# ASC 340-944-05: Other Assets and Deferred Costs — Financial Services—Insurance — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/340/944/#05-overview-and-background)

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## ASC 340-944-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/340/944/#05-overview-and-background)

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##### [340-944-05-1](https://asc.understandingaccounting.org/asc/340/944/#340-944-05-1)

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This Subtopic provides guidance to insurance entities on the accounting for and financial reporting of certain deferred costs and prepaid expenses. The guidance in this Subtopic is provided in the following two Subsections:

1.  a
    
    General
    
2.  b
    
    [Reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts.

### Reinsurance Contracts

##### [340-944-05-2](https://asc.understandingaccounting.org/asc/340/944/#340-944-05-2)

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This Subtopic provides guidance to insurance entities on the accounting for and financial reporting of certain deferred costs and prepaid expenses related to [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts.