 

DETAILED LEARNING OBJECTIVES

• Explain the primary purpose of ASU 2025-06

• Identify the changes made to the internal-use software guidance by ASU 2025-06

• Determine when capitalization of internal-use software costs should begin

• Identify circumstances indicating that the probable-to-complete recognition threshold has not been met

• Distinguish between capitalizable and expensed internal-use software costs

• Explain why a SaaS entity developing novel or unproven software may capitalize relatively few development costs

• Determine how to account for a cloud computing arrangement that includes a license to internal-use software

• Identify the guidance used to account for implementation costs of a cloud computing arrangement that is a service contract

• Identify costs that may qualify as implementation costs of a cloud computing arrangement

• Evaluate the capitalization and allocation of large language model fees incurred in developing softwareExplain the primary purpose of ASU 2025-06

• Identify the changes made to the internal-use software guidance by ASU 2025-06

• Determine when capitalization of internal-use software costs should begin

• Identify circumstances indicating that the probable-to-complete recognition threshold has not been met

• Distinguish between capitalizable and expensed internal-use software costs

• Explain why a SaaS entity developing novel or unproven software may capitalize relatively few development costs

• Determine how to account for a cloud computing arrangement that includes a license to internal-use software

• Identify the guidance used to account for implementation costs of a cloud computing arrangement that is a service contract

• Identify costs that may qualify as implementation costs of a cloud computing arrangement

• Evaluate the capitalization and allocation of large language model fees incurred in developing software

• Accounting for internal-use software costs – ASC 350-40
  – FASB Update – ASU 2025-06
  – Capitalization criteria and capitalizable costs
  – Significant development uncertainty 
  – Subsequent accounting 
  – Management controls over determining costs to capitalize
  – AI costs to develop software
• Accounting for cloud costs – ASC 350-40
  – Hosting or Cloud Computing Arrangement (CCA)
  – Accounting for Cloud Computing Arrangement (CCA)
  – Implementation costs of CCA
  – Effect of ASU 2025-06 on accounting for implementation costs of CCA 
• Accounting considerations for technology investments
  – Use of Large Language Models (LLMs)
  – Unit of account in a software project (module vs. project)
  – Capitalizing fees paid for LLMs
  – Tracking and allocating LLM costs on multiple software development projects ongoing simultaneously

Bobbi Gwinn, Professional Practice Director, Accounting, BDO

Bobbi is a CPA in Texas and has about 15 years of experience in various technical accounting roles. In her current role at BDO, she consults with audit teams on various topics including revenue, leases and financial instruments and leads thought leadership activities. 

Prior to joining BDO, Bobbi most recently served at the FASB where she led multiple FASB/EITF projects on topics including leases and revenue resulting in the issuance of ASUs and staff publications. Prior to joining the FASB, she provided accounting advisory services for about 8 years at Big 4 firms which included assisting global clients across multiple sectors with technical accounting questions under US GAAP and IFRS as well as SEC reporting matters related to acquisitions, divestitures and equity offerings.