---
title: "Contract cost"
description: "Contract cost — The incremental cost of obtaining a contract — typically a sales commission the entity would not have paid had the contract not been signed — recognized as an asset when expected to be recovered, then amortized as the related goods or services transfer. Expensing it when incurred is permitted if the amortization period would be one year or less."
canonical: "https://lopifi.com/glossary/contract-cost"
---

# Contract cost

> Contract cost — The incremental cost of obtaining a contract — typically a sales commission the entity would not have paid had the contract not been signed — recognized as an asset when expected to be recovered, then amortized as the related goods or services transfer. Expensing it when incurred is permitted if the amortization period would be one year or less.

Source: https://lopifi.com/glossary/contract-cost
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

---

**What is contract cost?** In accounting, contract cost means the incremental cost of obtaining a contract — typically a sales commission the entity would not have paid had the contract not been signed — recognized as an asset when expected to be recovered, then amortized as the related goods or services transfer. Expensing it when incurred is permitted if the amortization period would be one year or less.

## Also known as

- Capitalized commission

## Words this system refuses for it

- deferred commission expense
- prepaid commission

- **Category:** Revenue recognition
- **Specified in:** [Lexicon](https://lopifi.com/md/docs/domain/11-lexicon)
- **Related:** amortization, period, asset