Contract acquisition costs (capitalised brokerage)
Under a revenue policy that capitalises the costs of obtaining a contract, an approved channel-partner commission is parked in Contract Acquisition Costs instead of brokerage expense and released to expense by each revenue run in step with the booking's revenue; possession expected within the practical-expedient months expenses it at once.
Contract acquisition costs (capitalised brokerage)
Brokerage paid to a channel partner is a cost of winning the sale, not of building the flat. When the promoter's books defer sale revenue until the unit is delivered, the matching brokerage is deferred too: it is held as an asset, Contract Acquisition Costs, and charged to expense only as the booking's revenue is recognised. NirmaanOne calls this capitalising the brokerage. When possession is close, the standard's practical expedient lets you expense it straight away instead.
How it works in NirmaanOne
Where it is set
On the promoter's books, tab Revenue policy (the Approve permission on Revenue Recognition to change it), section Brokerage and cancellation:
- Brokerage and other costs of obtaining a contract: Capitalise (the default) or Expense. The hint reads "Capitalise: held as an asset and released with the booking's revenue. Expense: charged when approved."
- Expense directly when possession is within (months): the practical expedient, 12 by default, 0 to 120; "Practical expedient: 0 turns it off." It is disabled when the setting above is Expense.
Like every revenue policy setting it is effective-dated: the policy in force on the commission's Approval date decides.
The test at approval
When a commission is approved on Commission, the brokerage is capitalised only when all three hold:
- the policy in force on the approval date defers revenue at all, that is its Framework is not Revenue on billing;
- Brokerage and other costs of obtaining a contract is Capitalise;
- the practical expedient does not apply. It applies when the months are above 0, the project has an Expected possession date, and the whole calendar months from the approval date to that date (a part month counts as a whole one) are not more than the setting. A project with no expected possession date never triggers it, so its brokerage is always capitalised.
When it is capitalised, the journal posted on approval debits Contract Acquisition Costs (1270) for the gross brokerage, with the narration "Brokerage (contract acquisition cost)", instead of the ledger mapped to the Channel Partner Commission component (seeded Brokerage Expense, 5200). The GST input, the partner's bill and the TDS legs are exactly as for an ordinary commission (see Channel partner commissions). The commission is marked as capitalised, and that mark is what later runs look for.
The release by revenue runs
Every revenue run gives each booking a line. On that line the capitalised total is the sum of the gross of the booking's capitalised commissions that are not cancelled, and:
- released to date = capitalised total × the booking's revenue progress ÷ 100, rounded half-up to the paise;
- released this run = released to date − released to date on the booking's line in the last posted run;
- a cancelled booking is taken to 100% at once, so whatever is still parked is written off in the run after the cancellation. A commission clawed back in the cancellation drops out instead: its approval journal is reversed, and the next run takes back whatever earlier runs had released.
Under Point in time the progress is 0% until control passes and then 100%, so the whole amount is released in the run that recognises the sale. Under an over-time method it follows the stage or cost progress. Posting the run creates one journal per project called "brokerage released": Dr the commission's mapped expense ledger (else Brokerage Expense) / Cr Contract Acquisition Costs. The run page shows the amount in the Brokerage column of each line and as Brokerage released in the Summary; the runs list prints "brokerage <amount>" under the run's revenue.
Why
Ind AS 115 and the ICAI Guidance Note both match the cost of obtaining a contract with the revenue of that contract. Expensing a lakh of brokerage in the month of booking, two years before the flat is handed over and its revenue recognised, understates that month's profit and overstates the month of handover. Parking it in 1270 keeps the margin of each period honest. The practical expedient exists because deferring for a few months is not worth the bookkeeping.
Example
Sea Breeze Developers LLP follows Ind AS 115, Point in time, brokerage Capitalise, expedient 12 months. Booking BK-2026-27-00007 (unit A-1203, Sea Breeze Residency) came through Skyline Realty Advisors; the accrued gross brokerage is ₹2,73,893.66. The project's Expected possession is 31 December 2028.
- The Finance Lead approves the commission on 10 October 2026. Whole months from 10 October 2026 to 31 December 2028: 26 full months plus one for the part month (the 31st is after the 10th) = 27, more than 12, so the expedient does not apply. The approval journal debits Contract Acquisition Costs ₹2,73,893.66 ("Brokerage (contract acquisition cost)"), then the GST input, the partner's bill COMM-BK-2026-27-00007 and TDS Payable as usual.
- Every monthly run up to handover shows the booking with Progress 0% ("Waiting for: possession handed over") and nothing in the Brokerage column. The Contract balances report carries ₹2,73,893.66 in the Contract acquisition costs card as Capitalised.
