{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/720/944/","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":"720-944","topic":"720","title":"Financial Services—Insurance","area":"Expenses","paragraphs":11,"summary":"ASC 944-720 tells insurance entities which costs must be expensed as incurred rather than capitalized as deferred acquisition costs. Because 944-30-25-1A permits capitalization only of incremental direct acquisition costs relating to successful contract acquisitions or renewals, everything else — non-qualifying acquisition-related costs and all indirect costs — is charged to expense as incurred (944-720-25-2).","concepts":["deferred acquisition costs","successful efforts capitalization","indirect costs","expense as incurred","direct-response advertising","agent commissions","general overhead","insurance entity"],"categories":["Recognition","Industry-specific","Initial measurement"],"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":"720-944-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Acquisition CostsAmendedAccounting Standards Update No. 2010-2610/13/2010
944-720-25-1AmendedAccounting Standards Update No. 2010-2610/13/2010
944-720-25-2AmendedAccounting Standards Update No. 2010-2610/13/2010
944-720-55-1AmendedAccounting Standards Update No. 2014-0905/28/2014
944-720-55-1AddedAccounting Standards Update No. 2010-2610/13/2010
944-720-55-2AddedAccounting Standards Update No. 2010-2610/13/2010
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This Subtopic provides guidance to insurance entities on accounting for and financial reporting of other expenses.
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In a number of life insurance entities, virtually all sales expense is composed of compensation paid to agents. Such compensation relates directly to the amount of business produced by an agent.
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In other entities, considerably less compensation will be paid to agents; however, additional sums will be paid to salaried employees, such as branch managers and employees, or to field representatives, who call on and assist the agents.
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There are also entities that do not sell through agents. Some entities use mail, the internet, and other mass-marketing methods to sell their products.
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15.
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Paragraph 944-30-25-1A requires that an insurance entity capitalize certain acquisition costs directly related to successful contracts.
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An insurance entity shall charge to expense as incurred any of the following costs:
  1. a
    An acquisition-related cost that cannot be capitalized in accordance with paragraph 944-30-25-1A (for implementation guidance, see paragraph 944-720-55-1)
  2. b
    An indirect cost (for implementation guidance, see paragraph 944-720-55-2).
","snippet":"An insurance entity shall charge to expense as incurred any of the following costs:\n(a) An acquisition-related cost that cannot be capitalized in accordance with paragraph 944-30-25-1A (for implementation guidance, see p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dfee5756953e8c7c9710eb6fe9ea801e4ea43131102d5a19a77cb661d9980fec","downloaded_from":"2026-09-10T01:11:30.049Z","last_downloaded_at":"2026-09-10T01:11:30.049Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477550","source_sha256":"b564a1be453ba54303d768c7220036c3a941535da72ab6b664b4c05db67cdd6d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c2c9f05e313a2c1b177305ed4c05aba80949cde7b65231dbe90e8e50f085cb54","downloaded_from":"2026-09-10T01:11:30.049Z","last_downloaded_at":"2026-09-10T01:11:30.049Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477550","source_sha256":"b564a1be453ba54303d768c7220036c3a941535da72ab6b664b4c05db67cdd6d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:efc2fbe806960afe7bfeda24a1d8a7ee565ba3f27303d06dc6a3c03b6877a163","downloaded_from":"2026-09-10T01:11:30.049Z","last_downloaded_at":"2026-09-10T01:11:30.049Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477550","source_sha256":"b564a1be453ba54303d768c7220036c3a941535da72ab6b664b4c05db67cdd6d"}},{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"720-944-55-1","para":"55-1","html":"
This implementation guidance addresses paragraph 944-720-25-2(a), which requires that an insurance entity charge to expense as incurred any acquisition-related cost that cannot be capitalized in accordance with paragraphs 944-30-25-1A through 25-1AA. Such costs include costs of all of the following:
  1. a
    Soliciting potential customers (except direct-response advertising capitalized in accordance with paragraph 944-30-25-1AA)
  2. b
    Market research
  3. c
    Training
  4. d
    Administration
  5. e
    Unsuccessful acquisition or renewal efforts (except direct-response advertising capitalized in accordance with paragraph 944-30-25-1AA)
  6. f
    Product development.
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This implementation guidance addresses paragraph 944-720-25-2(b), which requires that an insurance entity charge to expense as incurred any indirect cost. Such costs include all of the following:
  1. a
    Administrative costs
  2. b
    Rent
  3. c
    Depreciation
  4. d
    Occupancy costs
  5. e
    Equipment costs (including data processing equipment dedicated to acquiring insurance contracts)
  6. f
    Other general overhead.
