ASC

ASC 720-972

Real Estate—Common Interest Realty Associations

720 Other Expenses

Download JSONDownload Markdown3 paragraphs · 3 sectionsJump to summary

Source downloaded: .Record version 1567c470e761. Effective date must be checked in the source.

In brief

IntermediateRecognitionIndustry-specificFinancial statement presentation

This Subtopic tells common interest realty associations (CIRAs) — such as condominium and homeowners' associations — how to account for expenditures on major repairs or replacements of common property. Under 720-972-25-1, a CIRA that uses fund accounting charges such expenditures to the fund(s) established for major repairs and replacements; if the expenditure relates to common property that has been recognized as an asset, the amount is instead reported as a transfer to the operating fund (or property fund, if one exists).

Key points (4)
  • The Subtopic addresses accounting for major repair or replacement expenditures by common interest realty associations (720-972-05-1).
  • Its scope is the same as that of the Overall Subtopic, ASC 972-10-15 (720-972-15-1).
  • A CIRA using fund accounting charges expenditures for major repairs or replacements to the fund or funds established for major repairs and replacements (720-972-25-1).
  • If the expenditure from the major repairs and replacement fund relates to common property that is recognized as an asset, the amount expended is reported as a transfer to the operating fund — or to the property fund if such a fund has been established (720-972-25-1).

For students. The trap is treating every replacement outlay as an expense of the replacement fund: if the underlying common property is capitalized as an asset, the outlay is a transfer between funds rather than a charge against the replacement fund. Knowing whether the CIRA recognizes common property as an asset drives the answer.

common interest realty associationfund accountingmajor repairs and replacements fundcommon propertyinterfund transferoperating fundproperty fund

Machine-generated study aid for ASC 720-972. Check the source paragraphs below.

720-972-05Overview and Background

Source downloaded: .Record version f93140d64684. Effective date must be checked in the source.

720-972-05-1
This Subtopic addresses the accounting for major repair or replacement expenditures by common interest realty associations.

720-972-15Scope and Scope Exceptions

Source downloaded: .Record version 06f5ecacfcee. Effective date must be checked in the source.

Overall Guidance

720-972-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 972-10-15.

720-972-25Recognition

Source downloaded: .Record version 8a8a04bf342e. Effective date must be checked in the source.

720-972-25-1
Common interest realty associations that use fund accounting shall charge expenditures for major repairs or replacements to the fund or funds established for major repairs or replacements. If an expenditure from the major repairs and replacement fund relates to common property recognized as an asset, the amount expended shall be reported as a transfer to the operating fund (or property fund, if such a fund is established).

Related subtopics