Capitalizing credit card processing fees to deferred COGS

Sans any GAAP pronouncements (I have not looked), wouldn't the matching principle be your guide?

Also, should you not separate these transactions into their components when applying said principle (i.e., sale & cash)?

I appreciate the response but that's not really helpful. Not sure what your second sentence is getting at - we do accrual accounting, cash is irrelevant.

I believe the relevant guidance is ASC 340-40 regarding Deferred Cost of Revenues which says: "Entity shall recognize as an asset the incremental costs of obtaining a contract with a customer if entity expects to recover those costs. It also says: "the incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contracted had not been obtained".

However, all the standard gives as examples are sales commissions and the credit card processing fees don't seem to me to fit that definition so I'm wondering how other companies treat their credit card processing fees.

Anyone else have some insight?

Thanks.

Quincy
If the sale and payment are part of the same transaction/occur together, then I would regard the cc fee as a cost of sale. I would separate it in COGS from the pure cost of the product or service delivered, and recognize it at the same rate as the revenue-ie using a Deferred COGS to track/release the costs over the contract period.

I think it is common sense to do that.It's critical for management tracking of margins.

I would also track gross billings and card charges (ie ignore deferral) to monitor the cc expense % of sales.