The subscription asset represents the value of the government’s right to use the software over the subscription term. It’s initially measured as the value of the related subscription liability, plus certain capitalizable costs. These can include payments made before the subscription term begins (excluding implementation costs) and any direct costs necessary to place the subscription asset into service.
Once recorded, the subscription asset is amortized (expensed) over the subscription term, usually on a straight-line basis, unless another method better reflects the usage pattern of the software.
What's Important Here?
The subscription asset under GASB 96 reflects the economic benefit a government receives from its right to use a subscription-based software product. It’s recorded at the start of the subscription term, based primarily on the value of the subscription liability, plus eligible upfront costs. This asset is amortized over time, representing the gradual consumption of the software’s value.
Accurately calculating and maintaining this asset is essential for complying with GASB 96 and ensuring that financial statements reflect the full impact of subscription-based software arrangements.
