DISCUSSION ASPECTS OF ACCOUNTING FOR INTANGIBLE ASSETS RELATED TO THE USE OF CLOUD TECHNOLOGIES

Abstract

The relevance of this research is due to the fact that, in the current economic climate, the vast majority of businesses use a variety of cloud services under “Software as a Service” contracts. The aim of the study presented in this article is to develop a model for the accounting treatment of intangible assets when using cloud technologies, based on a review of current approaches to the recognition of intangible assets, including those proposed as part of the IASB’s discussions on the draft amendments to IAS 38 “Intangible Assets”. The main research findings obtained in the study concern the justification for broadening the understanding of intangible assets as an accounting item under longterm SaaS contracts, where access to the cloud and the associated integration rights are regarded as a single resource that may be accounted for as a ‘right-of-use’ by analogy with a lease under the IFRS 16 approach. It has been concluded that, firstly, contracts for the use of cloud technologies have specific characteristics in terms of their accounting treatment due to the particular nature of the transfer of access rights to software or a cloud resource, which, under certain conditions, may be recognised as an intangible asset; secondly, the current approaches to the recognition of intangible assets under IAS 38, as well as the interpretations issued by the IFRS Interpretations Committee, are conservative and do not take into account the practical aspects of the use of cloud services, which are constantly expaning. This calls for an update to the approaches to interpreting the control criterion in the context of how to understand restrictions on other parties’ access to the economic benefits of an asset. This article proposes a model for the accounting treatment of contracts involving the use of cloud technologies, presented as an algorithm, which outlines approaches to their recognition as either intangible assets or operating expenses, taking into account the specific features of the transfer of access rights and the nature of their use. This model represents a step forward in the development of the conceptual approach of the IASB’s Project to update IAS 38. Prospects for further research relate to justifying the need for amendments to the current IAS 38 and NAS 8 with regard to clarifying the concept of intangible assets as a whole and the wording of the criteria for their recognition