---
title: Costs to Obtain a Contract
description: Incremental costs of obtaining a contract, such as sales commissions, that the entity expects to recover and must capitalize. These costs are then amo...
sidebar_position: 29
tags: ['asc-606', 'Contracts']
---

# Costs to Obtain a Contract

## The ASC 606 Standard

Incremental costs of obtaining a contract, such as sales commissions, that the entity expects to recover and must capitalize. These costs are then amortized over the expected period of benefit.

## The Real-World Scenario

You pay a sales rep a $5,000 commission for closing a 3-year enterprise deal; that $5,000 must be spread across the 3 years.

## The Spreadsheet Breaking Point

Tying individual sales rep commission payouts to the specific amortization schedule of the underlying customer contract breaks manual spreadsheets.

## The Hidden Cost to the Bottom Line

Expensing massive commission payouts upfront instead of capitalizing them violently destroys your short-term profitability metrics.

## How GAAPX Eliminates the Risk

Automatically links commission payout data to the revenue contract, capitalizing and amortizing the expense in perfect lockstep with the revenue.