Question

1.) Assume the Miami Dolphins pay its sales staff a 5% sales commission on each luxury suite license contract signed (such as by a corporate customer). Should this commission payment be reported as an asset or an expense by the Miami Dolphins and what FASB codification reference or references down to the paragraph does this scenario apply to?

Answer 1

At contract inception, Miami Dolphins concludes that the commission is an incremental cost of obtaining the contract because the cost would not have been incurred if the contract had not been obtained. Therefore, it should capitalise the commission when it is incurred.

The Financial Accounting Standards Board (FASB) released a new Accounting Standards update regarding revenue recognition. The new revenue recognition standard impacts how companies need to account for the associated commissions expenses. Under the standard, companies must track commission expenses at a mone 1 F level and produce an audit trail that demonstrates: The term of the contract and how any given commission in the customer relationship benefits your company as the selle The right amount of time over which to ammortize the expense he impact of all commissions pa