Reserved GPU commitment
A multi-year reserved GPU commitment is a signed commitment, not consumption. The amount paid or payable in advance is a prepaid asset, not an expense and not a capitalized intangible on day one. It unwinds as capacity is drawn down: to cost of revenue when it serves a paid product, to expense for experimentation, or to a software asset for capacity used in an internal-use build ASU 2018-15.
Commitment vs consumption
The mistake is treating the whole committed amount as the period's OpEx. A reserved commitment gives you the right to future capacity; you have consumed nothing at signing. Book the advance payment as prepaid compute and release it as you actually draw down the reserved capacity. The commitment-vs-consumption axis is the single most important read on this instrument.
Where the drawn-down capacity lands
- Capacity consumed serving a live paid product: cost of revenue.
- Capacity consumed building an internal-use asset in the development window: capitalized ASC 350-40-25.
- Capacity consumed on experimentation: expensed ASC 350-40-25.
Term length drives the schedule
The commitment term sets the maximum period over which the prepaid unwinds: a three-year commitment unwinds over at most three years. Software built with the drawn-down capacity is a separate asset, amortized over its own useful life.
Questions this posts answers
- Is a reserved GPU commitment CapEx or OpEx?
- Neither at signing. It is a prepaid asset that unwinds as capacity is consumed, landing in COGS, expense or a capitalized asset depending on what the capacity is used for.
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.