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Note 11 - Contract Costs
 12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Capitalized Contract Costs [Text Block]
11.
Contract Costs:
 
(a)     Deferred costs of acquisition
 
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the period of benefit of those costs to be longer than
one
year and those costs are expected to be recoverable under the term of the contract. We have identified certain sales incentive programs that meet the requirements to be capitalized, and therefore, capitalized them as contract costs in the amount of
$1.4
million at
December 31, 2018.
 
Capitalized contract acquisition costs are amortized into operating expense based on the transfer of goods or services to which the assets relate which typically range from
two
 –
ten
 years. For the year ended
December 31, 2018,
the Company capitalized
$0.9
 million and also amortized
$0.9
million of contract costs, respectively. There was
no
impairment loss recognized in relation to the costs capitalized during the year ended
December 31, 2018.
The breakdown of the movement in the contract costs balance for the year ended
December 31, 2018
is as follows (Dollar amounts in thousands of U.S. dollars):
 
   
Year ended
December 31,
2018
(1)
  
         
Balance, beginning of period
   $
1,404
  
Capitalization of costs
    
913
  
Amortization of costs
    
(927
 )
Balance, end of period
   $
1,390
  
 
(
1
)
The beginning balance consists entirely of a cumulative adjustment recorded on
January 1, 2018
as a result of the modified retrospective adoption of Topic
606.
See Note
2
– “Recent accounting pronouncements” of Notes to Consolidated Financial Statements for more information.
 
When the amortization period for costs incurred to obtain a contract with a customer is less than
one
year, we have elected to apply a practical expedient to expense the costs as incurred.  These costs include our internal sales compensation program and certain partner sales incentive programs.
 
(b)     Deferred costs of fulfillment
 
Deferred costs to fulfill contracts generally consist of domain registration costs which have been paid to a domain registry, and are capitalized as Prepaid domain name registry and ancillary services fees. These costs are deferred and amortized over the life of the domain which generally ranges from
one
to
ten
years. For the year ended
December 31, 2018,
the Company capitalized
$163.5
million and also amortized
$183.9
 million of contract costs. There was
no
impairment loss recognized in relation to the costs capitalized during the year ended
December 31, 2018.
Amortization expense is primarily included in cost of revenue. The breakdown of the movement in the prepaid domain name registry and ancillary services fees balance for the year ended
December 31, 2018
is as follows (Dollar amounts in thousands of U.S. dollars).
 
 
   
Year ended December 31,
2018
  
         
Balance, beginning of period
   $
127,003
  
Deferral of costs
    
163,447
  
Recognized costs
1
    
(183,923
 )
Balance, end of period
   $
106,527
  
 
 
1
As a result of the bulk transfer of
2.8
million domain names to Namecheap throughout
2018,
recognized costs for the year ended
December 31, 2018
includes
$16.7
million related to previously deferred prepaid registry fees, a portion of which would have otherwise been recognized after
December 31, 2018.