{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/720/940/","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","number":"720-940","topic":"720","title":"Financial Services—Brokers and Dealers","area":"Expenses","paragraphs":4,"summary":"This short subtopic addresses how brokers and dealers in securities account for mutual fund distribution costs. Its only substantive instruction is a cross-reference: for 12b-1 fees and contingent deferred sales charges, apply the cost guidance in Subtopic 946-720 (Investment Companies—Other Expenses). Its scope follows the broker-dealer Overall Subtopic scope in Section 940-10-15.","concepts":["mutual fund distribution costs","12b-1 fees","deferred sales charges","broker-dealers","other expenses","cross-reference guidance"],"categories":["Industry-specific","Recognition","Financial statement presentation"],"level":"intermediate","topic_title":"Other Expenses","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"720-940-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
12b-1AddedAccounting Standards Update No. 2014-0905/28/2014
940-720-05-1AddedAccounting Standards Update No. 2014-0905/28/2014
940-720-15-1AddedAccounting Standards Update No. 2014-0905/28/2014
940-720-25-1AddedAccounting Standards Update No. 2014-0905/28/2014
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This Subtopic addresses the accounting for mutual fund distribution costs for brokers and dealers in securities (broker-dealers).
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 940-10-15.
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With respect to 12b-1 fees and deferred sales charges, see the cost guidance in Subtopic 946-720.
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Its only substantive instruction is a cross-reference: for 12b-1 fees and contingent deferred sales charges, apply the cost guidance in Subtopic 946-720 (Investment Companies—Other Expenses). Its scope follows the broker-dealer Overall Subtopic scope in Section 940-10-15.","key_points":["The subtopic covers accounting for mutual fund distribution costs incurred by broker-dealers (720-940-05-1).","Scope is the same as the broker-dealer Overall Subtopic, Section 940-10-15 (720-940-15-1).","For 12b-1 fees and deferred sales charges, the applicable cost guidance is in Subtopic 946-720 (720-940-25-1).","The subtopic itself contains no independent recognition, measurement, or disclosure requirements beyond the cross-reference."],"categories":["Industry-specific","Recognition","Financial statement presentation"],"audience_level":"intermediate","student_note":"Recognize this as a pointer subtopic, not a source of rules: if asked how a broker-dealer accounts for 12b-1 fees or deferred sales charges, the answer is found in 946-720. A common mistake is assuming 720-940 permits capitalizing distribution costs; it prescribes nothing on its own.","related_topics":["946-720","940-10","940-20","720-10"],"key_concepts":["mutual fund distribution costs","12b-1 fees","deferred sales charges","broker-dealers","other expenses","cross-reference guidance"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3d13aa8be311c587a71c31db373917997eb8cfb57166e4b175595707c80b6abc","downloaded_from":"2026-09-10T01:10:51.348Z","last_downloaded_at":"2026-09-10T01:11:02.039Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"720-946","title":"Financial Services—Investment Companies","topic_title":"Other 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