# ASC Topic 705: Cost of Sales and Services Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/705/) 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): 2026-09-10T00:55:38.735Z to 2026-09-10T00:57:08.857Z Record version: sha256:90b36bf0fe583b8000411953a101c8fa4315dd5e4b0fcf3bcb016c2c0e3aee51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 705 covers cost of sales and services, but it is mostly a set of pointers rather than a freestanding body of rules. The Overall Subtopic (705-10) explains that, under the Codification's asset liability model, cost recognition guidance actually lives in the related asset Topics — Topic 330 (inventory), Topic 360 (PP&E), Topic 606 and Subtopic 340-40 (contracts with customers), Topic 718 (share-based payment) — and the industry subtopics (705-905 cooperatives, 705-912 federal government contractors, 705-926 films, 705-976 retail land, 705-985 software) are likewise link-only or largely superseded by ASU 2014-09. The one substantive body of guidance is ASC 705-20, which requires a customer to treat consideration received from a vendor as a reduction of the purchase price of goods or services acquired (705-20-25-1) unless it pays for a distinct good or service, reimburses a specific incremental identifiable selling cost, or reimburses a qualifying consumer sales incentive. The takeaway: know where to look for cost guidance, and default to purchase-price reduction for vendor consideration. Source downloaded (UTC): 2026-09-10T00:55:38.735Z to 2026-09-10T00:55:50.312Z Record version: sha256:59db9b56b509f263d5f0447a6f4fed5da06c8a44dec99403622b50d692e68c92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-10: Cost of Sales and Services — Overall ### Machine-generated study aids ```json { "summary": "ASC 705-10 is a \"pointer\" subtopic: it contains almost no substantive rules of its own and instead links to the Topics where cost of sales and services guidance actually resides. This structure follows from the Codification's asset liability model, under which costs are recognized as assets are sold or remeasured (or liabilities incurred), so the guidance sits in Topics such as 330 (inventory), 360 (PP&E), 606/340-40 (customer contracts), and 718 (share-based payment).", "key_points": [ "Topic 705 comprises two subtopics — Overall (705-10) and Accounting for Consideration Received from a Vendor (705-20) (705-10-05-1).", "705-10 provides only links to other Subtopics because the asset liability model places cost-of-sales guidance in the Derecognition and Subsequent Measurement Sections of the related asset Topics, e.g., Topic 330 and Topic 360 (705-10-05-1A; 705-10-25-1).", "Inventory-driven cost of sales adjustments are governed by 330-10-35-1A through 35-11 (subsequent measurement) and 330-10-30-1 through 30-13 (cost basis and inventory pricing methods) (705-10-25-2; 705-10-25-3).", "Sales with a right of return follow Topic 606, specifically 606-10-32-10 and 606-10-55-22 through 55-29 (705-10-25-4).", "Incremental costs of obtaining a contract with a customer and fulfillment costs not within another Topic's scope are accounted for under Subtopic 340-40 (705-10-25-4A).", "Other cross-references: 360-10-35-38 through 35-40 (costs to sell held-for-sale long-lived assets), 270-10-45-4 through 45-6 (interim reporting), 605-20-25-6 (loss on separately priced extended warranty and product maintenance contracts), 718-10-25 (share-based payment), 985-330 (software duplication and packaging), 350-40 (internal-use software sold) (705-10-25-5 through 25-15).", "All of Section 705-10-45 and several Section 25 paragraphs were superseded by ASU 2014-09, so legacy cost-of-sales presentation guidance now flows through Topic 606 and Subtopic 340-40." ], "categories": [ "Recognition", "Inventory and PP&E", "Revenue", "Financial statement presentation" ], "audience_level": "introductory", "student_note": "The point here is structural, not substantive: there is no freestanding \"cost of sales\" standard in U.S. GAAP, so you must locate the rule in the asset or contract Topic (330, 360, 606, 340-40, 718). A common misunderstanding is treating ASC 705-10 as authority for measuring cost of goods sold; the only real substance in Topic 705 is in 705-20 on vendor consideration.", "related_topics": [ "705-20", "330-10", "360-10", "340-40", "606-10", "270-10" ], "key_concepts": [ "cost of sales and services", "asset liability model", "cross-reference subtopic", "inventory pricing methods", "right of return", "costs to obtain and fulfill a contract", "costs to sell long-lived assets", "interim cost recognition" ] } ``` Source downloaded (UTC): 2026-09-10T00:55:38.735Z to 2026-09-10T00:55:38.735Z Record version: sha256:fea75cf4bdb4ca721ff069da66bc71c251b9992b12ebfc86023bd72401e0bcf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/705/10/#00-status) SEC content: no ##### [705-10-00-1](https://asc.understandingaccounting.org/asc/705/10/#705-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:38.735Z to 2026-09-10T00:55:38.735Z Record version: sha256:b991ff960953b0229a2cf6b597e29f889f6ad7b53cf5b3a2c90b421af453700e 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
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
705-10-05-1AmendedAccounting Standards Update No. 2014-0905/28/2014
705-10-05-1AAddedAccounting Standards Update No. 2014-0905/28/2014
705-10-05-2AmendedAccounting Standards Update No. 2014-0905/28/2014
705-10-25-2AmendedAccounting Standards Update No. 2015-1107/22/2015
705-10-25-4AmendedAccounting Standards Update No. 2014-0905/28/2014
705-10-25-4AAddedAccounting Standards Update No. 2014-0905/28/2014
705-10-25-6SupersededAccounting Standards Update No. 2014-0905/28/2014
705-10-25-8AmendedAccounting Standards Update No. 2014-0905/28/2014
705-10-25-9AmendedAccounting Standards Update No. 2014-0905/28/2014
705-10-25-10 through 25-12
SupersededAccounting Standards Update No. 2014-0905/28/2014
705-10-45-1 through 45-5
SupersededAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:55:41.102Z to 2026-09-10T00:55:41.102Z Record version: sha256:cb1d915212b6c73730896b8d6509259124a6d9026b9aabcec87dfe8a4935ffb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/705/10/#05-overview-and-background) SEC content: no ##### [705-10-05-1](https://asc.understandingaccounting.org/asc/705/10/#705-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:41.102Z to 2026-09-10T00:55:41.102Z Record version: sha256:be5a226bd6f4ce838e851924bb5d4dbab4e1b067c3b42fe9edb0e6436c75d18e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cost of Sales and Services Topic includes the following Subtopics: 1. a Overall 2. b Accounting for Consideration Received from a Vendor. ##### [705-10-05-1A](https://asc.understandingaccounting.org/asc/705/10/#705-10-05-1A) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:41.102Z to 2026-09-10T00:55:41.102Z Record version: sha256:df26c8e5689ccc3967fca43f8a4c518d1619b722759833b965b89c0cdb7ca9db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Overall Subtopic only provides links to guidance on accounting for the cost of sales and services in other applicable Subtopics because the asset liability model used in the Codification generally results in the inclusion of that guidance in other Topics. For example, because assets are sold or remeasured (or liabilities are incurred), the guidance related to the transactions is included in the applicable Derecognition and Subsequent Measurement Sections of Topic 330 on inventory and Topic 360 on plant, property, and equipment rather than in this Topic. ##### [705-10-05-2](https://asc.understandingaccounting.org/asc/705/10/#705-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:41.102Z to 2026-09-10T00:55:41.102Z Record version: sha256:6dbb3e8e9d0199f7889cb78b19d468090276cf1fc895def28e2746da4df2839e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Included in Section 705-10-25 are links to certain other Subtopics containing guidance applicable to the recognition of cost of sales and services. Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:d4704ac31953841e86fdf2727f1229dd484e9ae411c2c6552aebf68c325ecb6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/705/10/#25-recognition) SEC content: no ##### [705-10-25-1](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:bcbaf4c3132d01f500d73173d08571e876a507cacdffcce2d9d241bdc94eeb71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Inventory ##### [705-10-25-2](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:9ed7775643b39dd317a6a4bfbf34ebac6a2ba83590436994b2df0f2bdcabdbe4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [330-10-35-1A through 35-11](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1A) for adjustments affecting cost of sales and services resulting from the subsequent measurement of inventory. ##### [705-10-25-3](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:a17a015f82e8fa78581a2519a477e72a5bb4c94c1bfec523a6b59243439026ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [330-10-30-1 through 30-13](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-1) for adjustments affecting cost of sales and services resulting from establishing the cost basis and the use of inventory pricing methods. ##### [705-10-25-4](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:007bc056dff0159abb5b2161a651ee81aef5cd890a0ce64d088594cac1b607d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."), specifically paragraph [606-10-32-10](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-10) and paragraphs [606-10-55-22 through 55-29](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-22) for the accounting for a sale with a right of return. #### Other Assets and Deferred Costs—Contracts with Customers ##### [705-10-25-4A](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-4A) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:e10d2b21173da835eac38f7abc471c32e7b40ab91e38490f1e8ca0c2e91c69bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Subtopic 340-40 for guidance on the following costs related to a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with a [customer](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") within the scope of Topic 606 on revenue from contracts with customers: 1. a Incremental costs of obtaining a contract with a customer 2. b Costs incurred in fulfilling a contract with a customer that are not within the scope of another Topic. #### Property, Plant, and Equipment ##### [705-10-25-5](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:d30e0328a332a1c782f719d025335a51d21e1c1a284810a24ff3dd9c88e18d3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [360-10-35-38 through 35-40](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-38) for a discussion of the costs to sell long-lived assets classified as held for sale for purposes of measuring the expected disposal loss. ##### [705-10-25-6](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:cdbfd47a951e22df9e3ae8d54ec5bd462a6f0e69b9b47e628e6be1e530d88c57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Interim Financial Reporting ##### [705-10-25-7](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:7940310d5a86986ffc81cd0d34127d4b3fc9c9cf89ff7fcdd3450c7488c573e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [270-10-45-4 through 45-6](https://asc.understandingaccounting.org/asc/270/10/#270-10-45-4) for a discussion of recognition principles used for cost of sales and services used in reporting on an interim basis. #### Extended Warranty and Product Maintenance Contracts ##### [705-10-25-8](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:cef00b02eac7fa667da38828c40c9dd16b0d0fb626abe002c13c98377b3d96ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [605-20-25-6](https://asc.understandingaccounting.org/asc/605/20/#605-20-25-6) for guidance on recognizing a loss on separately priced extended warranty and product maintenance contracts. #### Consideration Received from a Vendor ##### [705-10-25-9](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:6900eef9d06c7cdc16c7d7c352c24e9bb60632bbd6897a03514e95f1d5c4a54a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Subtopic 705-20 for a discussion of consideration received from a vendor by a customer. ##### [705-10-25-10](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:e302e0bf9e045322e4e4f79d85f6194864a76e49508d437632ecfd3208b099a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-10-25-11](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:22c51bacf606bf8a148684498d743b76761a5ef2e11c19f75e24494b0d253191 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-10-25-12](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:6ddfef5c9739ec5a6b42c5e292aaf01733adc873a1426d018e9b63bfc68d4968 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Costs Resulting from Share-Based Payment Transactions ##### [705-10-25-13](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:5ab2abbf56d251d3894e7b4fee726f13cdd6206eb32eb71e7ec0cdeb666ac712 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 718-10-25 for a discussion of recognition principles for costs incurred under share-based payment transactions. #### Costs of Computer Software Sold ##### [705-10-25-14](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:cf65e5a35e3210f5a82ee8244b2c8d834d4fa9447a0e979c4875ef0c8949b66b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [705-10-25-15](https://asc.understandingaccounting.org/asc/705/10/#705-10-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:47.878Z to 2026-09-10T00:55:47.878Z Record version: sha256:82f35d874de95fae3c82152b6489e000fda37619f65d8ab7ecc4f7bdcb3c99d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Subtopic 350-40 for a discussion of the cost of internal-use computer software sold. Source downloaded (UTC): 2026-09-10T00:55:50.312Z to 2026-09-10T00:55:50.312Z Record version: sha256:86b4f2b1a9e612e59e434cb4185b580ddcfcb022e7170417ff7935a22b85614d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/705/10/#45-other-presentation-matters) SEC content: no ##### [705-10-45-1](https://asc.understandingaccounting.org/asc/705/10/#705-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:50.312Z to 2026-09-10T00:55:50.312Z Record version: sha256:19b9c97b9c21ccda54c5b91d86972488e7b47409539e3be8011050a1b0010472 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-10-45-2](https://asc.understandingaccounting.org/asc/705/10/#705-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:50.312Z to 2026-09-10T00:55:50.312Z Record version: sha256:fe0461b1d7f25cb34325d1f6204c7d8d227687bc6c7d77594518c1b07621925c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-10-45-3](https://asc.understandingaccounting.org/asc/705/10/#705-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:50.312Z to 2026-09-10T00:55:50.312Z Record version: sha256:6d0168e4c7b79ee74282e8cb19e8f7f3617b68737d06cfa66f28e93e3678f2f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-10-45-4](https://asc.understandingaccounting.org/asc/705/10/#705-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:50.312Z to 2026-09-10T00:55:50.312Z Record version: sha256:fef4350d3284d5525bc7e01cd80f485ccad72ce445679bc3edef59396a7ba16e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-10-45-5](https://asc.understandingaccounting.org/asc/705/10/#705-10-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:50.312Z to 2026-09-10T00:55:50.312Z Record version: sha256:ae8e80beab04f02ec92e6ef766cd4cda240b6bfad9d448307c02d99422c6b73c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:55:52.101Z to 2026-09-10T00:56:00.827Z Record version: sha256:348e07e5f742b1b4a9ce8e7eaf931ec1bc3d888821db8e06914029813a61889c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-20: Cost of Sales and Services — Accounting for Consideration Received from a Vendor ### Machine-generated study aids ```json { "summary": "ASC 705-20 governs how a customer (often a reseller) accounts for cash, credits, coupons, or vouchers received from a vendor. The default rule is that vendor consideration reduces the purchase price of the goods or services acquired (705-20-25-1), unless it is payment for a distinct good or service transferred to the vendor, a reimbursement of specific incremental costs incurred to sell the vendor's products, or reimbursement for the vendor's sales incentives offered directly to consumers. The Subtopic also prescribes systematic and rational recognition of volume/loyalty rebates payable under binding