A $2M/yr reserved GPU commitment, posted line by line
The buyer's exact case: a $2M per year reserved GPU commitment over three years. At signing it is a prepaid asset, not a $6M expense. As capacity is drawn down it unwinds to cost of revenue, expense or a capitalized build. Every figure below is an illustrative example, not client data, to show the shape of the postings ASU 2018-15.
At signing
Assume the first year is prepaid at $2,000,000. Book the advance as prepaid compute; nothing hits the P&L yet because nothing is consumed.
As capacity is drawn down
Say 60% of the year's capacity serves production inference for a paid product and 40% funds an internal build in its development window. Release the prepaid accordingly.
US GAAP vs IFRS
Under US GAAP the capitalized 40% rests on ASC 350-40-25: funding committed and completion probable, plus, once ASU 2025-06 is adopted, no significant development uncertainty. Under IFRS the same portion is capitalized only if the IAS 38.57 development criteria are met IAS 38-57; otherwise it is expensed, so the split can differ between frameworks.
Posts to
Primary sources
- [S2] KPMG: Cloud computing implementation costs post ASU 2018-15 (US GAAP)
- [S1] KPMG: Hot Topic: ASC 350-40, customers' accounting for cloud computing arrangements after adopting ASU 2018-15 (updated September 2021) (US GAAP)
Ledger current as of 2026-10-23. A position and a citation, not accounting advice. See how we cite.