Capitalizing Commissions Paid to Employees
As per ASC606 guidance, customer capitalizes Commission paid through Payroll to Employees on Subscription Contracts and amortizes over a period of 5 years. Customer also needs to segregate the Asset into Short Term Asset (12 Month) and Long Term Asset
Commissions are paid to Employees for Subscription Contracts through payroll. The Entry is sent to General Ledger.
Customer amortizes the Commission paid in 60 months.
Customer now Manually creates 2 Assets in the Asset module (of the legacy system) to amortize the Commission paid.
a. 1 for a Short Term Asset with 12 Month Amortization and DPIS on 49th Month
b. 1 Long Term Asset for 48 month with DPIS in current month.