Intuit Financial Community: Deduction of buying group fees - Intuit Financial Community

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Deduction of buying group fees

#1 User is offline   mackayr Icon

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Posted 26 March 2011 - 09:32 PM

How can a business deduct a one-time fee relating to membership in a buying group which provides for significant cost reductions?

On one hand, the fee clearly relates to the cost of goods to be resold and should be deducted as part of the cost of goods sold.

On the other hand, the fee appears to be an intangible asset that has an indefinite life (since the savings will continue to be enjoyed in perpetuity).

Thoughts?
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#2 User is offline   Tim Parris Icon

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Posted 26 March 2011 - 11:23 PM

What would be the accounting treatment of this transaction under GAAP?
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