arrangements.", "key_points": [ "Consideration from a vendor (cash, credits, coupons, vouchers, including from parties that sell goods to the vendor) is accounted for as a reduction of the purchase price of goods or services acquired unless it falls within one of three exceptions: exchange for a distinct good or service, reimbursement of costs to sell the vendor's products, or consideration for manufacturer sales incentives offered to customers (705-20-25-1).", "If the consideration is for a distinct good or service (per 606-10-25-19 through 25-22), the entity accounts for it like any other sale under Topic 606, but any excess over the standalone selling price (estimated per 606-10-32-33 through 32-35 if not observable) reduces the purchase price of goods acquired from the vendor (705-20-25-2).", "Cash consideration is characterized as a reduction of the related cost only if it reimburses a specific, incremental, identifiable cost incurred in selling the vendor's products; any excess over the cost reimbursed is characterized as a reduction of cost of sales (705-20-25-3).", "A vendor's sales incentive offered directly to consumers must meet all four criteria in 705-20-25-7 (consumer-tendered at resellers, direct reimbursement based on face amount, terms not negotiated with other incentive arrangements, and an agency relationship); if met, the reimbursement is not a purchase-price reduction and Topic 606 is considered instead (705-20-25-8).", "Sales incentives failing any criterion in 705-20-25-7 are accounted for as a reduction of the purchase price of goods or services acquired from the vendor (705-20-25-8).", "A rebate or refund payable under a binding arrangement contingent on cumulative purchase levels or continued customer status is recognized as a reduction of cost of sales by systematic and rational allocation to the underlying transactions if probable and reasonably estimable; otherwise it is recognized as milestones are achieved (705-20-25-10, with impairing factors listed in 705-20-25-11).", "Changes in estimated rebates and retroactive vendor changes to a prior offer are changes in estimate recognized through a cumulative catch-up adjustment, with allocation to other accounts such as inventory where applicable (705-20-25-12)." ], "categories": [ "Recognition", "Inventory and PP&E", "Revenue", "Presentation" ], "audience_level": "intermediate", "student_note": "This is the mirror image of ASC 606-10-32-25's \"consideration payable to a customer\" guidance, and it drives whether vendor allowances hit inventory/COGS or revenue. The most common mistake is recording all vendor cash as revenue or as an immediate COGS credit; the default is a purchase-price reduction that stays in inventory until the goods are sold, and the distinct-good exception only applies up to standalone selling price.", "related_topics": [ "606-10", "330", "340-40", "705-10" ], "key_concepts": [ "consideration received from a vendor", "reduction of purchase price", "distinct good or service", "standalone selling price", "specific incremental identifiable cost", "manufacturer sales incentives to consumers", "volume rebates and refunds", "cumulative catch-up adjustment" ] } ``` Source downloaded (UTC): 2026-09-10T00:55:52.101Z to 2026-09-10T00:55:52.101Z Record version: sha256:1d36b5a412593bca9b3b62d951bf6070b7155dbbb5cf90be6ac3cf2b9c0d5176 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/705/20/#00-status) SEC content: no ##### [705-20-00-1](https://asc.understandingaccounting.org/asc/705/20/#705-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:52.101Z to 2026-09-10T00:55:52.101Z Record version: sha256:02fa811cc94f47592da8c07ecfcb4c0e036eed49ced321a1d1e0cd913dc4129b 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
Cash ConsiderationAmendedAccounting Standards Update No. 2018-0706/20/2018
Cash ConsiderationAddedAccounting Standards Update No. 2014-0905/28/2014
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
Probable (2nd def.)AddedAccounting Standards Update No. 2014-0905/28/2014
ResellerAddedAccounting Standards Update No. 2014-0905/28/2014
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
Standalone Selling PriceAddedAccounting Standards Update No. 2014-0905/28/2014
VendorAddedAccounting Standards Update No. 2014-0905/28/2014
705-20-05-1AddedAccounting Standards Update No. 2014-0905/28/2014
705-20-25-1 through 25-12
AddedAccounting Standards Update No. 2014-0905/28/2014
705-20-25-7AmendedMaintenance Update 2020-18 (PDF)11/25/2020
Source downloaded (UTC): 2026-09-10T00:55:54.380Z to 2026-09-10T00:55:54.380Z Record version: sha256:f91ab0c4080b878456aa5899c32e3604c7f396cdaeaa6451dab27573926f84b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/705/20/#05-overview-and-background) SEC content: no ##### [705-20-05-1](https://asc.understandingaccounting.org/asc/705/20/#705-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:54.380Z to 2026-09-10T00:55:54.380Z Record version: sha256:56a526906a82d13b71387d5a9bea62b44633a74c2b13fa76e6dad58939e606b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on accounting for consideration received by an entity from a [vendor](https://asc.understandingaccounting.org/glossary/v/#vendor "A service provider or product seller, such as a manufacturer, distributor, or reseller."). Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:ab951eca43d7ddaa5f7e09d9a241936ae3024fac45fa52cdfed66ffd5dc15dc4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/705/20/#25-recognition) SEC content: no #### Accounting for Consideration Received from a Vendor (Supplier) ##### [705-20-25-1](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:096cf71cda5bf565ba5c15a908b3d0c810174d45461391292f70d539b86490c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consideration from a [vendor](https://asc.understandingaccounting.org/glossary/v/#vendor "A service provider or product seller, such as a manufacturer, distributor, or reseller.") includes cash amounts that an entity receives or expects to receive from a vendor (or from other parties that sell the goods or services to the vendor). Consideration from a vendor also includes credit or other items (for example, a coupon or voucher) that the entity can apply against amounts owed to the vendor (or to other parties that sell the goods or services to the vendor). The entity shall account for consideration from a vendor as a reduction of the purchase price of the goods or services acquired from the vendor unless the consideration from the vendor is one of the following: 1. a In exchange for a distinct good or service (as described in paragraphs [606-10-25-19 through 25-22](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-19) ) that the entity transfers to the vendor 2. b A reimbursement of costs incurred by the entity to sell the vendor's products 3. c Consideration for sales incentives offered to customers by manufacturers. ##### [705-20-25-2](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:c90c343efc53c6bd622f709a52b66d75a54db68bf7339bfe45cc14eba1a11159 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the consideration from a vendor is in exchange for a distinct good or service (see paragraphs [606-10-25-19 through 25-22](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-19) ) that an entity transfers to the vendor, then the entity shall account for the sale of the good or service in the same way that it accounts for other sales to [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") in accordance with Topic 606 on revenue from contracts with customers. If the amount of consideration from the vendor exceeds the [standalone selling price](https://asc.understandingaccounting.org/glossary/s/#standalone-selling-price "The price at which an entity would sell a promised good or service separately to a customer.") of the distinct good or service that the entity transfers to the vendor, then the entity shall account for such excess as a reduction of the purchase price of any goods or services acquired from the vendor. If the standalone selling price is not directly observable, the entity shall estimate it in accordance with paragraphs [606-10-32-33 through 