GASB 96 - SBITA Exclusions
GASB 96 excludes certain subscription-based IT arrangements (SBITAs) from its scope, such as contracts with perpetual or short-term durations, cancellable terms without permissions, arrangements lacking control (like some cloud storage), and those where the IT software component is insignificant compared to tangible assets, which are instead accounted for under GASB 87, and it does not include lessor accounting, which typically follows revenue recognition.
GASB 96 - SBITA Exclusions
- There is no such thing as Lessor accounting for GASB 96. If you believe you are a lessor, it's likely that you'll follow revenue recognition.
- Timing: Some contracts are excluded from GASB 96 due to timing. Examples include:
- Perpetual contracts (no period mentioned)
- Month-to-month or year-to-year agreements
- Contracts that include a cancellation clause a month or two into the subscription
- Cancellable terms: When both the government and the SBITA vendor can terminate without permissions, these are excluded from the SBITA term.
- Cloud-based storage: May not always be an SBITA. In this case, it’s important to pay attention to the control part of the SBITA definition.
- When the IT software component is insignificant compared to the costs of the tangible capital asset.
- Tangible assets: Likely accounted for under GASB 87.