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ASC 340 — Other Assets and Deferred Costs

Below is an overview of FASB Accounting Standards Codification Topic 340, Other Assets and Deferred Costs, as well as a list of FASB Accounting Standards Updates (ASUs) and proposed ASUs related to this Topic.

Overview

The full text of ASC 340 can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).

ASC 340 comprises four Subtopics (Overall, Capitalized Advertising Costs, Insurance Contracts that Do Not Transfer Insurance Risk, and Other Assets and Deferred Costs — Contracts With Customers). Below is an overview of each Subtopic.

 

340-10 Overall

ASC 340-10 notes the following:

 

The Overall Subtopic addresses the accounting and reporting for certain deferred costs and prepaid expenses. The guidance in this Subtopic is limited to a discussion of the nature of prepaid expenses and preproduction costs related to long-term supply arrangements. The specific guidance for many other costs that have been deferred is included in various other financial, broad, and industry Topics.

340-20 Capitalized Advertising Costs

ASC 340-20 provides guidance on capitalized advertising costs and notes the following:

 

Specifically, for direct-response advertising that may result in reported assets, this Subtopic provides guidance on:

  1. How such assets shall be measured initially
  2. How the amounts ascribed to such assets shall be amortized
  3. How the realizability of such assets shall be assessed
  4. The financial statement disclosures that shall be made about advertising.

340-30 Insurance Contracts that Do Not Transfer Insurance Risk

ASC 340-30 notes the following in regards to the guidance in this Subtopic:

 

This Subtopic provides guidance on how to apply the deposit method of accounting when it is required for insurance and reinsurance contracts that do not transfer insurance risk. These contracts may be prospective or retroactive in nature.

The transfer of insurance risk requires transferring both timing risk and underwriting risk. Therefore, four possible categories for deposit arrangements have been identified as follows:

  1. An insurance or reinsurance contract that transfers only significant timing risk.
  2. An insurance or reinsurance contract that transfers only significant underwriting risk.
  3. An insurance or reinsurance contract that transfers neither significant timing nor significant underwriting risk.
  4. An insurance or reinsurance contract with an indeterminate risk.

340-40 Other Assets and Deferred Costs — Contracts With Customers

ASC 340-40 was added by ASU 2014-09, Revenue From Contracts With Customers, which is not effective until fiscal years beginning after December 15, 2017 (see ASC 606, Revenue From Contracts With Customers, for the full effective date information). ASC 340-40 notes the following in regards to the guidance in this Subtopic:

 

This Subtopic provides accounting guidance for the following costs related to a contract with a customer within the scope of Topic 606 on revenue from contracts with customers:

  1. Incremental costs of obtaining a contract with a customer
  2. Costs incurred in fulfilling a contract with a customer that are not in the scope of another Topic.

Content from the FASB Accounting Standards Codification® included at http://www.usgaapplus.com is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

    The following ASUs amended the guidance in this Topic:

    Proposed FASB Accounting Standards Updates

      No current proposed ASUs on Topic 340.

      Correction list for hyphenation

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