# ASC 310-978-05: Receivables — Real Estate—Time-Sharing Activities — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

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## ASC 310-978-05: 05 Overview and Background

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##### [310-978-05-1](https://asc.understandingaccounting.org/asc/310/978/#310-978-05-1)

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This Subtopic addresses [time-sharing](https://asc.understandingaccounting.org/glossary/t/#time-sharing "An arrangement in which a seller sells or conveys the right to occupy a dwelling unit for specified periods in the future. Forms of time-sharing arrangements include but are not limited to fixed and floating time, interval ownership, undivided interests, points programs, vacation clubs, right-to-use arrangements such as tenancy-for-years arrangements, and arrangements involving special-purpose entities. In this context, an undivided interest is a time-sharing arrangement that involves a tenant-in-common interest in a condominium unit or entire improved property, and in which the interest holder is assigned a specific period (generally, a specific week). The interest holder is also assigned a specific unit if the undivided interest is in the entire improved property.") receivables recognition and measurement issues.

##### [310-978-05-2](https://asc.understandingaccounting.org/asc/310/978/#310-978-05-2)

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Most sales of time-sharing intervals are to retail consumers, who often choose to use seller-provided financing. Although certain financial institutions will participate in the securitization or hypothecation of portfolios of time-sharing receivables, financial institutions typically will not finance the purchase of individual time-sharing intervals. Therefore, a majority of the sales price is often financed by the [time-share](https://asc.understandingaccounting.org/glossary/t/#time-share "See Interval.") seller through a promissory note (generally, with a term of 5 to 10 years) signed by the buyer. The promissory note is typically a [recourse](https://asc.understandingaccounting.org/glossary/r/#recourse "The right of a transferee of receivables to receive payment from the transferor of those receivables for any of the following: Failure of debtors to pay when due The effects of prepayments Adjustments resulting from defects in the eligibility of the transferred receivables.") note secured by the time-sharing [interval](https://asc.understandingaccounting.org/glossary/i/#interval "The specific period (generally, a specific week) during the year that a time-sharing unit is specified by agreement to be available for occupancy by a particular customer. Also denoted Time-Sharing Interest or Time-Share."). Delinquency and default rates on promissory notes vary widely among individual time-sharing entities and tend to fluctuate in line with the general state of the economy.

##### [310-978-05-3](https://asc.understandingaccounting.org/asc/310/978/#310-978-05-3)

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In an effort to manage cash flows, many time-share sellers will sell, hypothecate, securitize, or otherwise monetize their receivables through another party. In general, those transactions are completed with some recourse to the time-share seller (that is, if receivables are uncollectible, the seller is liable for the bad debts up to stated limits).