ASC 606 Recap - Capitalization of Sales Commission

You may have heard about the upcoming impacts of the new FASB accounting regulation ASC 606, scheduled to take effect for all year-end financial reporting regarding the fiscal year 2020. Company accountants are working hard at applying the ASC 606 standard, but the new guidelines’ most significant effect on sales organizations is the ASC 606, Subtopic 340-40.

This compliance substantially re-writes the accounting rules for handling sales organizations’ most considerable expense: commission. There has been a lot of attention on the ASC 606 new revenue recognition standard for contracts with customers; however, Subtopic, ASC 340-40, stipulates how companies should account for and recognize the costs associated with those contracts, including the capitalization of sales commissions ...

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