Fulfillment costs are costs that are

  1. Directly related to a specific contract,
  2. Generate or enhance a resource that is used to fulfill a performance obligation, and
  3. Are recoverable under the contract.

However, if any of these costs are addressed by other standards (e.g., inventory), that guidance must be applied. In addition, some fulfillment costs may fall under capitalized costs.

To help you stay in compliance with revenue recognition standards, save this Construction Issue Sheet.