# ASC 340-10-05: Other Assets and Deferred Costs — Overall — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/340/10/#05-overview-and-background) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:54:18.589Z to 2026-09-09T23:54:18.589Z Record version: sha256:2ea6fe95163d7e35f059305f4b7128844f5a9f19109ba498a1206a9ec23e76fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/340/10/#05-overview-and-background) SEC content: no ##### [340-10-05-1](https://asc.understandingaccounting.org/asc/340/10/#340-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:54:18.589Z to 2026-09-09T23:54:18.589Z Record version: sha256:0e26ad5a1738152e0119cafe1f74f72e9e5e5690b3a67153d9948455be4f3e6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Other Assets and Deferred Costs Topic includes the following Subtopics: 1. a Overall 2. b [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). 3. c Insurance Contracts That Do Not Transfer Insurance Risk. 4. d [Contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [Customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") ##### [340-10-05-2](https://asc.understandingaccounting.org/asc/340/10/#340-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:54:18.589Z to 2026-09-09T23:54:18.589Z Record version: sha256:a4ff73ea0ef331222637772240bdd399a61106be880c4a92b5c340808816ca0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. References to certain, but not all, of the guidance in other Topics are included in this Subtopic. #### Deferred Costs Addressed in this Subtopic ##### [340-10-05-3](https://asc.understandingaccounting.org/asc/340/10/#340-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:54:18.589Z to 2026-09-09T23:54:18.589Z Record version: sha256:384b3a6e5ba4ef4e308ace85f73af8b0b3706f52b62055a0d23d5660a8a543ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following provides background regarding certain items included in this Subtopic. ##### [340-10-05-4](https://asc.understandingaccounting.org/asc/340/10/#340-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:54:18.589Z to 2026-09-09T23:54:18.589Z Record version: sha256:4e9fda82cc3dd3db1d3032fee0711f47d21640660dba44cbdc25e4653a46ea11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prepaid expenses are a category of assets that are typically used up or expire within the normal operating cycle of an entity. The term derives from the fact that they are paid in advance of their use or consumption. ##### [340-10-05-5](https://asc.understandingaccounting.org/asc/340/10/#340-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:54:18.589Z to 2026-09-09T23:54:18.589Z Record version: sha256:b9ab128e22612083a263ffeec4c2e7a53aab21e89998f8af468c7e5cbbd667b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prepaid expenses include items such as the following: 1. a Insurance 2. b Interest 3. c Rents 4. d Taxes 5. e Unused royalties 6. f Current paid advertising service not yet received 7. g Operating supplies. ##### [340-10-05-6](https://asc.understandingaccounting.org/asc/340/10/#340-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:54:18.589Z to 2026-09-09T23:54:18.589Z Record version: sha256:e139d3d6a2d763f202631ab1b7059221273e16d386541a141bae2102376e0271 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Manufacturers often incur preproduction costs related to products they will supply to their customers under long-term supply arrangements. For example, the manufacturer may incur costs to perform certain services related to the design and development of the products it will sell under long-term supply arrangements and may incur costs to design and develop molds, dies, and other tools that will be used in producing those products. While practice varies from industry to industry, the supplier may be contractually guaranteed reimbursement of design and development costs, implicitly guaranteed reimbursement of design and development costs through the pricing of the product or other means, or not guaranteed reimbursement of the design and development costs incurred under the long-term supply arrangement.