# ASC 340-940: Other Assets and Deferred Costs — Financial Services—Brokers and Dealers Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/340/940/) 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): 2026-09-09T23:57:38.994Z to 2026-09-09T23:57:57.240Z Record version: sha256:d2740d4ae2dd0be643d2b4de846b8721aeb3f7b7dcc622ed6640d865a473ec71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-940: Other Assets and Deferred Costs — Financial Services—Brokers and Dealers ### Machine-generated study aids ```json { "summary": "ASC 340-940 governs two broker-dealer asset/deferred-cost items: exchange memberships and deferred underwriting expenses. Memberships are classified based on the rights conveyed — as an intangible asset (trading right only), an ownership interest in the exchange (cost less impairment), or a contributed interest (fair value with an equal, offsetting subordinated liability). Underwriting expenses incurred before securities are issued are deferred and recognized when the related underwriting revenues are recorded, or written off if the deal does not close.", "key_points": [ "An exchange membership that conveys only the right to conduct business on an exchange is accounted for as an intangible asset under Subtopic 350-10, with a finite or indefinite life depending on the arrangement terms (340-940-25-1(a)).", "A membership is accounted for as an ownership interest in the exchange if it conveys both ownership and trading rights held for operating purposes, or if ownership must be held to conduct business on the exchange (340-940-25-1(b)).", "A membership whose use is contributed to the broker-dealer under a formal or informal subordination agreement and subordinated to general creditors is recorded as a contributed interest with a corresponding subordinated liability (340-940-25-1(c)).", "A membership registered in an individual's name is an asset of the broker-dealer if an agreement requires the departing member to fund a replacement membership, remit sale proceeds, or transfer the membership for nominal consideration to the entity's designee (340-940-25-2).", "Ownership-interest memberships are initially measured at cost (340-940-30-1) and subsequently at cost less impairment measured under paragraphs 321-10-35-3 through 35-4 (340-940-35-1).", "Contributed-interest memberships are measured initially and subsequently at fair value, with the related subordinated liability measured at an equal and offsetting amount (340-940-30-2; 340-940-35-2).", "Underwriting expenses incurred before issuance of the securities are deferred (340-940-25-3) and recognized when the related revenues are recorded; if the transaction is not completed, participating entities write the costs off to expense (340-940-35-3)." ], "categories": [ "Recognition", "Initial measurement", "Subsequent measurement", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The exam trap is assuming all exchange memberships get the same treatment — classification turns entirely on whether the membership conveys ownership, only trading rights, or is contributed under a subordination agreement, and each bucket has a different measurement basis (350-10 intangible, cost less 321-10 impairment, or fair value with an offsetting liability). Also remember deferred underwriting costs follow the revenue: recognized when underwriting revenue is recorded, expensed immediately if the deal dies.", "related_topics": [ "940-10", "940-340", "350-10", "321-10", "606-10", "940-20" ], "key_concepts": [ "exchange membership", "trading privileges", "ownership interest in an exchange", "contributed interest", "liability subordinated to claims of general creditors", "deferred underwriting expenses", "syndicate cost allocation", "cost less impairment" ] } ``` Source downloaded (UTC): 2026-09-09T23:57:38.994Z to 2026-09-09T23:57:38.994Z Record version: sha256:8439597a48b1a6532b2618e9912b858562f9a19a36b1d2fc4cee39d10a4ad2e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-940-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/340/940/#00-status) SEC content: no ##### [340-940-00-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:38.994Z to 2026-09-09T23:57:38.994Z Record version: sha256:3850f15a88b23e1c6ae11f1a4d067774bc7bc68147550de38472d907dcd12c27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ABC AgreementSupersededAccounting Standards Update No. 2016-1912/14/2016
940-340-25-2AmendedAccounting Standards Update No. 2016-1912/14/2016
940-340-35-1AmendedAccounting Standards Update No. 2016-0101/05/2016
Source downloaded (UTC): 2026-09-09T23:57:41.766Z to 2026-09-09T23:57:41.766Z Record version: sha256:3103fca70d83300b314970c65219a7ebaa58b1b3b4e4bd37f7c0a29225c9634d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-940-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/340/940/#05-overview-and-background) SEC content: no ##### [340-940-05-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:41.766Z to 2026-09-09T23:57:41.766Z Record version: sha256:025b33b2fa9f9cbe1fe8d5aa8d74382c11ce8d4abe36154b91d84db1851d8958 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses other assets and deferred costs for brokers and dealers in securities (broker-dealers), including those associated with both of the following: 1. a Exchange memberships. Exchange memberships provide the broker-dealer with the right to do business on the exchanges of which the broker-dealer is a member. Some exchange memberships also represent an ownership interest in the exchange. Due to the demutualization of some exchanges, membership may not be aligned with ownership in the exchange as trading privileges are disaggregated from ownership. Many broker-dealers have memberships in several exchanges and have more than one membership in any particular exchange. Memberships are usually registered in the names of individuals who are affiliated with the broker-dealer. 