- The unit is handed over on 20 January 2029. The run to 31 January 2029 recognises the sale at 100%: released to date = ₹2,73,893.66 × 100 ÷ 100 = ₹2,73,893.66, released this run ₹2,73,893.66. Its "brokerage released" journal: Dr Brokerage Expense ₹2,73,893.66 / Cr Contract Acquisition Costs ₹2,73,893.66.
Had the books used Over time (stages achieved) instead, and Tower A stood at 15% on 30 November 2026, 40% on 31 March 2027 and 65% on 31 May 2027, the releases would have been:
| Run | Progress | Released to date | Released this run |
|---|---|---|---|
| 30 Nov 2026 | 15% | ₹2,73,893.66 × 15 ÷ 100 = ₹41,084.05 | ₹41,084.05 |
| 31 Mar 2027 | 40% | ₹2,73,893.66 × 40 ÷ 100 = ₹1,09,557.46 | ₹1,09,557.46 − ₹41,084.05 = ₹68,473.41 |
| 31 May 2027 | 65% | ₹2,73,893.66 × 65 ÷ 100 = ₹1,78,030.88 | ₹1,78,030.88 − ₹1,09,557.46 = ₹68,473.42 |
And had the project's expected possession been 30 September 2027, the months from 10 October 2026 would be 11 plus one for the part month = 12, not more than 12: the expedient applies, the approval debits Brokerage Expense at once and no run releases anything.
Where you see it
- Revenue policy: the two settings under Brokerage and cancellation.
- Commission: Approve and the accrual journal; the debit ledger shows which treatment applied.
- Revenue run: the Brokerage column, Brokerage released in the Summary and the "brokerage released" journals.
- Contract balances: the Contract acquisition costs card with Capitalised and Released per project.
- Component mappings: the Channel Partner Commission ledger the release is charged to.
- Edit project: Expected possession, which drives the practical expedient.
Related
Related
- Revenue policyScreen
The CA's effective-dated choices on how the books recognise sale revenue and the costs that go with it: framework, method, possession trigger, OC rule, cost treatments and judgement areas.
- CommissionScreen
One channel-partner commission: the partner, the brokerage with GST and TDS, the payouts against it, and the actions to edit, approve, cancel or delete it.
- CommissionsScreen
Every channel-partner commission accrued on bookings, with filters for status, payable state, project and books, and a shortcut to open each one.
- Revenue runScreen
One period close: what each booking and member offer recognises, the journals and cost moves it posts, the subjects it left out, and the actions to recompute, post, reverse or delete it.
- Contract balancesScreen
The Ind AS 115 contract-balances disclosure per project over a period: contract liability, contract asset and contract acquisition costs rolled forward from the ledger, with the revenue recognised in the period and how much of it came out of the opening liability.
- Component mappingsScreen
Which ledger each charge component posts to in the chosen set of books (a main ledger, an optional second tax ledger, an optional cost centre and, for sale and tenant charges, the revenue treatment and contract liability ledger), and the action to copy template additions into the books.
- Edit projectScreen
Change a project's facts on one page: basics, site address, land survey details and expected possession, and, on a redevelopment, the development agreement date and the fair value of the development rights. The settings the project inherits from the organization live on its Settings tab.
- VoucherScreen
One voucher with its lines and bill allocations, its reversal links, its history, and the actions to post, reverse, cancel or delete it.
- Channel partner commissionsConcept
Brokerage owed to the channel partner who sourced a booking: accrued from the booking with a basis percent or a gross amount, GST and TDS under 194H, approved to post the accrual journal, and paid out singly or through a Commissions payout run.
- Revenue recognition: policy, point in time vs over time, and revenue runsConcept
Each set of books carries an effective-dated revenue policy (framework, method, possession trigger, cost and brokerage treatments, judgement areas) chosen by the CA; a revenue run is the period close that computes every booking's and member offer's progress under it, recognises the catch-up revenue, cost of sales and brokerage, and posts the journals.
- Contract liability, contract asset and the transaction priceConcept
A booking's transaction price is the sum of its charges treated "With the unit"; while revenue is deferred, demands for those charges are credited to a contract liability (billed ahead of revenue), a revenue run debits it as revenue is recognised, and revenue recognised ahead of billing sits in the contract asset.
- Expected possession date and charges at possessionConcept
The project's expected possession date is when the charge groups a pricing plan collects "at time of possession" fall due: one undivided row per charge, owed from booking, outside the buyer's payment plan, re-dated on every open booking when the date changes.
- Booking cancellation, forfeiture and refundConcept
Cancelling a booking reverses its demands with credit notes, posts the forfeiture and any charges against the buyer's ledger by the rule in force, creates the refund as a pending payout for the credit that is left, and frees the unit and parking; with nothing billed or received it only frees them.