What it is
Sales commissions on a signed contract are incremental costs of obtaining it, and ASC 340-40 requires them to be capitalized and amortized unless the amortization period is one year or less and the entity elects the practical expedient. The asset is a standard audit area for software and other subscription businesses.
This schedule takes the commission, the date, the contract term and the expected benefit period for each contract. It sets the amortization period from the renewal commission answer, applies the practical expedient when you elect it, calculates amortization and the net balance at two period ends, and rolls the asset forward to the ledger.
When to use it
- At each close for the contract cost asset and amortization expense.
- When the audit team tests the benefit period and the renewal commission policy.
- When adopting or changing the practical expedient election.
What’s inside
- Commissions tab: 50 contracts with amortization period, capitalized and expensed amounts, balances at two dates
- Opening, additions and amortization by contract, with flags on benefit period inconsistencies
- Rollforward tab with impairment input and a tie to the ledger
- Instructions on incremental costs, the renewal commission test and the expedient
Standard cited
This template follows ASC 340-40. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Which costs qualify for capitalization?
Incremental costs of obtaining a contract: costs that would not have been incurred had the contract not been obtained, such as sales commissions. Costs incurred regardless of the outcome, such as base salary and general sales overhead, are expensed.
How long is the amortization period?
It is the period over which the asset relates to the goods or services transferred. If a renewal commission is commensurate with the initial commission, the initial commission is amortized over the initial term. If not, it is amortized over the expected benefit period, which can include renewals.
What does the practical expedient do?
It lets the entity expense the cost when incurred if the amortization period would be one year or less. The election applies consistently to similar contracts. Set it at the top of the Commissions tab.
Related templates
- SaaS Contract SSP Allocation and Revenue Waterfall
- Audit Program: SaaS and Software Company
- ASC 606 Revenue Recognition Schedule
- Prepaid Expense Amortization Schedule (Excel)
Last updated 11/05/2026. All free templates.