ASC

ASC 350-908

Airlines

350 Intangibles—Goodwill and Other

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In brief

IntermediateIntangibles and goodwillIndustry-specificRecognitionSubsequent measurement

ASC 350-908 tells airlines how to account for purchased take-off and landing slots. Because the Department of Transportation permits airlines to sell or trade slots, a purchased slot is a salable right recorded as an intangible asset under Topic 350 (350-908-25-1). Slots acquired by exchanging slots with another airline are nonmonetary assets measured under Topic 845 and then accounted for under Topic 350 (350-908-35-2).

Key points (6)
  • Take-off and landing slots purchased by an airline are recorded as intangible assets and accounted for in conformity with Topic 350 (350-908-25-1).
  • Slots have value because airports are at capacity and DOT policy makes slots transferable by sale or exchange, turning them into salable rights (350-908-05-2).
  • In determining the useful life of slots, an airline must consider, in addition to the Topic 350 factors: the pace of change and airport competition, uncertainty about continued government policy on slot sales, terms of existing airport facility leases, probability of new airport construction serving the same metro area, and traffic patterns/trends and local operating restrictions (350-908-35-1).
  • Slots received in an airline-to-airline slot exchange are nonmonetary assets recorded in conformity with Topic 845 and thereafter accounted for under Topic 350 (350-908-35-2).
  • Acquisition of an international airline route authority is illustrated in Example 6 at paragraph 350-30-55-17 (350-908-25-1).
  • The Subtopic follows the same scope and scope exceptions as the airlines Overall Subtopic, Section 908-10-15 (350-908-15-1).

For students. This is a short industry overlay: the real work is done by Topic 350 (and Topic 845 for exchanges), and this Subtopic only adds airline-specific useful-life factors. A common misunderstanding is assuming slots are automatically indefinite-lived — regulatory and competitive factors in 350-908-35-1 must be evaluated, and the guidance covers purchased or exchanged slots, not internally obtained ones.

take-off and landing slotsintangible assetsuseful life determinationnonmonetary exchangeairline route authorityindefinite-lived intangiblesairport gates

Machine-generated study aid for ASC 350-908. Check the source paragraphs below.

350-908-05Overview and Background

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350-908-05-1
This Subtopic provides accounting guidance for take-off and landing slots for entities in the airline industry.
350-908-05-2
New entrants to a market and airlines expanding in markets need gates and take-off and landing slots available to them at the airports in those markets. At certain airports, the frequency of take-offs and landings at all times is generally at capacity. At other airports, the slots during popular travel times are at capacity. Because an airline cannot enter a market where no slots are available, the Department of Transportation has adopted a rule under which airlines may sell or trade slots. These transactions frequently include the sale of or access to gates for the acquiring airlines. Although slots, particularly those in high-demand time periods, have always had intrinsic value, the Department of Transportation policy of transferability through sale or exchange has made the slot a salable right.

350-908-15Scope and Scope Exceptions

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Overall Guidance

350-908-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 908-10-15.

350-908-25Recognition

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Take-off and Landing Slots

350-908-25-1
When airlines buy take-off and landing slots, the recorded asset is an intangible asset that shall be accounted for in conformity with Topic 350. See also Example 6 (paragraph 350-30-55-17) for guidance with respect to the acquisition of an international airline route authority.

350-908-35Subsequent Measurement

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Take-Off and Landing Slots

350-908-35-1
When determining a useful life of take-off and landing slots, the following factors shall be considered, in addition to the factors indicated in Topic 350:
  1. a
    The accelerated pace of change in the airline industry and the effects of competition among airports
  2. b
    The uncertainty of the continuation of the current governmental policy regarding sale of and access to landing slots
  3. c
    The terms of existing facility leases at airports
  4. d
    The probability of new airport construction to serve the same metropolitan area
  5. e
    The traffic patterns and trends and local operating restrictions.
350-908-35-2
When an airline exchanges slots with another airline, the slots acquired in the exchange are nonmonetary assets that shall be recorded in conformity with Topic 845 and accounted for in accordance with Topic 350.

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