","snippet":"This implementation guidance addresses paragraph 944-720-25-2(b), which requires that an insurance entity charge to expense as incurred any indirect cost. Such costs include all of the following:\n(a) Administrative costs…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:83ca83e558d456498cecde9dbbd1c7643db958f0569f695a388ce830d99e2710","downloaded_from":"2026-09-10T01:11:34.185Z","last_downloaded_at":"2026-09-10T01:11:34.185Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478516","source_sha256":"4aadb7d7b55b374569ec633ba24a3df0931e6f209a8c595fa9084236ee640c51"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d3782c4c9bf206ff4668fc4f12585cc60e7c34e0769fad98cdc356c777ef2e33","downloaded_from":"2026-09-10T01:11:34.185Z","last_downloaded_at":"2026-09-10T01:11:34.185Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478516","source_sha256":"4aadb7d7b55b374569ec633ba24a3df0931e6f209a8c595fa9084236ee640c51"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d5fab1e7324d30c4d23a5e396ffb8f33560c460005b1001ed1cf0ea2cd5e334e","downloaded_from":"2026-09-10T01:11:34.185Z","last_downloaded_at":"2026-09-10T01:11:34.185Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478516","source_sha256":"4aadb7d7b55b374569ec633ba24a3df0931e6f209a8c595fa9084236ee640c51"}},{"number":"60","label":"60 Relationships","anchor":"60-relationships","is_sec":false,"groups":[{"block":null,"heading":"Other Expenses","paragraphs":[{"citation":"720-944-60-1","para":"60-1","html":"
For guidance on accounting for insurance costs by any insured entity, see Subtopic 720-20.
","snippet":"For guidance on accounting for insurance costs by any insured entity, see Subtopic 720-20.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b7a320c2e75a8d56e68cba80de670882099d6938d3f58d9c78215cd4fe5872ab","downloaded_from":"2026-09-10T01:11:36.351Z","last_downloaded_at":"2026-09-10T01:11:36.351Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479085","source_sha256":"5aa2f8d6b3e17b7de77d8dd6f2c6a9ffdaa900d502eafece5b97dc3f54bf5b97"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:09229cee37f30fdfdf60e7b5756ffad8223760b45b8dfaab8767eb94b344357b","downloaded_from":"2026-09-10T01:11:36.351Z","last_downloaded_at":"2026-09-10T01:11:36.351Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479085","source_sha256":"5aa2f8d6b3e17b7de77d8dd6f2c6a9ffdaa900d502eafece5b97dc3f54bf5b97"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:79beb7843fef31fbf2e1ecbd276ca63a8840e96b17cad18d5760b91a0953f549","downloaded_from":"2026-09-10T01:11:36.351Z","last_downloaded_at":"2026-09-10T01:11:36.351Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479085","source_sha256":"5aa2f8d6b3e17b7de77d8dd6f2c6a9ffdaa900d502eafece5b97dc3f54bf5b97"}}],"enrichment":{"summary":"ASC 944-720 tells insurance entities which costs must be expensed as incurred rather than capitalized as deferred acquisition costs. Because 944-30-25-1A permits capitalization only of incremental direct acquisition costs relating to successful contract acquisitions or renewals, everything else — non-qualifying acquisition-related costs and all indirect costs — is charged to expense as incurred (944-720-25-2).","key_points":["944-720-25-2(a) requires an insurance entity to expense as incurred any acquisition-related cost that fails the capitalization criteria of 944-30-25-1A.","944-720-25-2(b) requires an insurance entity to expense as incurred all indirect costs.","Per 944-720-55-1, non-capitalizable acquisition-related costs include soliciting potential customers, market research, training, administration, unsuccessful acquisition or renewal efforts, and product development — except direct-response advertising capitalized under 944-30-25-1AA.","Per 944-720-55-2, indirect costs that must be expensed include administrative costs, rent, depreciation, occupancy costs, equipment costs (including data processing equipment dedicated to acquiring insurance contracts), and other general overhead.","The Subtopic follows the scope of 944-10-15 (944-720-15-1) and observes that sales expense structures vary — agent commissions tied to business produced, salaried branch/field personnel, or mass-marketing channels (944-720-05-2 through 05-4).","For accounting for insurance costs by an insured (non-insurer) entity, look to Subtopic 720-20 rather than this Subtopic (944-720-60-1)."],"categories":["Recognition","Industry-specific","Initial measurement"],"audience_level":"intermediate","student_note":"This is the mirror image of the DAC rules: after ASU 2010-26 only incremental direct costs of *successful* contract acquisitions may be deferred, so know the expense-as-incurred lists cold. The most common mistake is deferring costs of unsuccessful selling efforts, training, or overhead allocated to acquisition activity — only direct-response advertising meeting 944-30-25-1AA escapes immediate expensing.","related_topics":["944-30","944-10","720-20","944-40","340-20"],"key_concepts":["deferred acquisition costs","successful efforts capitalization","indirect costs","expense as incurred","direct-response advertising","agent commissions","general overhead","insurance entity"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0f10e90aee0cae139a876a0abf09f7bd8d29b47e5094ed65fc313e521c4a5103","downloaded_from":"2026-09-10T01:11:16.270Z","last_downloaded_at":"2026-09-10T01:11:38.484Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"340-944","title":"Financial 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