Capitalized implementation costs for a CCA should be assessed for impairment in accordance with the guidance in ASC 360-10-35 on impairment of long-lived assets—that is, at the asset group level. Further, impairment testing is performed when a triggering event has been identified for the asset group or for an individual asset included in the broader asset group (if significant). ASC 360‑10‑35‑21 provides examples of when to test long-lived assets for recoverability and impairment. For further discussion regarding long-lived asset impairment triggers, see PPE 5.2.3. ASC 350-40-35-11 includes examples of triggering events for capitalized implementation costs for a CCA:

When a reporting entity identifies an impairment indicator for capitalized implementation costs for a CCA included in a broader asset group, the reporting entity should consider the significance of the asset in relation to the overall asset group and the facts and circumstances surrounding the impairment indicator to determine whether impairment testing at the asset group level may be required. See PPE 5.2.3.1. These impairment indicators are examples and should not be considered the only potential indicators that an asset or an asset group may not be recoverable.

When a CCA is terminated early, the capitalized implementation costs should be treated similar to an asset being disposed of by abandonment. That is, the implementation costs should be expensed when the related cloud-based service ceases to be used.

As described in ASC 350-40-35-12, “implementation costs related to each module or component of a hosting arrangement that is a service contract shall be evaluated separately as to when it ceases to be used.” Therefore, in the case of a partial termination of the arrangement, the reporting entity should impair the capitalized implementation costs related to the component(s) for which the reporting entity’s right to access the hosted software was terminated.