BC297 The boards decided that an entity should recognise as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. The boards defined the incremental costs of obtaining a contract as the costs that an entity incurs in its efforts to obtain a contract that would not have been incurred if the contract had not been obtained. The boards acknowledged that, in some cases, an entity's efforts to recognise an asset from incremental acquisition costs might exceed the financial reporting benefits. Consequently, as a practical expedient, the boards decided to allow an entity to recognise those costs as expenses when incurred for contracts in which the amortisation period for the asset that the entity otherwise would have recognised is one year or less.
BC298 The boards considered requiring an entity to recognise all of the costs of obtaining a contract as expenses when those costs are incurred. The boards observed that
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