USA Sales Commission Question

[Dab]

Hi,

I was wondering if anyone was a little more familiar with Sales Commissions and the Codification.

A client is receiving sales commissions for their role in a transaction and they are currently deferring that revenue. I'm not sure that is correct as I believe conservatism applies, however I'm struggling to find proof of that in the Cod.

Can anyone help steer me in the right direction?

Thanks

 

[kirby]

The question is "Is the earning process complete?" If so, the revenue is to be recognized. If not, then deferred until complete. You will not find a specific FASB statement on this. It is part of the basic principles (revenue recognition principle). On your part, make sure you have a complete understanding of the transaction. Then you can ask why they believe they can defer the revenue.