# ASC 720-946-25: Other Expenses — Financial Services—Investment Companies — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/720/946/#25-recognition) 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): 2026-09-10T01:11:53.415Z to 2026-09-10T01:11:53.415Z Record version: sha256:3bdc9e880e586e91e2ff924f7eb52ec16f426635fde3651d04304d681ba3f32b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-946-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/720/946/#25-recognition) SEC content: no #### Investment Adviser's Offering Costs When both 12b-1 Fees and Contingent-Deferred Sales Fees Are Not Received ##### [720-946-25-1](https://asc.understandingaccounting.org/asc/720/946/#720-946-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:11:53.415Z to 2026-09-10T01:11:53.415Z Record version: sha256:5f3d6ff4dd949c3a52a30633d9aa0bd4068a4f8dfabfc52a9a2a1313c7c90e3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [946-720-25-4](https://asc.understandingaccounting.org/asc/720/946/#720-946-25-4) provides guidance on accounting by investment advisers who are reimbursed, for [offering costs](https://asc.understandingaccounting.org/glossary/o/#offering-costs "Offering costs include all of the following: Legal fees pertaining to the investment company's shares offered for sale Securities and Exchange Commission (SEC)and state registration fees Underwriting and other similar costs Costs of printing prospectuses for sales purposes Initial fees paid to be listed on an exchange Tax opinion costs related to offering of shares Initial agency fees of securing the rating for bonds or preferred stock issued by closed-end funds.") paid, through both [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940.") fees and [contingent-deferred sales fees](https://asc.understandingaccounting.org/glossary/c/#contingent-deferred-sales-load "A sales charge imposed directly on redeeming shareholders based on a percentage of the lesser of the redemption proceeds or original cost. The percentage may decrease or be eliminated based on the duration of share ownership (frequently decreases by 1 percent a year). Also referred to as back-end load."). Accordingly, the accounting by those investment advisers for offering costs are outside the scope of the guidance in paragraphs [946-720-25-2 through 25-3](https://asc.understandingaccounting.org/asc/720/946/#720-946-25-2) . ##### [720-946-25-2](https://asc.understandingaccounting.org/asc/720/946/#720-946-25-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:11:53.415Z to 2026-09-10T01:11:53.415Z Record version: sha256:7fcc2cf4f47c65b27a15de714239b6cc7aef464e098d6443ea4427a0c93067f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Benefits expected from the expenditures paid by an investment adviser in connection with the distribution of shares of a fund in circumstances in which the investment adviser does not receive both 12b-1 fees and contingent-deferred sales fees do not meet the definition of an asset of the investment adviser as provided in FASB Concepts Statement No. 6, Elements of Financial Statements. Accordingly, such offering costs paid by the investment adviser shall be expensed as incurred. Initial offering costs paid by an investment adviser that does not receive both 12b-1 fees and contingent-deferred sales fees are start-up costs of the investment adviser, which should be accounted for in accordance with Subtopic 720-15. Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [105-10-65-9](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-9) Costs incurred by an investment adviser in connection with the distribution of shares of a fund in circumstances in which the investment adviser does not receive both 12b-1 fees and contingent-deferred sales fees shall be expensed as incurred. Initial offering costs paid by an investment adviser that does not receive both 12b-1 fees and contingent-deferred sales fees are start-up costs of the investment adviser, which should be accounted for in accordance with Subtopic 720-15. #### Distribution Costs for Funds ##### [720-946-25-3](https://asc.understandingaccounting.org/asc/720/946/#720-946-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:11:53.415Z to 2026-09-10T01:11:53.415Z Record version: sha256:daf16ecc55eb9881b114b2acfd21dc0127ff658fb4ad5e207f3967ae81c031b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraph [946-720-25-2](https://asc.understandingaccounting.org/asc/720/946/#720-946-25-2) applies also to distribution plans of open-end investment companies permitted under Rule 12b-1. Some closed-end interval funds incur distribution-related fees (similar to 12b-1 fees) and impose early withdrawal charges (similar to contingent-deferred sales fees) pursuant to exemptive orders issued under the Investment Company Act of 1940. In addition, certain funds not subject to regulation under the Investment Company Act of 1940 also may incur fees and impose charges that are substantially the same as 12b-1 fees and contingent-deferred sales fees, respectively. In those instances, an entity shall defer and amortize the incremental direct costs and shall account for offering costs incurred for distribution of those funds in a manner similar to the accounting specified in paragraph [946-720-25-4](https://asc.understandingaccounting.org/asc/720/946/#720-946-25-4). ##### [720-946-25-4](https://asc.understandingaccounting.org/asc/720/946/#720-946-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:11:53.415Z to 2026-09-10T01:11:53.415Z Record version: sha256:eef592665f6aab22db7c82cace7dbb36ea992bb579d36535773f636dba3df62f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Distributors of mutual funds that do not have a [front-end load](https://asc.understandingaccounting.org/glossary/f/#front-end-load "A sales commission or charge payable at the time of purchase of mutual fund shares.") shall defer and amortize the incremental direct costs and shall expense the indirect costs when incurred.