How to Book Prepaid Expense Amortization Journal Entry
Prepaid expenses are costs that have been paid in advance for goods or services that will be received in the future. Prepaid expenses are recorded as assets on the balance sheet until they are used or consumed. When the prepaid expense is used or consumed, it is then recorded as an expense on the income statement.
How to Book Capitalization and Amortization for Costs to Obtain a Contract Journal Entry
Revenue recognition under ASC 606 requires the capitalization of costs to complete a contract. This is most often but is not limited to sales commissions. The capitalized costs are amortized over the expected customer life (the contract length plus reasonably anticipated renewals).
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