# ASC 720-972: Other Expenses — Real Estate—Common Interest Realty Associations

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/720/972/)

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## ASC 720-972: Other Expenses — Real Estate—Common Interest Realty Associations

### Machine-generated study aids

```json
{
  "summary": "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": [
    "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)."
  ],
  "categories": [
    "Recognition",
    "Industry-specific",
    "Financial statement presentation"
  ],
  "audience_level": "intermediate",
  "student_note": "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.",
  "related_topics": [
    "972-10",
    "972-360",
    "972-605",
    "958-205"
  ],
  "key_concepts": [
    "common interest realty association",
    "fund accounting",
    "major repairs and replacements fund",
    "common property",
    "interfund transfer",
    "operating fund",
    "property fund"
  ]
}
```

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## ASC 720-972-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/720/972/#05-overview-and-background)

SEC content: no

##### [720-972-05-1](https://asc.understandingaccounting.org/asc/720/972/#720-972-05-1)

Pending content: no

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This Subtopic addresses the accounting for major repair or replacement expenditures by [common interest realty associations](https://asc.understandingaccounting.org/glossary/c/#common-interest-realty-association "An association, also known as a community association, responsible for the governance of the common interest community, for which it was established to serve. A common interest realty association is generally funded by its members via periodic assessments by the common interest realty association so that it can perform its duties, which include management services and maintenance, repair, and replacement of the common property, among other duties established in the governing documents and by state statute.").

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## ASC 720-972-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/720/972/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [720-972-15-1](https://asc.understandingaccounting.org/asc/720/972/#720-972-15-1)

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

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## ASC 720-972-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/720/972/#25-recognition)

SEC content: no

##### [720-972-25-1](https://asc.understandingaccounting.org/asc/720/972/#720-972-25-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:13:52.448Z to 2026-09-10T01:13:52.448Z

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[Common interest realty associations](https://asc.understandingaccounting.org/glossary/c/#common-interest-realty-association "An association, also known as a community association, responsible for the governance of the common interest community, for which it was established to serve. A common interest realty association is generally funded by its members via periodic assessments by the common interest realty association so that it can perform its duties, which include management services and maintenance, repair, and replacement of the common property, among other duties established in the governing documents and by state statute.") 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](https://asc.understandingaccounting.org/glossary/c/#common-property "A common interest realty association's real or personal property to which title or other evidence of ownership is held by either: Individual members in common The common interest realty association directly.") 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).