GASB 96 SBITA Accounting Example

GASB 96 applies to Subscription-based IT Arrangements (SBITAs) Let’s take an example of a payroll software subscription by the state government department that is active for two years at $20,000, beginning on January 1, 2023, and ending on December 31, 2024, paid annually at the beginning of the year. The implementation of the software will incur several costs:

• $500 is the estimated preliminary cost which will be consumed during the process of finding the vendor and will add no value to the software subscription.

• $3,000 is the estimated initial implementation cost which will enhance the value of the software as the software will include customizations requested by the state government department

• $450 is the estimated operational cost which will be consumed in the maintenance of the software and will not add value to the existing software functionality.

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