Subject: Re:My Client has two related ASC 606 Questions
Submitted on 02-21-19 8:22 pm. Message:
a) Cost of revenue rules don't change under ASC 606
b) ASC 606 reinforces the existing rules under ASC 340 - costs that relate to a specific revenue contract with a customer are capitalized - most commonly commissions, but could be other things such as legal fees that are only paid if a contract with a customer is signed. Also costs to fulfill a specific contract, such as set up costs with a new customer. There is a practical expedient to not capitalize any costs if the amortization period would be one year or less.