How to Record Deferred Acquisition Costs
Recording costs incurred during the due diligence phase of a property acquisition before the transaction is finalized.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Deferred Acquisition Costs | Asset | 25,000.00 | - |
| Cash | Asset | - | 25,000.00 |
💡 Accountant's Note
Pre-acquisition costs such as environmental reports and legal due diligence are capitalized as deferred assets until the acquisition closes, at which point they are reclassified to the property basis.
Practitioner & Systems Framework
💻 ERP Architecture
Use a clearing project code in the fixed asset module to track costs per potential property.
⚠️ Audit Flags
Failed acquisitions where costs are not immediately expensed to the income statement.
📄 Required Documentation
Invoices for due diligence services and purchase and sale agreements (PSA).
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Discussion & Community Questions
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