How to Recognize Expenses for ASC 606

This article walks through the specific steps for how to recognize commissions as part of the expense record so you can stay ASC 606 compliant. ASC 606 guidelines set forth how you recognize the expenses associated with acquiring new customer contracts. The way you stay compliant is up to you, but QuotaPath provides the tools (Ledger) to create those recognition schedules.

Head to the Ledger page. Records show on the Ledger page once deals have been approved. If your approvals workflow is turned off, records appear here once the deal records are considered closed.

At the top of the Ledger page you have an Unrecognized tab and a Recognized tab. In either tab you can filter on specific owners, plans, and dates.

Each record is broken down by component, so you may see the same deal multiple times if it earns across different components.

There are two ways to recognize deals.

To recognize individual records, select specific deal records and click Recognize.

To recognize in bulk, scroll to the bottom and adjust the row count if needed (the default is 100 rows). Click Select All, then Recognize.

When you recognize, you can choose to recognize the records immediately or amortize them on a straight-line basis. If you amortize, you select a start date and a number of months.

For start date, you can choose a specific date, or if you have date fields mapped in your data source (for example a close date or contract start date), you can pick from those for a more dynamic schedule. Your date field in your mapping must be mapped to the Term Start Date field that appears natively in QuotaPath. In your component mapping(s), this is added as an additional field at the bottom of the second mapping screen, where you have fields like deal name, deal amount, deal date, etc.

For number of months, you can enter a specific number, or use a field that you have mapped to the native QuotaPath field called Term Length. This is done by adding term length as an additional field in your QuotaPath mapping and mapping your desired length field from your data source to it. The amortization will then follow the term length on each deal, dynamically.

You can also choose to pro-rate daily or monthly. Additionally, you can add benefits to the recognition before saving.

Once you hit Save, those records are considered recognized. They will no longer appear on the Unrecognized tab and will instead show on the Recognized tab.

On the Recognized tab, you can filter by owner and plan. When you are about to export, set the filters to "All" so nothing is excluded.

Note that the date filter on the Recognized tab is based on the recognition date, not the deal date. Once you set the filter to All and click Apply, the data updates to show the full range.

If you ever need to unrecognize records, select the deals on the Recognized tab and click Unrecognize. Those records will move back to the Unrecognized tab.

Click Export to export all of the data you currently see on the page. You can also export in a beginning-of-period and end-of-period format by clicking the dropdown arrow next to Export and choosing that option.