# ASC 720-978: Other Expenses — Real Estate—Time-Sharing Activities Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/720/978/) 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): 2026-09-10T01:14:14.996Z to 2026-09-10T01:14:26.123Z Record version: sha256:10722cb4af9e62297d64fd6e1a87205f82d2b60f06ebe2ef76e0cd35767d407d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-978: Other Expenses — Real Estate—Time-Sharing Activities ### Machine-generated study aids ```json { "summary": "This subtopic governs how a time-share seller accounts for other expenses of time-sharing activities — chiefly selling and marketing costs and subsidies of the owners association. The core rule is that all costs incurred to sell time-sharing intervals are expensed as incurred unless they qualify for capitalization as costs to obtain a contract under ASC 340-40-25-1 through 25-4, and seller payments of dues, maintenance fees, or subsidies of owners association losses are likewise expensed as incurred.", "key_points": [ "All costs incurred to sell time-sharing intervals are charged to expense as incurred unless they specifically qualify for capitalization under paragraphs 340-40-25-1 through 25-4 (720-978-25-1).", "Costs that must be expensed include costs to induce potential buyers to take sales tours (e.g., telemarketing call centers), all costs of unsuccessful sales transactions, and all sales overhead such as on-site and off-site sales office rent, utilities, maintenance, and telephone (720-978-25-2).", "Advertising costs are accounted for under Subtopic 720-35; direct incremental costs of tour fulfillment, such as airline tickets to bring customers to a tour location, are expensed at the time the tour takes place (720-978-25-2).", "Seller payments of dues or maintenance fees on unsold intervals are expensed as incurred, except when accounted for as incidental operations during holding periods under 978-330-35-3 through 35-6 (720-978-25-3).", "Seller payments of additional amounts to subsidize owners association losses are charged to expense as incurred (720-978-25-3).", "If the seller is contractually entitled to recover all or part of its subsidy from the owners association, a receivable is recorded only if recovery is probable and measurable with reasonable reliability (720-978-25-3).", "A time-share seller typically forms the owners association, appoints its board during sellout, and often has an affiliate manage the project (720-978-05-3)." ], "categories": [ "Recognition", "Industry-specific", "Revenue", "Inventory and PP&E" ], "audience_level": "intermediate", "student_note": "Exam traps here are the presumption of expensing: students often assume heavy selling and marketing outlays in time-share projects can be capitalized as project costs, when only incremental costs meeting ASC 340-40-25-1 through 25-4 qualify, and tour-generation, failed-sale, and sales overhead costs never do. Also remember a subsidy receivable from the owners association requires recovery to be both probable and measurable with reasonable reliability.", "related_topics": [ "340-40", "978-10", "978-330", "720-35", "606", "970" ], "key_concepts": [ "time-sharing intervals", "selling and marketing costs", "costs to obtain a contract", "owners association", "seller subsidy", "tour fulfillment costs", "maintenance fees and dues", "recoverability of subsidy" ] } ``` Source downloaded (UTC): 2026-09-10T01:14:14.996Z to 2026-09-10T01:14:14.996Z Record version: sha256:a62fc160f7d307b5a42e0ef0eceba4a8bcbfae609102c1b1b91b82253fd0ff6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-978-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/720/978/#00-status) SEC content: no ##### [720-978-00-1](https://asc.understandingaccounting.org/asc/720/978/#720-978-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:14.996Z to 2026-09-10T01:14:14.996Z Record version: sha256:b1c34a141a181642da5abf87fb0c5bfb6e1c4cd92d6c6c3bc3bd70d1c540ef0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Time-SharingAmendedAccounting Standards Update No. 2014-0603/14/2014
Undivided Interest (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
978-720-25-1 through 25-3
AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T01:14:18.950Z to 2026-09-10T01:14:18.950Z Record version: sha256:1b0df735dfba280b228eaa92e862ebd528cb438857c600d8e8383f2e4b87008b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-978-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/720/978/#05-overview-and-background) SEC content: no ##### [720-978-05-1](https://asc.understandingaccounting.org/asc/720/978/#720-978-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:18.950Z to 2026-09-10T01:14:18.950Z Record version: sha256:64181cb192d4b18a544840928a35d176e99b0df835a5969b55b9527e6033aa3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses real estate [time-sharing](https://asc.understandingaccounting.org/glossary/t/#time-sharing "An arrangement in which a seller sells or conveys the right to occupy a dwelling unit for specified periods in the future. Forms of time-sharing arrangements include but are not limited to fixed and floating time, interval ownership, undivided interests, points programs, vacation clubs, right-to-use arrangements such as tenancy-for-years arrangements, and arrangements involving special-purpose entities. In this context, an undivided interest is a time-sharing arrangement that involves a tenant-in-common interest in a condominium unit or entire improved property, and in which the interest holder is assigned a specific period (generally, a specific week). The interest holder is also assigned a specific unit if the undivided interest is in the entire improved property.") recognition issues for other expenses. Other expenses may include selling costs, [seller subsidies](https://asc.understandingaccounting.org/glossary/s/#seller-subsidy "As related to time-sharing transactions, an amount that a seller pays to an owners association to cover net losses that may be incurred by the association."), and [owners association](https://asc.understandingaccounting.org/glossary/o/#owners-association "A body of owners formed to administer the rules and regulations of a time-sharing project. Also denoted homeowners association, interval owners association, property owners association, or vacation owners association.") costs. ##### [720-978-05-2](https://asc.understandingaccounting.org/asc/720/978/#720-978-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:18.950Z to 