Costs to Fulfill a Contract
Costs to Fulfill a Contract
The ASC 606 Standard
Direct costs incurred to satisfy a performance obligation that generate resources used in the future, which must be capitalized. They align the recognition of massive upfront expenses with the timing of the associated revenue.
The Real-World Scenario
You spend $40,000 on engineering labor to build a custom software integration for a client before their multi-year subscription officially begins.
The Spreadsheet Breaking Point
Manually pulling engineer timesheets to calculate the direct labor cost of custom software setups is an excruciating month-end task.
The Hidden Cost to the Bottom Line
Failing to capitalize fulfillment costs means you take a massive, unnecessary hit to your gross margins before revenue even begins.
How GAAPX Eliminates the Risk
Integrates with project management tools to automatically track labor inputs, capitalize the costs, and amortize them against project revenue.