Capitalizing Commissions Paid to Employees

Summary:

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

Content (required):

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.