32-35](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-33) . ##### [705-20-25-3](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:ef754a7ac670cccc40dd14c4dc43e3f45c152f6633f48966df0715b1a8e03dd5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Cash consideration](https://asc.understandingaccounting.org/glossary/c/#cash-consideration "Cash payments and credits that the customer can apply against trade amounts owed to the vendor. In addition, as indicated in Section 718-10-25, consideration in the form of share-based payment awards is recognized in the same period or periods and in the same manner (that is, capitalize versus expense) as if the entity had paid cash for the goods or services instead of paying with or using the share-based payment awards. Accordingly, guidance with respect to cash consideration is applicable to consideration that consists of equity instruments.") represents a reimbursement of costs incurred by the entity to sell the vendor's products and shall be characterized as a reduction of that cost when recognized in the entity's income statement if the cash consideration represents a reimbursement of a specific, incremental, identifiable cost incurred by the entity in selling the vendor's products or services. If the amount of cash consideration paid by the vendor exceeds the cost being reimbursed, that excess amount shall be characterized in the entity's income statement as a reduction of cost of sales when recognized in the entity's income statement. ##### [705-20-25-4](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:6b5d1452190522755f722cd656dd2f9cb61b199ca64f6b57701eea0a987e51e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Manufacturers often sell their products to [resellers](https://asc.understandingaccounting.org/glossary/r/#reseller "Any entity that purchases another vendor's products for resale, regardless of whether that entity is a distributor or wholesaler, a retailer, or other type of reseller.") who then sell those products to consumers or other end users. In some cases, manufacturers will offer sales discounts and incentives directly to consumers—for example, rebates or coupons—in order to stimulate consumer demand for their products. Because the reseller has direct contact with the consumer, the reseller may agree to accept, at the point of sale to the consumer, the manufacturer's incentives that are tendered by the consumer (for example, honoring manufacturer's coupons as a reduction to the price paid by consumers and then seeking reimbursement from the manufacturer). In other instances, the consumer purchases the product from the reseller but deals directly with the manufacturer related to the manufacturer's incentive or discount (for example, a mail-in rebate). ##### [705-20-25-5](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:8a0bdb19e074bf85f3b719818dce8804c0fdea01660636c3a7bac0aab975cfce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [705-20-25-6](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:a2ae005287171e90ecdbc8def57c7f70ba5ec2e51731babb05b3d443b9ea9f56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The issue is whether consideration received by a reseller from a vendor that is a reimbursement by the vendor for honoring the vendor's sales incentives offered directly to consumers shall be recorded as a reduction of the cost of the reseller's purchases from the vendor and, therefore, characterized as a reduction of cost of sales under the guidance in paragraph [705-20-25-1](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-1). ##### [705-20-25-7](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:9a243abe2e6093b6dc9daf1b02800c84ebe14b1649ff0c5ee05c5771293522f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of this guidance, the phrase _vendor's sales incentive offered directly to consumers_ is limited to a vendor's incentive that meets all the following criteria: 1. a The incentive can be tendered by a consumer at resellers that accept manufacturer's incentives in partial payment of the price charged by the reseller for the vendor's product. 2. b The reseller receives a direct reimbursement from the vendor (or a clearinghouse authorized by the vendor) based on the face amount of the incentive. 3. c Terms of reimbursement to the reseller for the vendor's sales incentive offered to the consumer must not be influenced by or negotiated in conjunction with any other incentive arrangements between the vendor and the reseller but, rather, may be determined only by the terms of the incentive offered to consumers. 4. d The reseller is subject to an agency relationship with the vendor, whether expressed or implied, in the sales incentive transaction between the vendor and the consumer. ##### [705-20-25-8](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:3d4f0e5ee9cbe657a76a8714ece392211ad305da3b2879968172a3514b40851d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity with sales incentive arrangements that meet all of the criteria described in paragraph [705-20-25-7](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-7) shall not account for consideration received from a vendor as a reduction of the purchase price of the goods or services acquired from the vendor and shall consider the guidance in Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."). Sales incentives that do not meet all of the criteria in paragraph [705-20-25-7](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-7) shall be accounted for as a reduction of the purchase price of the goods or services acquired from the vendor. ##### [705-20-25-9](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:0a86eb4a4ffefcd42083596aa64475d3c6c7158bd0d91d9464fc446a96180412 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [705-20-25-10 through 25-11](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-10) for guidance on the presentation of a rebate pursuant to a binding agreement. #### Accounting for Certain Consideration Received from a Vendor ##### [705-20-25-10](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:0bbed43aa3f761b4930aa9847df3e48eb207b41386cc865ae98ebc5093308b91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A rebate or refund of a specified amount of cash consideration that is payable pursuant to a binding arrangement only if the entity completes a specified cumulative level of purchases or remains a customer for a specified time period shall be recognized as a reduction of the cost of sales based on a systematic and rational allocation of the cash consideration offered to each of the underlying transactions that results in progress by the entity toward earning the rebate or refund provided the amounts are [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") and can be reasonably estimated. If the rebate or refund is not probable and cannot be reasonably estimated, it shall be recognized as the milestones are achieved. ##### [705-20-25-11](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:01a39e1e854d1b54ba3c8f4232040db241f0f264b46f16685b749ff394cc93a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The ability to make a reasonable estimate of the amount of future cash rebates or refunds depends on many factors and circumstances that will vary from case to case. However, any of the following factors may impair an entity's ability to determine whether the rebate or refund is probable and can be reasonably estimated: 1. a The rebate or refund relates to purchases that will occur over a relatively long period. 2. b There is an absence of historical experience with similar products or the inability to apply such experience because of changing circumstances. 