The following table identifies the changes made to this Subtopic.
The Cost of Sales and Services Topic includes the following Subtopics:
- a
Overall
- b
Accounting for Consideration Received from a Vendor.
Included in Section
705-10-25 are links to certain other Subtopics containing guidance applicable to the recognition of cost of sales and services.
This Section consists solely of links to other Subtopics because the asset liability model used in the Codification requires that applicable guidance be included in other Topics. In addition, the following may not represent a complete list of other Topics containing cost of sales and services guidance.
See paragraphs
for adjustments affecting cost of sales and services resulting from establishing the cost basis and the use of inventory pricing methods.
See paragraphs
for a discussion of the costs to sell long-lived assets classified as held for sale for purposes of measuring the expected disposal loss.
See paragraphs
for a discussion of recognition principles used for cost of sales and services used in reporting on an interim basis.
See paragraph
605-20-25-6 for guidance on recognizing a loss on separately priced extended warranty and product maintenance contracts.
See Subtopic
705-20 for a discussion of consideration received from a vendor by a customer.
See Section
718-10-25 for a discussion of recognition principles for costs incurred under share-based payment transactions.
For guidance on costs incurred for duplicating the computer software, documentation, and training materials from product masters and for physically packaging the product for distribution, see Subtopic
985-330.
See Subtopic
350-40 for a discussion of the cost of internal-use computer software sold.
The following table identifies the changes made to this Subtopic.
Although the reseller often benefits from the vendor's direct-to-consumer incentives as a result of increased sales volume, the reseller generally has no control over which consumers or consumer groups participate in the incentive programs. Because the manufacturer reimburses the reseller for the value of the discount provided to the consumer, the reseller's gross margin on the product is the same regardless of whether or not the consumer purchases the product with the manufacturer's incentive.
See paragraphs
for guidance on the presentation of a rebate pursuant to a binding agreement.
Changes in the estimated amount of cash rebates or refunds and retroactive changes by a vendor to a previous offer (an increase or a decrease in the rebate amount that is applied retroactively) are changes in estimate that shall be recognized using a cumulative catch-up adjustment. That is, the entity would adjust the cumulative balance of its rebate recognized to the revised cumulative estimate immediately. Entities shall consider whether any portion of the cumulative effect adjustment affects other accounts (inventory, for example), in which case only a portion of that adjustment would be reflected in the income statement.
The following table identifies the changes made to this Subtopic.
This Subtopic only provides links to guidance for
agricultural cooperatives on amounts that are charged to costs of goods sold when boards of directors assign amounts to unprocessed products.
The Cooperatives Subsections only provide links to guidance for
agricultural cooperatives on amounts that are charged to costs of goods sold when boards of directors assign amounts to unprocessed products.
See paragraph
905-405-25-1 for guidance on amounts of liabilities to be established and the related amount to be charged to cost of goods sold when boards of directors assign amounts to unprocessed products received from
patrons.
See paragraph
905-330-25-7 indicating that cost of goods sold will not include a charge for unprocessed products received from patrons when amounts are not assigned to such products by the board of directors. See Example 1 (paragraph
905-330-55-1) for an illustration of this guidance.
The following table identifies the changes made to this Subtopic.
The following table identifies the changes made to this Subtopic.
This Subtopic presents the accounting by entities in the film production and distribution industry for costs incurred to manufacture or duplicate products held for sale, such as videocassettes and video discs.
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section
926-20-15.
The costs of producing a film include manufacturing costs. An entity shall charge manufacturing or duplication costs of products for sale, such as videocassettes and digital video discs, to expense on a unit-specific basis when the related product revenue is recognized.
The following table identifies the changes made to this Subtopic.
This Subtopic provides measurement guidance concerning the cost of retail land sales.
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section
976-10-15.
No updates have been made to this subtopic.
This Subtopic only provides links to guidance on costs of sales and services related to computer software.
Paragraph
985-20-45-1 indicates that the amortization of capitalized costs to develop a software product that is marketed to others would be charged to cost of sales or a similar expense category.
For guidance on costs to keep certain software current with hardware revisions, see paragraphs
.
The following is the text of SEC Observer Comment: Accounting for the Film and Software Costs Associated with Developing Entertainment and Educational Software Products.
The SEC staff has become aware of diversity in the application of generally accepted accounting principles to exploitation, film, and other software development costs associated with EE products.
The SEC staff has learned that certain registrants are recording all costs incurred in the development of EE products pursuant to the provisions of Topics 340, 720, and 985. Other registrants are separating exploitation and film costs from other software development costs and accounting for the other software development costs using Topic 985 and capitalizing film and exploitation costs as film cost inventory as described in Topic 926. Still other registrants, principally film production companies, are capitalizing all costs relating to the development of EE products as film cost inventory.
The SEC staff views stated here are not intended to apply to costs incurred to produce computer-generated special effects and images used in products that are exhibited in theaters or licensed to television stations because those costs are addressed by Topic 926. Topic 985 establishes standards of financial accounting and reporting for the costs of all computer software to be sold, leased, or otherwise marketed as a separate product or as part of a product or process, whether internally developed and produced or purchased. The SEC staff believes that EE products that are sold, leased, or otherwise marketed are subject to the accounting requirements of Topic 985. The SEC staff does not believe that other standards of financial accounting and reporting or that industry practice are acceptable alternatives to those requirements.
The SEC staff also believes that film costs incurred in the development of an EE product should be accounted for under the provisions of Topic 985, not the provisions of Topic 926. In addition, exploitation costs should be expensed as incurred unless those costs include advertising costs that qualify for capitalization in accordance with the provisions of Topics 340 and 720.