# ASC 330-978-30: Inventory — Real Estate—Time-Sharing Activities — 30 Initial Measurement

Source: FASB Accounting Standards Codification, Basic View

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## ASC 330-978-30: 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/330/978/#30-initial-measurement)

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#### Accounting for Cost of Sales and Time-Sharing Inventory

##### [330-978-30-1](https://asc.understandingaccounting.org/asc/330/978/#330-978-30-1)

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Sellers of [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.") intervals shall account for cost of sales and time-sharing inventory using the [relative sales value method](https://asc.understandingaccounting.org/glossary/r/#relative-sales-value-method "The relative sales value method is similar to a gross profit method and is used to allocate inventory cost and determine cost of sales in conjunction with a sale. Under the relative sales value method, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage—the ratio of total estimated cost (including costs to complete, if any) to total estimated time-sharing revenue. Time-sharing revenue is calculated as total expected future revenue adjusted for total expected future bad-debt expense."). The relative sales value method shall be applied to each [phase](https://asc.understandingaccounting.org/glossary/p/#phase "A contractually or physically distinguishable portion of a real estate project (including time-sharing projects). That portion is distinguishable from other portions based on shared characteristics such as: Units a developer has declared or legally registered to be for sale Units linked to an owners association Units to be constructed during a particular time period How a developer plans to build the real estate project.") separately. [Common costs](https://asc.understandingaccounting.org/glossary/c/#common-costs "Costs that relate to two or more units or phases within a real estate or time-sharing project."), including [amenities](https://asc.understandingaccounting.org/glossary/a/#amenities "Features that enhance the attractiveness or perceived value of a time-sharing interval. Examples of amenities include golf courses, utility plants, clubhouses, swimming pools, tennis courts, indoor recreational facilities, and parking facilities. See also Promised Amenities."), shall be allocated to inventory among the phases that those costs will benefit.

##### [330-978-30-2](https://asc.understandingaccounting.org/asc/330/978/#330-978-30-2)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [330-978-30-3](https://asc.understandingaccounting.org/asc/330/978/#330-978-30-3)

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See paragraph [978-330-35-1](https://asc.understandingaccounting.org/asc/330/978/#330-978-35-1) for additional guidance related to the determination of total time-sharing revenue and total cost estimates.