ASC

ASC 720-942

Financial Services—Depository and Lending

720 Other Expenses

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In brief

IntermediateRecognitionIndustry-specific

This Subtopic governs how depository institutions account for assessments imposed by the Financing Corporation (FICO) under the Deposit Insurance Funds Act of 1996, which requires institutions with deposits assessable by the Deposit Insurance Fund to help finance outstanding FICO bonds. The single rule is that the FICO assessment is reported as a period cost as incurred (720-942-25-1) rather than capitalized or accrued for future periods.

Key points (4)
  • The Subtopic applies to all depository institutions that are subject to Financing Corporation assessment (720-942-15-1).
  • The Deposit Insurance Funds Act of 1996 authorizes FICO to impose an assessment on institutions with deposits assessable by the Deposit Insurance Fund to share the cost of financing outstanding FICO bonds (720-942-05-2).
  • A depository institution shall report the FICO assessment as a period cost as incurred (720-942-25-1).
  • Because the assessment is expensed as incurred, no asset or liability is recognized for the institution's share of future FICO bond financing costs.

For students. A very short, single-rule industry Subtopic: the FICO assessment is simply an expense of the period incurred. The common mistake is treating the assessment as a prepaid asset or accruing the institution's share of the entire remaining FICO bond obligation instead of recognizing it period by period.

financing corporation assessmentdeposit insurance funddepository institutionperiod costexpense as incurreddeposit insurance funds act of 1996

Machine-generated study aid for ASC 720-942. Check the source paragraphs below.

720-942-00Status

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720-942-00-1
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
942-720-05-2 Amended Maintenance Update 2014-07 (PDF) 03/17/2014

720-942-05Overview and Background

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720-942-05-1
This Subtopic addresses the recognition of assessments by the Financing Corporation.
720-942-05-2
On September 30, 1996, the Deposit Insurance Funds Act of 1996 was enacted. The Act authorizes the Financing Corporation (FICO) to impose an assessment on institutions with deposits assessable by the Deposit Insurance Fund to share in the cost of financing outstanding FICO bonds.

720-942-15Scope and Scope Exceptions

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Overall Guidance

720-942-15-1
The guidance in this Subtopic applies to all depository institutions that are subject to Financing Corporation assessment.

720-942-25Recognition

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720-942-25-1
A depository institution shall report the Financing Corporation (FICO) assessment as a period cost as incurred.

Related subtopics