App, Cloud Services Gain Clarity With Software Accounting Revamp

Companies making software to use in-house are poised for fresh guidance on how to account for the costs to develop apps and tools including cloud-based services.

The Financial Accounting Standards Board on Tuesday released a proposal that aims to modernize financial reporting for software that is developed or acquired for internal use like payroll systems or websites. The plan would also increase transparency around development costs.

“Stakeholders expressed the desire for updated accounting guidance that better aligns with how software is developed,” board Chair Rich Jones said in a statement.

The draft changes aim to provide neutral guidance that could ...