ASC 944-30 provides the definition of insurance acquisition costs that can be capitalized. ASC 944-30-25-1A includes four categories of acquisition costs that may be deferred; incremental direct costs of contract acquisition, other direct costs of contract acquisition, Other costs directly related to acquisition activities, and Direct-response advertising costs. For further information on eligibility and capitalization of deferred acquisitions costs, refer to IG 3.

Qualifying acquisition costs based on the above guidance are deferred and amortized to income in future periods if the costs are determined to be recoverable. The "at inception recoverability test" for long duration is described in ASC 944-30-30-2, which requires that gross premiums are sufficient to cover actual acquisition costs for newly acquired contracts. The guidance in this section remains applicable until an entity adopts the new guidance in ASU 2018-12. For more information see IG 3.5.2.