Is the deferral of contract acquisition and origination costs in the transactions addressed in SAB 101 required or is it merely permitted?
Such deferral is permitted. In recognition of diversity in practice in accounting for contract acquisition and origination costs, the Accounting Standards Executive Committee (AcSEC) has added a project on the subject to its agenda. Until new guidance is adopted, the staff would not object to either expensing or capitalizing incremental direct costs of contract acquisition and origination, except in situations where the accounting literature specifically requires one treatment or the other. The accounting policy for these costs should be disclosed and applied consistently.