2. b Underwriting. In connection with its participation in an underwriting of securities, a broker-dealer may receive various types of revenues as well as incur various related expenses. Such revenues include management fees (in the case of the lead or comanaging underwriter), underwriting fees (in the case of the lead underwriter and other members of the syndicate), and selling concession fees (in the case of all selling group members). The related expenses include but are not limited to marketing and advertising fees, legal fees, stabilization costs, and the other costs associated with setting up the syndicate group. These expenses are accumulated by the lead underwriter and are allocated to the other members of the syndicate on a pro-rata basis. Source downloaded (UTC): 2026-09-09T23:57:43.514Z to 2026-09-09T23:57:43.514Z Record version: sha256:b7ed6830e79bc80d810927e215aa270236cd5289959ff111c65b9193477ba6b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-940-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/340/940/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [340-940-15-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:43.514Z to 2026-09-09T23:57:43.514Z Record version: sha256:729087b157acb1243581ff86b214f434bbb1fd2c904150089261282602d95130 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 940-10-15. Source downloaded (UTC): 2026-09-09T23:57:50.114Z to 2026-09-09T23:57:50.114Z Record version: sha256:348eb09ad11d95b97c42110113b388aabf5d120287643542697faf1a5e67b011 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## 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) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:50.114Z to 2026-09-09T23:57:50.114Z Record version: sha256:e789848f14ea14ef8175a6138bb6e0395f4f9fbc119689fa847057acb7d6dd26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:50.114Z to 2026-09-09T23:57:50.114Z Record version: sha256:1ee8948f146eb22c29b13db97bbd6d501023a0c2dfd99d7aa4b5b47386e7532a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:50.114Z to 2026-09-09T23:57:50.114Z Record version: sha256:87e1907c145019b9e10485a00b6f4c14fa173b311eca38aa1de95580c1b9379e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Underwriting expenses incurred before the actual issuance of the securities shall be deferred. Source downloaded (UTC): 2026-09-09T23:57:51.737Z to 2026-09-09T23:57:51.737Z Record version: sha256:aceeec116658f2ada37956f9c17b2e4747a755b2ff1869b44e7b363d2dcb4b9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-940-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/340/940/#30-initial-measurement) SEC content: no #### Exchange Memberships ##### [340-940-30-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-30-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:51.737Z to 2026-09-09T23:57:51.737Z Record version: sha256:b11fb12046910e8e49cb01719e960b9f97aa5c0a208d95a4a9ff7530f5e7fe51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An exchange membership recognized under paragraph [940-340-25-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-25-1) as an ownership interest in the exchange shall be measured initially at cost. ##### [340-940-30-2](https://asc.understandingaccounting.org/asc/340/940/#340-940-30-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:51.737Z to 2026-09-09T23:57:51.737Z Record version: sha256:abd7a0a5ca21a82e1d0cce3330b0492daa001e824e5d5dfa104ed60077f4b992 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An exchange membership recognized under paragraph [940-340-25-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-25-1) as a contributed interest shall be measured initially at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") with the related subordinated liability measured initially at an equal and offsetting amount. Source downloaded (UTC): 2026-09-09T23:57:54.309Z to 2026-09-09T23:57:54.309Z Record version: sha256:efac7afd3ace0969c4d784b357d203eba75f6b5d46ff3cc0731e933e40ebc51d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-940-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/340/940/#35-subsequent-measurement) SEC content: no #### Exchange Memberships ##### [340-940-35-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:54.309Z to 2026-09-09T23:57:54.309Z Record version: sha256:91bc64a545cb353382203090d9c1d6af628a886dd4ae36fae7b9182fb2e87353 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An exchange membership recognized under paragraph [940-340-25-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-25-1) as an ownership interest in the exchange shall be measured subsequently at cost less impairment. Impairment shall be measured in accordance with paragraphs [321-10-35-3 through 35-4](https://asc.understandingaccounting.org/asc/321/10/#321-10-35-3) . ##### [340-940-35-2](https://asc.understandingaccounting.org/asc/340/940/#340-940-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:54.309Z to 2026-09-09T23:57:54.309Z Record version: sha256:4bbc7efa2b8e2d3419fd15dd54b94cfe51a933e339990b58fd734154ff8ab1ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An exchange membership recognized under paragraph [940-340-25-1](https://asc.understandingaccounting.org/asc/340/940/#340-940-25-1) as a contributed interest shall be measured subsequently at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") with the related subordinated liability measured subsequently at an equal and offsetting amount. #### Underwriting Expenses ##### [340-940-35-3](https://asc.understandingaccounting.org/asc/340/940/#340-940-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:54.309Z to 2026-09-09T23:57:54.309Z Record version: sha256:a6f81451c92d0c5ebecc12dca3d2709a1ba6ce25c46ec19c02d0b8f5ced3664d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Underwriting expenses deferred under the guidance in paragraph [940-340-25-3](https://asc.understandingaccounting.org/asc/340/940/#340-940-25-3) shall be recognized at the time the related revenues are recorded. In the event that the transaction is not completed and the securities are not issued, the entities that have agreed to participate in the costs associated with the underwriting shall write those costs off to expense.