3. c Significant adjustments to expected cash rebates or refunds have been necessary in the past. 4. d The product is susceptible to significant external factors (for example, technological obsolescence or changes in demand). ##### [705-20-25-12](https://asc.understandingaccounting.org/asc/705/20/#705-20-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:00.827Z to 2026-09-10T00:56:00.827Z Record version: sha256:2bab0aefc91ad119aa9c6bf07f2d9d430ebaf29998ea1de85856e808b9d8a817 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T00:56:04.703Z to 2026-09-10T00:56:11.435Z Record version: sha256:de1c52de8bbde65c169c96ce5824f43ea685ac5b16020c9c2ced5e25b8511ffd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-905: Cost of Sales and Services — Agriculture ### Machine-generated study aids ```json { "summary": "ASC 705-905 is a \"link-only\" subtopic: it contains no substantive rules of its own and simply directs agricultural cooperatives to the guidance elsewhere in the Agriculture topic on when unprocessed products received from patrons are charged to cost of goods sold. The core point is that a COGS charge (and the related liability to patrons) arises only when the cooperative's board of directors assigns an amount to those unprocessed products.", "key_points": [ "This Subtopic only provides links to guidance for agricultural cooperatives on amounts charged to cost of goods sold when boards of directors assign amounts to unprocessed products (705-905-05-1; 705-905-05-2).", "For the amount of liability to be established and the related charge to cost of goods sold when the board of directors assigns amounts to unprocessed products received from patrons, see paragraph 905-405-25-1 (705-905-25-1).", "When the board of directors does not assign amounts to unprocessed products received from patrons, cost of goods sold does not include a charge for those products (705-905-25-2, citing 905-330-25-7).", "An illustration of the no-assignment fact pattern appears in Example 1 at paragraph 905-330-55-1 (705-905-25-2).", "Because the guidance is limited to the Cooperatives Subsections, it applies to cooperative entities receiving products from patrons rather than to agricultural producers generally." ], "categories": [ "Recognition", "Industry-specific", "Inventory and PP&E" ], "audience_level": "intermediate", "student_note": "This subtopic is a signpost, not a rule source — quoting it as authority is the common mistake; the operative guidance is in 905-405-25-1 and 905-330-25-7. Remember the trigger: no board assignment of value to patrons' unprocessed products means no COGS charge and no related liability.", "related_topics": [ "905-405", "905-330", "905-605", "705-10", "330-10" ], "key_concepts": [ "agricultural cooperative", "unprocessed products", "patrons", "board of directors assignment", "cost of goods sold", "liability to patrons", "link-only subtopic" ] } ``` Source downloaded (UTC): 2026-09-10T00:56:04.703Z to 2026-09-10T00:56:04.703Z Record version: sha256:e9b8ac2bab072e2e7bcd62ba1bfc45d85084303f430e9298417f47c2f34175af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-905-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/705/905/#00-status) SEC content: no ##### [705-905-00-1](https://asc.understandingaccounting.org/asc/705/905/#705-905-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:04.703Z to 2026-09-10T00:56:04.703Z Record version: sha256:ccb65888654765a45ec1183c117d329e9f03c1ef72c09f2801ea2709f7350d2d 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
Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
CooperativesSupersededAccounting Standards Update No. 2014-0603/14/2014
Member of an Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
Nonmember of an Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
PatronsAmendedAccounting Standards Update No. 2014-0603/14/2014
905-705-05-1AmendedAccounting Standards Update No. 2014-0603/14/2014
905-705-05-2AmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T00:56:07.104Z to 2026-09-10T00:56:07.104Z Record version: sha256:96d20eb57d39ed2ff8be113d87eb40b81482f31594a9a21256cdd467b2f8a475 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-905-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/705/905/#05-overview-and-background) SEC content: no ##### [705-905-05-1](https://asc.understandingaccounting.org/asc/705/905/#705-905-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:07.104Z to 2026-09-10T00:56:07.104Z Record version: sha256:0eca6d431cda159494e55bd23c11321235e91b9c9fbea6e27401821aac471b41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic only provides links to guidance for [agricultural cooperatives](https://asc.understandingaccounting.org/glossary/a/#agricultural-cooperative "The Agricultural Marketing Act of 1929 defines a cooperative association as any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services. Provided, however, that such associations are operated for producers or purchasers and conform to one or both of the following requirements: No member of an agricultural cooperative association is allowed more than one vote because of the amount of stock or membership capital he may own therein. The association does not pay dividends on stock or membership capital in excess of 8 percent per year. In addition to meeting either of the requirements in this paragraph, the association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers of an agricultural cooperative in an amount greater in value than the total amount of such business transacted by it with or for members. All business transacted by any cooperative association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association.") on amounts that are charged to costs of goods sold when boards of directors assign amounts to unprocessed products. ### Cooperatives ##### [705-905-05-2](https://asc.understandingaccounting.org/asc/705/905/#705-905-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:07.104Z to 2026-09-10T00:56:07.104Z Record version: sha256:fc4d558a19df428e1b734715ec38ec6bf8e598105d6f753377d775245d392a52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cooperatives Subsections only provide links to guidance for [agricultural cooperatives](https://asc.understandingaccounting.org/glossary/a/#agricultural-cooperative "The Agricultural Marketing Act of 1929 defines a cooperative association as any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services. Provided, however, that such associations are operated for producers or purchasers and conform to one or both of the following requirements: No member of an agricultural cooperative association is allowed more than one vote because of the amount of stock or membership capital he may own therein. The association does not pay dividends on stock or membership capital in excess of 8 percent per year. In addition to meeting either of the requirements in this paragraph, the association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers of an agricultural cooperative in an amount greater in value than the total amount of such business transacted by it with or for members. All business transacted by any cooperative association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association.") on amounts that are charged to costs of goods sold when boards of directors assign amounts to unprocessed products. Source downloaded (UTC): 2026-09-10T00:56:11.435Z to 2026-09-10T00:56:11.435Z Record version: sha256:5bf8975b57e8bf940716ca6264592afe9f2c6da48454a188369dd69e8c06af48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-905-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/705/905/#25-recognition) SEC content: no ### Cooperatives ##### [705-905-25-1](https://asc.understandingaccounting.org/asc/705/905/#705-905-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:11.435Z to 2026-09-10T00:56:11.435Z Record version: sha256:2e941261069da8f68b877bfc887505a63ea22c0e19ac91f217108f0a2b6cd52c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [905-405-25-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-25-1) 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](https://asc.understandingaccounting.org/glossary/p/#patrons "Any individual, trust, estate, partnership, corporation, or agricultural cooperative with or for whom a cooperative does business on a cooperative basis, whether a member of an agricultural cooperative or nonmember of an agricultural cooperative."). ##### [705-905-25-2](https://asc.understandingaccounting.org/asc/705/905/#705-905-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:11.435Z to 2026-09-10T00:56:11.435Z Record version: sha256:e7c4493fe42f2076768e58d1a3b6bc489e70681dd53beb9c28d50e07de6df1da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [905-330-25-7](https://asc.understandingaccounting.org/asc/330/905/#330-905-25-7) 