ASC 340 Other Assets and Deferred Costs

This Topic comprises four Subtopics (Overall, Capitalized Advertising Costs, Insurance Contracts that Do Not Transfer Insurance Risk, and Other Assets and Deferred Costs — Contracts With Customers).

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10 Overall 20 Capitalized Advertising Costs 30 Insurance Contracts That Do Not Transfer Insurance Risk 40 Contracts with Customers 910 Contractors—Construction 915 Development Stage Entities 928 Entertainment—Music 940 Financial Services—Brokers and Dealers 944 Financial Services—Insurance 948 Financial Services—Mortgage Banking 952 Franchisors 954 Health Care Entities 970 Real Estate—General 978 Real Estate—Time-Sharing Activities 980 Regulated Operations

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:

How such assets shall be measured initially
How the amounts ascribed to such assets shall be amortized
How the realizability of such assets shall be assessed
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:

An insurance or reinsurance contract that transfers only significant timing risk.
An insurance or reinsurance contract that transfers only significant underwriting risk.
An insurance or reinsurance contract that transfers neither significant timing nor significant underwriting risk.
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:

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