Company: PAYX
Filing Date: 2025-03-26
Form Type: 10-Q
Source: 0000950170-25-045216
Chunk: 36

Company: PAYCHEX INC
Filing Date: 2025-03-26
Form: 10-Q
Item: Part I, Item 8
Chunk 36
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 of period
         
        $
         
        74.0

        $
         
        69.8

        $
         
        74.9

        $
         
        62.0

        Deferral of revenue

        11.5

        12.4

        29.1

        36.3

        Recognition of unearned revenue

        (9.9
        )

        (8.9
        )

        (28.4
        )

        (25.0
        )

        Balance, end of period
         
        $
         
        75.6

        $
         
        73.3

        $
         
        75.6

        $
         
        73.3

       Deferred revenue related to material rights is reported in the deferred revenue and other long-term liabilities line items on the Company’s Consolidated Balance Sheets. As of February 28, 2025, the Company expects to recognize deferred revenue related to these material rights for the remainder of fiscal 2025 and subsequent fiscal years as follows: 

        In millions
         
        Estimated

        Year ending May 31,
         
        recognition of unearned revenue

        2025
         
        $
         
        9.4

        2026

        32.1

        Thereafter

        34.1

        Total recognition of unearned revenue
         
        $
         
        75.6

       Assets Recognized from the Costs to Obtain and Fulfill ContractsThe Company recognizes an asset for the incremental costs of obtaining a contract with a client if it is expected that the economic benefit and amortization period will be longer than one year. The Company also recognizes an asset for the costs to fulfill a contract with a client if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered.   

9 

Deferred costs to obtain and fulfill contracts are reported in the prepaid expenses and other current assets and long-term deferred costs line items on the Company’s Consolidated Balance Sheets. Amortization expense related to costs to obtain and fulfill a contract are included in cost of service revenue and selling, general and administrative expenses in the Company’s Consolidated Statements of Income and Comprehensive Income and recognized over the expected economic benefit period.  The Company regularly reviews its deferred costs for potential impairment and did not recognize an impairment loss during