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](https://asc.understandingaccounting.org/asc/330/905/#330-905-55-1)) for an illustration of this guidance. Source downloaded (UTC): 2026-09-10T00:56:15.317Z to 2026-09-10T00:56:24.655Z Record version: sha256:fb7f1a5d6c1a6432615fe002c6b148f810c1fca8f41562bd3e2b6f7415fc6b1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-912: Cost of Sales and Services — Contractors—Federal Government ### Machine-generated study aids ```json { "summary": "ASC 705-912 formerly contained cost-of-sales guidance for contractors with the federal government, addressing matters such as contract costs and related recognition and disclosure. Every paragraph in the subtopic (scope, recognition, and disclosure) was superseded by ASU 2014-09 (Revenue from Contracts with Customers). The subtopic is therefore an empty shell; federal government contractors now apply ASC 606 and the cost guidance in ASC 340-40.", "key_points": [ "All substantive paragraphs — 705-912-05-1 (overview), 705-912-15-1 (scope), 705-912-25-1 through 25-3 (recognition), and 705-912-50-1 (disclosure) — were superseded by Accounting Standards Update No. 2014-09.", "No extant recognition, measurement, or disclosure requirements remain in ASC 705-912.", "Revenue and related contract accounting for federal government contractors is now governed by ASC 606, Revenue from Contracts with Customers.", "Costs to obtain and fulfill a contract that were previously addressed by industry cost guidance are now addressed in ASC 340-40, Other Assets and Deferred Costs—Contracts with Customers.", "Entities should consult ASC 912 (Contractors—Federal Government) industry subtopics for any guidance that survived ASU 2014-09 and the transition provisions in ASC 606-10-65-1." ], "categories": [ "Industry-specific", "Revenue", "Transition and effective dates" ], "audience_level": "intermediate", "student_note": "This subtopic is a placeholder — knowing that ASU 2014-09 wiped out the legacy industry-specific contractor cost guidance is the whole point. The common mistake is citing 705-912 as live authority for government contract costs instead of ASC 606 and ASC 340-40.", "related_topics": [ "606", "340-40", "912", "912-20", "705" ], "key_concepts": [ "superseded guidance", "federal government contractors", "cost of sales", "contract costs", "revenue from contracts with customers", "industry-specific guidance" ] } ``` Source downloaded (UTC): 2026-09-10T00:56:15.317Z to 2026-09-10T00:56:15.317Z Record version: sha256:76ce7ffd2bce5e0522ecf962b794b87c35362816d683335cc6f28c6ae3539122 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-912-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/705/912/#00-status) SEC content: no ##### [705-912-00-1](https://asc.understandingaccounting.org/asc/705/912/#705-912-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:15.317Z to 2026-09-10T00:56:15.317Z Record version: sha256:4dbcfa478c7a09585e8bbb66d5731d10d7c3fe3aa196c89199ad2f8ae77e6b55 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
912-705-05-1SupersededAccounting Standards Update No. 2014-0905/28/2014
912-705-15-1SupersededAccounting Standards Update No. 2014-0905/28/2014
912-705-25-1 through 25-3
SupersededAccounting Standards Update No. 2014-0905/28/2014
912-705-50-1SupersededAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:56:18.551Z to 2026-09-10T00:56:18.551Z Record version: sha256:51fd65305761a4bdbe6f1f9ae4a3dd9887266026035dfe81d3152b5d456360ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-912-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/705/912/#05-overview-and-background) SEC content: no ##### [705-912-05-1](https://asc.understandingaccounting.org/asc/705/912/#705-912-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:18.551Z to 2026-09-10T00:56:18.551Z Record version: sha256:234f0261205a6a9496ac6eac21c49c39426d4b5d0a101d6bbaa1ca87dd916f93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:56:20.681Z to 2026-09-10T00:56:20.681Z Record version: sha256:15a1f161566f26ff6378cf054318ac3331f57d1dbabceca72b466de1a1c25759 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-912-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/705/912/#15-scope-and-scope-exceptions) SEC content: no ##### [705-912-15-1](https://asc.understandingaccounting.org/asc/705/912/#705-912-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:20.681Z to 2026-09-10T00:56:20.681Z Record version: sha256:0ed86f5e9257133305d0b0a8b750b802bafafcb19267e5a8dec8fa7d9a0b4cf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:56:22.833Z to 2026-09-10T00:56:22.833Z Record version: sha256:38042a639d73524a767ae330f2c7518ca4257bc5e40bfc4b7bb1a7979adf14a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-912-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/705/912/#25-recognition) SEC content: no ##### [705-912-25-1](https://asc.understandingaccounting.org/asc/705/912/#705-912-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:22.833Z to 2026-09-10T00:56:22.833Z Record version: sha256:5f75330efb6153fe1467286fa9efc2d66c06c4c495dbf5f593e3cf8ce7a602a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-912-25-2](https://asc.understandingaccounting.org/asc/705/912/#705-912-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:22.833Z to 2026-09-10T00:56:22.833Z Record version: sha256:7293c869adb0333f3fd0603d9ecf328ff3c1881b8bcae6069f87e94b779c56ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-912-25-3](https://asc.understandingaccounting.org/asc/705/912/#705-912-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:22.833Z to 2026-09-10T00:56:22.833Z Record version: sha256:4643327096004f19ac655c1f322027cbc239887b42ee0dde21a32873e959c364 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:56:24.655Z to 2026-09-10T00:56:24.655Z Record version: sha256:27ee6b3b99cc95473d748d5c4bf790fed7c4b7549a3dcf1b47cbb00ddeee5e7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-912-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/705/912/#50-disclosure) SEC content: no ##### [705-912-50-1](https://asc.understandingaccounting.org/asc/705/912/#705-912-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:24.655Z to 2026-09-10T00:56:24.655Z Record version: sha256:f4521ee149b94975faedf4f0fee65e6fdd1bc8dd6fe47754a7de573fede18548 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:56:26.941Z to 2026-09-10T00:56:38.121Z Record version: sha256:971fee095dcc11ff17d4fdc8624853494136004a854a0147f3301bc95e806783 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-926: Cost of Sales and Services — Entertainment—Films ### Machine-generated study aids ```json { "summary": "This Subtopic governs how film production and distribution entities account for costs of manufacturing or duplicating products held for sale, such as videocassettes and digital video discs. Manufacturing/duplication costs are charged to expense on a unit-specific basis when the related product revenue is recognized (705-926-25-1). The cost of theatrical film prints is instead expensed over the period benefited (705-926-25-2).", "key_points": [ "The Subtopic addresses costs incurred by film production and distribution entities to manufacture or duplicate products held for sale, such as videocassettes and video discs (705-926-05-1).", "Scope follows the Overall Subtopic on films, Section 926-20-15 (705-926-15-1).", "Manufacturing costs are part of the costs of producing a film (705-926-25-1).", "Manufacturing or duplication costs of products for sale must be charged to expense on a unit-specific basis when the related product revenue is recognized (705-926-25-1).", "The cost of theatrical film prints must be charged to expense over the period benefited (705-926-25-2)." ], "categories": [ "Recognition", "Industry-specific", "Subsequent measurement" ], "audience_level": "intermediate", "student_note": "The key distinction is timing: duplication costs of sellable copies track the specific units' revenue (matching), while theatrical print costs are amortized over the benefit period rather than matched to individual sales. Students often mistakenly lump film print costs in with capitalized film production costs amortized under 926-20.", "related_topics": [ "926-20", "926-10", "926-605", "330", "720" ], "key_concepts": [ "film costs", "manufacturing and duplication costs", "unit-specific expense recognition", "theatrical film prints", "period benefited", "cost of sales", "product revenue recognition" ] } ``` Source downloaded (UTC): 2026-09-10T00:56:26.941Z to 2026-09-10T00:56:26.941Z Record version: sha256:30c338f1674739709aa56a42b73cbbe6fe745f4facc6c6289f448fedd422c14b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-926-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/705/926/#00-status) SEC content: no ##### [705-926-00-1](https://asc.understandingaccounting.org/asc/705/926/#705-926-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:26.941Z to 2026-09-10T00:56:26.941Z Record version: sha256:9b899441e35b036635729fd4477718d177938f29f27b464709553695edd7c352 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
