Observations from the front lines provides PwC's insight on current economic issues, our perspective regarding the business impacts, and actions we have seen companies taking to effectively address those issues.
Cloud computing enables businesses to efficiently and cost-effectively use shared IT infrastructure and applications on an as-needed, pay-as-you-go basis. This technology model, in essence, transfers the responsibility for ownership, management, and maintenance of equipment and IT operations to an external provider. The benefits can be substantial, but companies should consider possible implications to reporting and balance sheet metrics.
Currently, clear guidance is lacking on the issue of whether service agreements include a software license for customers and, if so, whether those licenses can be accounted for separately. The Financial Accounting Standards Board (FASB) recently issued proposed accounting guidance that, when final, will address this issue.