Deferred acquisition costs or expenses meaning

Deferred acquisition costs or expenses describes acquisition-related outlays that are capitalised as a balance sheet asset and released to profit or loss over time, rather than being expensed immediately, on the basis they are expected to be recovered from future margins. This is a descriptive accounting term used in legal and finance documents, not a statutory definition. Under UK‑adopted IFRS and IFRS as adopted in the EU (Ireland), treatment depends on context: - IFRS 15 (contracts with customers): incremental costs of obtaining a contract (for example, sales commissions) are recognised as an asset if recoverable and amortised systematically as related revenue is recognised; the asset is tested for impairment. - IFRS 17 (insurance contracts): insurance acquisition cash flows are included in the measurement of the contract; amounts paid before the related group of contracts exists are recorded as an asset for insurance acquisition cash flows and then released over the coverage period. Under UK GAAP (FRS 102, as amended), broadly similar principles apply. In practice, DAC is significant for insurers and long‑term sales arrangements and may affect EBITDA, distributable profits, purchase price adjustments and financial covenants. Usage and accounting are broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland.