# ASC 340-940-25: Other Assets and Deferred Costs — Financial Services—Brokers and Dealers — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/340/940/#25-recognition)

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## ASC 340-940-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/340/940/#25-recognition)

SEC content: no

#### Exchange Memberships

##### [340-940-25-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-25-1)

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The accounting for exchange memberships depends on the rights they convey and the reasons they are held as assets, as follows:

1.  a
    
    Intangible asset. If an exchange membership represents only the right to conduct business on an exchange, the entity shall account for the exchange membership as an intangible asset according to the guidance in Subtopic 350-10. Such memberships may have finite or indefinite lives based on the terms of the arrangement and the estimated life of the membership.
    
2.  b
    
    Ownership interest in the exchange. An exchange membership shall be accounted for as an ownership interest in the exchange if either of the following conditions is met:
    
    1.  1
        
        The exchange membership represents both an ownership interest and the right to conduct business on the exchange, which are owned by a broker-dealer and held for operating purposes.
        
    2.  2
        
        The exchange membership represents an ownership interest, which must be held by a broker-dealer to conduct business on the exchange.
        
3.  c
    
    Contributed interest. A membership may be considered to be an asset of the broker-dealer if its use has been contributed to the broker-dealer under a formal or informal subordination agreement. An exchange membership contributed for the use of the broker-dealer and subordinated to claims of general creditors shall be accounted for as a contributed interest and a liability subordinated to claims of general creditors.

##### [340-940-25-2](https://asc.understandingaccounting.org/asc/340/940/#340-940-25-2)

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A membership held in the name of an individual is considered to be an asset of the broker-dealer if it is held by the broker-dealer under an agreement that would require the member, upon leaving the broker-dealer, to do any of the following:

1.  a
    
    Pay the member entity the amount necessary to purchase another membership (if the named individual wishes to retain the membership)
    
2.  b
    
    Sell the membership and pay the proceeds over to the member entity
    
3.  c
    
    Transfer the membership for a nominal consideration to a person designated by the member entity and satisfactory to the exchange.

#### Underwriting Expenses

##### [340-940-25-3](https://asc.understandingaccounting.org/asc/340/940/#340-940-25-3)

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Underwriting expenses incurred before the actual issuance of the securities shall be deferred.