GASB 96 - Subsequent Measurement
GASB 96 requires that after initially recording Subscription Assets and Liabilities, the asset be amortized systematically over the shorter of the subscription term or useful life of the IT asset starting at subscription commencement, with monthly interest recorded on the remaining liability, adjustments made for short- and long-term liabilities, and any modifications or early terminations reflected by adjusting carrying values and recognizing gains or losses accordingly.
After initial recording of the Subscription Asset and Subscription Liability, the asset should be amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying IT Asset.
- Amortization should begin at the commencement of the subscription term.
- This amortization is recorded as an outflow of resources.
- Record interest on the remaining liability:
- This is calculated as the discount rate divided by 12 and multiplied by the remaining liability. This is recorded monthly and reduced when payments are made.
- Record short and long-term liability adjustments to account for the liability due in the next 12 months.
Modifications & Terminations
- Includes amendments and partial terminations.
- This includes changes that allow for additional access to underlying assets or increases in payments. Also includes changes to the index or rate on which variable payments depend.
- If an SBITA terminates early, reduce the carrying value of the Subscription Asset and Subscription Liability and recognize a gain or loss for the difference.