Background
Insurance companies incur large expenses when acquiring new business, but to ensure that they comply with GAAP's matching principle they need to spread out these costs over the period in which revenues are earned.
The DAC is treated as an asset on the Balance Sheet and amortized over the life of the insurance contract.
Read more about this topic: Deferred Acquisition Costs
Famous quotes containing the word background:
“I had many problems in my conduct of the office being contrasted with President Kennedy’s conduct in the office, with my manner of dealing with things and his manner, with my accent and his accent, with my background and his background. He was a great public hero, and anything I did that someone didn’t approve of, they would always feel that President Kennedy wouldn’t have done that.”
—Lyndon Baines Johnson (1908–1973)
“... every experience in life enriches one’s background and should teach valuable lessons.”
—Mary Barnett Gilson (1877–?)
“In the true sense one’s native land, with its background of tradition, early impressions, reminiscences and other things dear to one, is not enough to make sensitive human beings feel at home.”
—Emma Goldman (1869–1940)