Thanks for the good videos. How do you treat domain names that are leased annually, intended for resale, not development into functioning websites? The client resells the right to lease the domains to a 3rd party (rangin from $100-10,000 each), and if they are not sold in the one year lease time frame, they are either "dropped" (declined to renew) or leased again. (No individual owns domains, they all belong to the respective registrars, and people/corporations can lease the right to use the domain, annually.) My client has been claiming the annual cost of the leased domains as a "direct cost," and when a domain resells, have declared the sale amount as income, and not deducting any cost as inventory (having previously claimed all costs as a a driect expense). Have they been handling this correctly? Its very hard to find guidance on domain name expense/income practices.
Thank you so much for this video. I was learning about this topic using another CPA review course, but I had a hard time trying to remember when to expense, capitalize, and amortize. Your diagram really helped in that I was visually able to see the treatment of costs at every stage of development.
You are welcome! This is how we try to teach all of the topics in the CPA exam! Much easier to "see" the information, right? Have you signed up for a free trial yet?
what about Inventory & COGS in Scenario 1
Thanks for the good videos. How do you treat domain names that are leased annually, intended for resale, not development into functioning websites? The client resells the right to lease the domains to a 3rd party (rangin from $100-10,000 each), and if they are not sold in the one year lease time frame, they are either "dropped" (declined to renew) or leased again. (No individual owns domains, they all belong to the respective registrars, and people/corporations can lease the right to use the domain, annually.) My client has been claiming the annual cost of the leased domains as a "direct cost," and when a domain resells, have declared the sale amount as income, and not deducting any cost as inventory (having previously claimed all costs as a a driect expense). Have they been handling this correctly? Its very hard to find guidance on domain name expense/income practices.
Thank you so much for this video. I was learning about this topic using another CPA review course, but I had a hard time trying to remember when to expense, capitalize, and amortize. Your diagram really helped in that I was visually able to see the treatment of costs at every stage of development.
You are welcome! This is how we try to teach all of the topics in the CPA exam! Much easier to "see" the information, right? Have you signed up for a free trial yet?