RevenueSupersededAccounting Standards Update No. 2014-0905/28/2014
926-705-25-1AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:56:28.645Z to 2026-09-10T00:56:28.645Z Record version: sha256:1829c43e11c4e6b13f37ed654e8c102693d30e85b483ba7962d902ff783c6d9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-926-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/705/926/#05-overview-and-background) SEC content: no ##### [705-926-05-1](https://asc.understandingaccounting.org/asc/705/926/#705-926-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:28.645Z to 2026-09-10T00:56:28.645Z Record version: sha256:6567253015247e70daa4512039f42119fc332a5a11834d751db6050dd8f6cdc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T00:56:31.777Z to 2026-09-10T00:56:31.777Z Record version: sha256:8ed515ee2c68eab951fde77e58b4e57b42d8ed8c849d25e8368e99d226ce9e23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-926-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/705/926/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [705-926-15-1](https://asc.understandingaccounting.org/asc/705/926/#705-926-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:31.777Z to 2026-09-10T00:56:31.777Z Record version: sha256:723f29fa24705193a5cb61f1ae4206155f50587e719ca51194801c31fbb71567 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 926-20-15. Source downloaded (UTC): 2026-09-10T00:56:38.121Z to 2026-09-10T00:56:38.121Z Record version: sha256:6a09ab6966f53d4d24bd9bbad785d80c8d0ed0c046e21de0add83da57dc1d51b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-926-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/705/926/#25-recognition) SEC content: no #### Costs of Products Held for Sale ##### [705-926-25-1](https://asc.understandingaccounting.org/asc/705/926/#705-926-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:38.121Z to 2026-09-10T00:56:38.121Z Record version: sha256:1befef8c4a93ba53d5459e4c3d7f6c546db81098bc4fbbfae86b9263ed64383e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Theatrical Film Prints ##### [705-926-25-2](https://asc.understandingaccounting.org/asc/705/926/#705-926-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:38.121Z to 2026-09-10T00:56:38.121Z Record version: sha256:5d035416e311469a47f02c5292268dff9fd6a43ee91b7ef35630cc8cbc0c9a3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall charge the cost of theatrical [film prints](https://asc.understandingaccounting.org/glossary/f/#film-prints "Those materials, produced on behalf of a film distributor for delivery to a theater or other similar venue, that contain the completed audio and video elements of a film. Such materials are used by the theater or other similar venue to exhibit the film to its customers.") to expense over the period benefited. Source downloaded (UTC): 2026-09-10T00:56:41.306Z to 2026-09-10T00:56:51.715Z Record version: sha256:45ec2f5e9399925ecb9303b2b0d3de0ed93af795308d1601232bba7cb7f7aa18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-976: Cost of Sales and Services — Real Estate—Retail Land ### Machine-generated study aids ```json { "summary": "ASC 705-976 addresses the measurement of costs related to retail land sales, using the same scope as the Real Estate—Retail Land Overall Subtopic (976-10-15). Its substantive initial measurement guidance was superseded by ASU 2014-09, so the Subtopic now simply directs preparers to Subtopic 340-40 for incremental costs of obtaining a contract with a customer and costs to fulfill a contract.", "key_points": [ "705-976-05-1: The Subtopic provides measurement guidance concerning the cost of retail land sales.", "705-976-15-1: Scope follows the Overall Subtopic scope in Section 976-10-15 (retail land sales).", "705-976-30-1: The former initial measurement paragraph was superseded by ASU 2014-09 (the revenue recognition standard).", "705-976-30-2: Costs of obtaining and fulfilling a contract with a customer are now accounted for under Subtopic 340-40, not under industry-specific retail land guidance." ], "categories": [ "Initial measurement", "Revenue", "Industry-specific" ], "audience_level": "intermediate", "student_note": "This subtopic is essentially a pointer: after ASU 2014-09, retail land sellers no longer have specialized cost-of-sales measurement rules and must apply ASC 340-40's contract cost model. The common mistake is citing legacy retail land cost allocation guidance that has been superseded.", "related_topics": [ "340-40", "976-10", "606-10", "970" ], "key_concepts": [ "retail land sales", "cost of sales", "incremental costs of obtaining a contract", "costs to fulfill a contract", "real estate industry guidance", "superseded guidance" ] } ``` Source downloaded (UTC): 2026-09-10T00:56:41.306Z to 2026-09-10T00:56:41.306Z Record version: sha256:87d371c26e1c5c1807b870d2d4144827afbe3fbcbcdb3672fb12cda59e4f76c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-976-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/705/976/#00-status) SEC content: no ##### [705-976-00-1](https://asc.understandingaccounting.org/asc/705/976/#705-976-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:41.306Z to 2026-09-10T00:56:41.306Z Record version: sha256:b6bce7a461fd09e0b9875e48e55629aeff6d06b3764baa75808e3cec38b782c7 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
Full Accrual MethodSupersededAccounting Standards Update No. 2014-0905/28/2014
976-705-30-1SupersededAccounting Standards Update No. 2014-0905/28/2014
976-705-30-2AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:56:44.398Z to 2026-09-10T00:56:44.398Z Record version: sha256:ffd16f23c7e6babaa37d41174ec9b944e0f2d232b81e7864b07d28c3b665a620 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-976-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/705/976/#05-overview-and-background) SEC content: no ##### [705-976-05-1](https://asc.understandingaccounting.org/asc/705/976/#705-976-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:44.398Z to 2026-09-10T00:56:44.398Z Record version: sha256:278087c13fbe61b039953065ee23a300bc4a9c7afe28910db9f7a65b1fcc6997 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides measurement guidance concerning the cost of retail land sales. Source downloaded (UTC): 2026-09-10T00:56:48.188Z to 2026-09-10T00:56:48.188Z Record version: sha256:cdcbd4e6487a8eb16ec893dba7c0718df12cd49117b944db6810f2cc5a61afb0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-976-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/705/976/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [705-976-15-1](https://asc.understandingaccounting.org/asc/705/976/#705-976-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:48.188Z to 2026-09-10T00:56:48.188Z Record version: sha256:cf7b23b331e1e39cc5ca43e9ff302d7d91421a9caae649bdecda16aec0448a7b 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 976-10-15. Source downloaded (UTC): 2026-09-10T00:56:50.002Z to 2026-09-10T00:56:50.002Z Record version: sha256:bf80daccfc71ebb0d1c9b1bcb06f8014d57392beb32471eb856fa5712af96202 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-976-20: 20 Glossary [Read section](https://asc.understandingaccounting.org/asc/705/976/#20-glossary) SEC content: no Source downloaded (UTC): 2026-09-10T00:56:51.715Z to 2026-09-10T00:56:51.715Z Record version: