15.4 Contract Costs

The table below summarizes the disclosure requirements discussed in this section, including the disclosures that a nonpublic entity may elect not to apply as well as required interim disclosures.

Category	Disclosure Requirements	Election Available to Nonpublic Entities	Interim Requirement (ASC 270)
Contract costs	Qualitative information about: Judgments the entity made in determining the amount of the costs incurred to obtain or fulfill a contract. The method the entity uses to determine the amortization for each reporting period.	Yes	No
		Yes	No
	Quantitative information about: The closing balances of assets recognized from the costs incurred to obtain or fulfill a contract, by main category of asset. The amount of amortization and any impairment losses recognized in the reporting period.	Yes	No
		Yes	No

Entities are required to disclose significant judgments related to contract costs to help users of financial statements understand the types of costs that the entity has recognized as assets and how those assets are subsequently amortized or impaired.

ASC 340-40

50-1 Consistent with the overall disclosure objective in paragraph 606-10-50-1 and the guidance in paragraphs 606-10-50-2 through 50-3, an entity shall provide the following disclosures of assets recognized from the costs to obtain or fulfill a contract with a customer in accordance with paragraphs 340-40-25-1 or 340-40-25-5.

50-2 An entity shall describe both of the following:

The judgments made in determining the amount of the costs incurred to obtain or fulfill a contract with a customer (in accordance with paragraph 340-40-25-1 or 340-40-25-5)
The method it uses to determine the amortization for each reporting period.

50-3 An entity shall disclose all of the following:

The closing balances of assets recognized from the costs incurred to obtain or fulfill a contract with a customer (in accordance with paragraph 340-40-25-1 or 340-40-25-5), by main category of asset (for example, costs to obtain contracts with customers, precontract costs, and setup costs)
The amount of amortization and any impairment losses recognized in the reporting period.

50-4 An entity, except for a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, or an employee benefit plan that files or furnishes financial statements with or to the Securities and Exchange Commission, may elect not to provide the disclosures in paragraphs 340-40-50-2 through 50-3.

The illustrative disclosure below shows how an entity may disclose the qualitative information required under ASC 340-40-50-1.

Confidential and Proprietary — for Use Solely by Authorized Personnel

This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.