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Proposed AICPA Audit and Accounting Guide, Audits of Investment Companies,



ISSUE Distributors of mutual funds that do not have a front-end sales charge receive fees that are designed to compensate them for the distribution of fund shares. The fees are sometimes received over a specified future period. Copyright © 1986, Financial Accounting Standards Board Not for redistribution Page 1The issue is whether the fees that are expected to be received over a specified future period should (1) be accrued at present value and recognized at the time of the distribution, along with all costs of performance (the income accrual method) or (2) be recognized when received, along with the amortization of deferred incremental direct costs and the expensing of indirect costs when incurred (the cost deferral method, which is the existing accounting practice). EITF DISCUSSION The Task Force reached a consensus that the existing accounting practice, the cost deferral method, should not be changed—that is, the fees should be recognized when received, th

Year: 1978
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