ASC

ASC 720-952

Franchisors

720 Other Expenses

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In brief

IntermediateIndustry-specificRevenueTransition and effective datesDisclosure

ASC 720-952 was the franchisor-specific guidance on other expenses (franchise costs such as direct and indirect costs of franchise sales and continuing franchise services). Every paragraph in the subtopic has been superseded — the recognition, presentation and other guidance by Maintenance Update 2017-09 and the disclosure paragraph by ASU 2014-09 (Revenue from Contracts with Customers). As a result, the subtopic contains no operative guidance today; franchisor cost accounting is addressed under ASC 606 and ASC 340-40.

Key points (4)
  • All of the scope, recognition, presentation and other-presentation-matters paragraphs (720-952-05-1, 15-1, 25-1, 25-2, 45-1) were superseded by Maintenance Update 2017-09, leaving no substantive expense guidance for franchisors in this subtopic.
  • The single disclosure paragraph, 720-952-50-1, was superseded by Accounting Standards Update No. 2014-09, the revenue recognition standard.
  • Because ASU 2014-09 replaced the legacy franchisor revenue and related cost model, costs of obtaining and fulfilling franchise contracts are now evaluated under ASC 340-40 and revenue under ASC 606.
  • A superseded paragraph number is retained in the Codification as a placeholder; students should not cite it as current GAAP but may need it when analyzing pre-adoption financial statements.

For students. This subtopic is a shell: knowing that it is fully superseded is the point, and the common mistake is citing old franchisor cost-deferral rules that ASU 2014-09 eliminated. For current franchisor accounting, go to ASC 606 for revenue and ASC 340-40 for contract costs.

superseded guidancefranchisor costsfranchise fee revenuecosts to obtain a contractcosts to fulfill a contractindustry-specific expense guidance

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720-952-00Status

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720-952-00-1
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Continuing Franchise Fees Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
Contract Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
Contract Added Accounting Standards Update No. 2014-09 05/28/2014
Customer Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
Customer Added Accounting Standards Update No. 2014-09 05/28/2014
Franchisor Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
952-720-05-1 Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
952-720-15-1 Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
952-720-25-1 Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
952-720-25-2 Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
952-720-25-2 Amended Accounting Standards Update No. 2014-09 05/28/2014
952-720-45-1 Superseded Maintenance Update 2017-09 (PDF) 05/30/2017
952-720-45-1 Added Accounting Standards Update No. 2014-09 05/28/2014
952-720-50-1 Superseded Accounting Standards Update No. 2014-09 05/28/2014

720-952-05Overview and Background

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720-952-15Scope and Scope Exceptions

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720-952-20Glossary

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720-952-25Recognition

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720-952-45Other Presentation Matters

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720-952-50Disclosure

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