sha256:744286cdeb25708a363c97aaba309b4e9ca771bf66d9d20cca86d03b847886bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-976-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/705/976/#30-initial-measurement) SEC content: no ##### [705-976-30-1](https://asc.understandingaccounting.org/asc/705/976/#705-976-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:51.715Z to 2026-09-10T00:56:51.715Z Record version: sha256:76759c78327e606ddd34200dd2eb95192ab0da21ce435f7901a4d1bf9a6ca834 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [705-976-30-2](https://asc.understandingaccounting.org/asc/705/976/#705-976-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:51.715Z to 2026-09-10T00:56:51.715Z Record version: sha256:f190b0f4e1a3c4aa84ae8f58cee259e2d97bdc9ac6bb92c23d4777b37ce1316e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Subtopic 340-40 for guidance on incremental costs of obtaining a contract with a customer and costs to fulfill a contract. Source downloaded (UTC): 2026-09-10T00:56:55.035Z to 2026-09-10T00:57:08.857Z Record version: sha256:67ead8cfd7363e179c40c9646bccc55480002c525c7de397efc55dc766b426d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-985: Cost of Sales and Services — Software ### Machine-generated study aids ```json { "summary": "ASC 705-985 is a \"links only\" subtopic that points to the authoritative guidance elsewhere in the Codification on cost of sales and services for computer software. Its content is that amortization of capitalized software development costs for products marketed to others is charged to cost of sales or a similar expense category (per 985-20-45-1), while duplication/packaging costs are inventory costs under 985-330 and costs to keep software current with hardware revisions are addressed in 985-20-55-11 through 55-12.", "key_points": [ "705-985-05-1 states this Subtopic only provides links to guidance on costs of sales and services related to computer software; it contains no independent recognition or measurement rules.", "705-985-25-1 cross-references 985-20-45-1: amortization of capitalized costs to develop software marketed to others is charged to cost of sales or a similar expense category, not to operating expense lines like R&D or SG&A.", "705-985-25-2 directs preparers to Subtopic 985-330 for costs of duplicating software, documentation, and training materials from product masters and for physically packaging the product for distribution (inventory costs).", "705-985-25-3 directs preparers to paragraphs 985-20-55-11 through 55-12 for the treatment of costs incurred to keep software current with hardware revisions." ], "categories": [ "Presentation", "Inventory and PP&E", "Industry-specific", "Subsequent measurement" ], "audience_level": "intermediate", "student_note": "Remember this subtopic exists mainly as a signpost — the real rules live in 985-20 and 985-330. The common mistake is classifying amortization of capitalized software development costs as an operating expense or R&D; for software marketed to others it belongs in cost of sales.", "related_topics": [ "985-20", "985-330", "350-40", "730" ], "key_concepts": [ "cost of sales", "capitalized software development costs", "amortization of software costs", "software marketed to others", "product masters", "duplication and packaging costs", "hardware revisions", "cross-reference subtopic" ] } ``` Source downloaded (UTC): 2026-09-10T00:56:55.035Z to 2026-09-10T00:56:55.035Z Record version: sha256:102700d6b41f890c9e17de7a5d9e2807f76285e989b37cb9858be5cb539565e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-985-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/705/985/#00-status) SEC content: no ##### [705-985-00-1](https://asc.understandingaccounting.org/asc/705/985/#705-985-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:55.035Z to 2026-09-10T00:56:55.035Z Record version: sha256:41149da3221825b13408037a3a0e6036b6cd7f78e2eebb0bf6154c97f1ad210f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No updates have been made to this subtopic. Source downloaded (UTC): 2026-09-10T00:56:57.942Z to 2026-09-10T00:56:57.942Z Record version: sha256:f882eeaf01409d772ac9fc4496f0eed363580289610fdd01dbe02f7dfd82e27f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-985-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/705/985/#05-overview-and-background) SEC content: no ##### [705-985-05-1](https://asc.understandingaccounting.org/asc/705/985/#705-985-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:56:57.942Z to 2026-09-10T00:56:57.942Z Record version: sha256:759e723dfdbb86cc07ac26208f99065d4a623279ebec7196916e489ead96605c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic only provides links to guidance on costs of sales and services related to computer software. Source downloaded (UTC): 2026-09-10T00:57:01.817Z to 2026-09-10T00:57:01.817Z Record version: sha256:acce91d1f5b4a88b0257c7893acec99eb1543261990dbb772090ef8beb470b60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-985-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/705/985/#25-recognition) SEC content: no #### Amortization of Capitalized Software Development Costs ##### [705-985-25-1](https://asc.understandingaccounting.org/asc/705/985/#705-985-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:57:01.817Z to 2026-09-10T00:57:01.817Z Record version: sha256:8d5623c0b423db7b01d9876e29ef56a77a90acf4146aa40afdc5b4d7acf12934 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [985-20-45-1](https://asc.understandingaccounting.org/asc/985/20/#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. #### Cost of Duplicating Software, Documentation, Training Materials, and Packaging ##### [705-985-25-2](https://asc.understandingaccounting.org/asc/705/985/#705-985-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:57:01.817Z to 2026-09-10T00:57:01.817Z Record version: sha256:fb8822bb5ce9ae4279f7a41ee65a8a79e527db6ad2c78f62f69542c41a49c3e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Costs to Keep Software Current with Hardware Revisions ##### [705-985-25-3](https://asc.understandingaccounting.org/asc/705/985/#705-985-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:57:01.817Z to 2026-09-10T00:57:01.817Z Record version: sha256:0e702d1616d601fc6f50acf37b2fec7d1ec9b14718b3fcdca6143cae27bfe747 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on costs to keep certain software current with hardware revisions, see paragraphs [985-20-55-11 through 55-12](https://asc.understandingaccounting.org/asc/985/20/#985-20-55-11) . Source downloaded (UTC): 2026-09-10T00:57:05.784Z to 2026-09-10T00:57:05.784Z Record version: sha256:77acc9a9235a77872415a2ab5fcc892884915b113832379bf4c8a63e76e5bc75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-985-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/705/985/#sec-25-recognition) SEC content: yes #### Film and Software Costs Associated with Developing Entertainment and Educational Software Products ##### [705-985-S25-1](https://asc.understandingaccounting.org/asc/705/985/#705-985-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:57:05.784Z to 2026-09-10T00:57:05.784Z Record version: sha256:28ad5175764f4bc2371b844cc8cdf50a3c5a32a41922b5e58d9e57dc706c984c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [985-705-S99-1](https://asc.understandingaccounting.org/asc/705/985/#705-985-S99-1), SEC Observer Comment: Accounting for the Film and Software Costs Associated with Developing Entertainment and Educational Software Products, for SEC Staff views on the accounting for costs related to the development of entertainment and educational software products. Source downloaded (UTC): 2026-09-10T00:57:08.857Z to 2026-09-10T00:57:08.857Z Record version: sha256:c766b150b6bbd33d87135af11bde3b9830e25ca6594cd6dea179bee775e91883 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 705-985-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/705/985/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [705-985-S99-1](https://asc.understandingaccounting.org/asc/705/985/#705-985-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:57:08.857Z to 2026-09-10T00:57:08.857Z Record version: sha256:113c30b069145e5cc83d8095b5dd4a4f862d94f4cb004bbbd21fa5f5133074c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.