Recruiting fees can be capitalized, meaning they can be recorded as an asset on a company’s balance sheet rather than being expensed in the period in which they are incurred. This is because recruiting fees can be considered a cost of acquiring long-term assets, such as employees. When determining whether to capitalize or expense recruiting fees, companies should consider the nature of the fees and their purpose. For example, recruiting fees associated with filling a specific, long-term position may be more likely to be capitalized than fees associated with temporary or contract employees. Additionally, companies may only capitalize recruiting fees if they are expected to provide future economic benefits, such as increased revenue or reduced costs. It’s also worth noting that there are accounting standards and guidelines which provide specific criteria for determining when recruiting fees can be capitalized. For example, according to the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740-20, recruiting costs should be capitalized if they are incurred before the start of an employee’s service, if they are directly related to the acquisition of new employees, and if they are expected to be recovered over a period of time. In summary, recruiting fees can be capitalized when they are a cost of acquiring long-term assets such as employees and when they are expected to provide future economic benefits. However, it’s important to follow accounting standards and guidelines when making the decision to capitalize or expense recruiting fees.
Capitalizing vs Expensing Recruiting Fees: Understanding the Accounting Standards and Criteria.
