Build Cedar's contract-cost schedule

Cedar pays a $4,800 commission only after it obtains a customer contract. The commission is expected to be recovered and relates to services transferred evenly over four annual periods. The amortization period is longer than the one-year-or-less limit for the practical expedient. One annual period has elapsed.

These facts support capitalization under ASC 340-40-25-1 through 25-4. The commission would not have been incurred without the contract. The stated four-year benefit period also exceeds the practical expedient's limit.

Straight-line amortization is $1,200 each year: $4,800 divided by four. After one year, cumulative amortization is $1,200 and the carrying amount before impairment is $3,600.

Assume assets tested under other Topics have already been tested. Cedar expects $15,000 of remaining consideration related to the services and $12,500 of remaining costs that have not been recognized as expenses. The supplied comparison amount is $2,500. Because the $3,600 carrying amount exceeds that amount, Cedar records a $1,100 impairment loss and reports a $2,500 ending carrying amount.

Annual amortization              $1,200
Carrying amount before impairment 3,600
Remaining consideration          15,000
Less remaining costs            (12,500)
Impairment comparison amount       2,500
Impairment loss                    1,100
Ending carrying amount            $2,500

The arithmetic does not prove the commission is incremental, recoverable, or related to four years of service. Those are supplied conclusions. Amortization follows the related transfer pattern under ASC 340-40-35-1. The impairment comparison follows the supplied facts and the sequence in 35-3.

Now complete the independent Harbor schedule.