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I’m looking for an opinion on the following scenario. It happened at where I work and I was curious about it.
We paid recruitment fees for a new business executive that will start next fiscal year. I think the recruitment fees should be recognized in expense now. The reason is because the agency performed their part of the agreement (finding the candidate) and the school agreed to employ him. The agency invoiced us and we paid. My managers told us to defer the expense to prepaid and amortize beginning next fiscal year. I think it’s because this new person isn’t starting until next fiscal year and it’s arguably an expense for next year. I understand that “expenses follow the revenues” so it sounds like that’s why we are deferring the expense until next year.
What are your thoughts?
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