Do the costs to fulfill the contract have all the following characteristics?

  • Relate directly to a contract (or a specific anticipated contract),
  • Generate or enhance resources of the entity that will be used in satisfying performance obligations in the future,
  • Are expected to be recovered.

If the fulfillment costs are not within the scope of other literature, and all the indicated criteria are met, then they maybe capitalized under ASC 340, if they are recoverable. Recoverability and the potential applicability of a practical expedient will be analyzed separately. For purposes of this question, simply indicate whether the criteria are met.


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