Advanced Cost Amortization
When you check the accounting preference Enable Advanced Cost Amortization, you can accrue and amortize eligible sales costs associated with a contract. You record the eligible sales costs on the revenue arrangement and revenue elements in the base currency. When you save the revenue arrangement, a deferred cost journal entry is automatically created to accrue the costs. The amortization of these costs is tracked on the revenue recognition plan in a subtab called Cost Amortization Plan. A deferred expense rollforward report is available. For information, see Deferred Expense Rollforward Report.
Three types of eligible sales costs can be accrued and amortized. You must designate expense and deferred expense accounts for each type of cost.
Cost Type |
Location of Account Settings |
Where to Record Costs |
---|---|---|
Direct contract acquisition costs including all direct expenses incurred during the sales process for a revenue contract obligation, such as sales commissions and marketing expenses |
Contract Acquisition Expense Account, Contract Acquisition Expense Source Account, and Contract Acquisition Deferred Expense Account fields on the revenue arrangement header. You can set the defaults for these accounts on the Accounting Preferences page (Setup > Accounting > Accounting Preferences) |
Contract Acquisition Cost Amount (Base Currency) field on the revenue arrangement header |
Item-specific resale expenses for items that are not inventory items |
Deferred Expense Account and Expense Account in the Accounting subtab of the item record |
Item Resale Cost Amount (Base Currency) field on the revenue element |
Implementation labor expense |
Labor Expense Account and Labor Deferred Expense Account fields on the revenue element |
Item Labor Cost Amount (Base Currency) field on the revenue element |
For detailed information about the components of advanced cost amortization, see the following topics:
Related Topics
- Revenue Arrangement Management
- Updating Revenue Arrangements
- Viewing Revenue Arrangements
- Editing Revenue Arrangements
- Combination and Modification of Performance Obligations
- Revenue Element Field Reference
- Searching for Revenue Elements with Missing Dates
- Creating Revenue Elements from Journal Entries
- Deferring Revenue for Billable Costs
- Deleting Revenue Arrangements
- Deleting Revenue Elements