The costs to set up cloud computing services can be significant. Updated guidance on accounting for cloud computing costs aims to reduce differences in accounting treatment for these arrangements. Updated guidance, which is effective in 2020 for calendar-year public companies and 2021 for all other entities, requires the same approach to the capitalization of implementation costs associated with the adoption of a cloud computing agreement and an on-premises software license. Also, certain costs associated with the application-development phase can be capitalized and amortized over the duration of the hosting arrangement. Contact us for more information.