IFRIC March 2021 Agenda Decision on Cloud Configuration Costs
The IFRIC March 2021 agenda decision addresses configuration and customisation costs in a cloud computing arrangement under IFRS. Where the customer does not control the underlying software, the arrangement is a service, and configuration and customisation costs are generally expensed as the service is received unless a separate intangible asset the customer controls is created IFRIC 2021. This is the IFRS counterpart to the US ASU 2018-15 CCA analysis.
What it concluded
In a cloud computing arrangement the customer often does not obtain control of the supplier's software, so no software intangible is recognized under IAS 38. The March 2021 decision then addresses the configuration and customisation costs the customer incurs to make that hosted software usable: those costs are generally recognized as expense as the customer receives the configuration or customisation services IFRIC 2021.
The narrow exception
Configuration or customisation cost is capitalized only if it creates a resource the customer controls, for example separately identifiable code the customer owns, and that resource meets the IAS 38 asset definition and recognition criteria IAS 38-57. Otherwise it is expensed, either upfront or over the period the service is received where the supplier performs the work.
How it differs from ASU 2018-15
US GAAP under ASU 2018-15 permits capitalizing implementation costs of a service-contract CCA using the internal-use software model. The IFRIC decision is generally more restrictive: unless a controlled intangible is created, configuration and customisation is expensed. The same rented-model integration spend can therefore book differently under the two frameworks.
Questions this posts answers
- Can I capitalize configuration of a hosted AI platform under IFRS?
- Generally no. Unless the work creates a separately identifiable intangible you control, configuration and customisation costs are expensed as the service is received.
Instruments and mechanics this standard decides
Primary sources
- [S6] IFRS Interpretations Committee: Configuration or customisation costs in a cloud computing arrangement (IAS 38) agenda decision, March 2021 (IFRS)
- [S5] IFRS Foundation: IAS 38 Intangible Assets (IFRS)
Ledger current as of 2026-07-24. A position and a citation, not accounting advice. See how we cite.