2026-09-10T01:14:18.950Z Record version: sha256:d0d3ec12fea4af6977532b69b1cd2349130631cf0fd1c72cdb36fd0a7d98a2f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Time-share](https://asc.understandingaccounting.org/glossary/t/#time-share "See Interval.") projects typically incur significant operating costs, such as costs of property taxes, repairs and maintenance, and reservation systems. Time-share owners are responsible for paying for the costs of owning their intervals. Because there are many time-share owners for a given [project](https://asc.understandingaccounting.org/glossary/p/#project "A time-sharing development; some projects may be completed in a single phase, such as a single, one-story building containing several time-sharing units. Other projects may be completed in several phases, for example: A hotel that is being converted to time-sharing units one floor at a time while the unconverted units continue to be rented A number of buildings, each containing several time-sharing units, being built on a piece of property over an extended period of time."), a centralized mechanism generally is used to collect each owner's share of those costs of ownership and to pay for operating costs. ##### [720-978-05-3](https://asc.understandingaccounting.org/asc/720/978/#720-978-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:18.950Z to 2026-09-10T01:14:18.950Z Record version: sha256:9d6579a585d5c951f79357149360b6723b7a6bb775829d13565e9233c8ee5fec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A time-share seller typically forms an owners association to manage the day-to-day operations of a project. Time-share owners pay assessments to the owners association. The activities of an owners association are governed by its bylaws and by a board of directors. Typically, an owners association will hire a manager to handle the day-to-day operations. Often, an affiliate of the original time-share seller is hired by an owners association to manage a project. Because the time-share seller owns a majority of units at the beginning of the sellout of a project, it typically will appoint members of the owners association's board of directors. ##### [720-978-05-4](https://asc.understandingaccounting.org/asc/720/978/#720-978-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:18.950Z to 2026-09-10T01:14:18.950Z Record version: sha256:c5d3a56ac3ad87d48e3cccfc6d145184881c382c943e9371b7d28b79a1d2588a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Selling and marketing costs are significant in relation to sales revenue, and sales incentives and inducements are common. Source downloaded (UTC): 2026-09-10T01:14:22.587Z to 2026-09-10T01:14:22.587Z Record version: sha256:78a19cf0dd11f2cd5369123ccf17f86eaaadf9a236d414504bd1a7207f1a20b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-978-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/720/978/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [720-978-15-1](https://asc.understandingaccounting.org/asc/720/978/#720-978-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:22.587Z to 2026-09-10T01:14:22.587Z Record version: sha256:0fd004b2ac3cc2b926756982f31dec7df90961bd03785154cb49ab3a5534c26a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 978-10-15. Source downloaded (UTC): 2026-09-10T01:14:26.123Z to 2026-09-10T01:14:26.123Z Record version: sha256:55d80b26ab9ed91597c0de755d3a0c39ea017ac3bae86c0f1a5ed4e096e98ac0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-978-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/720/978/#25-recognition) SEC content: no #### Selling Costs ##### [720-978-25-1](https://asc.understandingaccounting.org/asc/720/978/#720-978-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:26.123Z to 2026-09-10T01:14:26.123Z Record version: sha256:1176aaecec34252103bbbcd04f3663dc2d9c93a99b6712a25519a960a1c01c9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All costs incurred to sell [time-sharing](https://asc.understandingaccounting.org/glossary/t/#time-sharing "An arrangement in which a seller sells or conveys the right to occupy a dwelling unit for specified periods in the future. Forms of time-sharing arrangements include but are not limited to fixed and floating time, interval ownership, undivided interests, points programs, vacation clubs, right-to-use arrangements such as tenancy-for-years arrangements, and arrangements involving special-purpose entities. In this context, an undivided interest is a time-sharing arrangement that involves a tenant-in-common interest in a condominium unit or entire improved property, and in which the interest holder is assigned a specific period (generally, a specific week). The interest holder is also assigned a specific unit if the undivided interest is in the entire improved property.") intervals shall be charged to expense as incurred unless they specifically qualify for capitalization under paragraphs [340-40-25-1 through 25-4](https://asc.understandingaccounting.org/asc/340/40/#340-40-25-1) . ##### [720-978-25-2](https://asc.understandingaccounting.org/asc/720/978/#720-978-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:26.123Z to 2026-09-10T01:14:26.123Z Record version: sha256:b28f7195f7646a13fe4875733d163c582ca02f08bbb3d34a359f25ac689a59ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of costs that do not meet the requirements in paragraphs [340-40-25-1 through 25-4](https://asc.understandingaccounting.org/asc/340/40/#340-40-25-1) for capitalization, and that shall therefore be charged to expense as incurred, include all costs incurred to induce potential buyers to take sales tours (for example, the costs of telemarketing call centers); all costs incurred for unsuccessful sales transactions; and all sales overhead such as on-site and off-site sales office rent, utilities, maintenance, and telephone expenses. Advertising costs shall be accounted for in accordance with Subtopic 720-35. Direct incremental costs of tour fulfillment, such as costs of airline tickets to bring customers to a tour location, shall be charged to expense at the time the tour takes place. #### Seller Subsidies ##### [720-978-25-3](https://asc.understandingaccounting.org/asc/720/978/#720-978-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:26.123Z to 2026-09-10T01:14:26.123Z Record version: sha256:4fecca32af64fc10056e46164b2fdb42cbb4a71cefce76050bf756c4c7c940ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During early stages of [project](https://asc.understandingaccounting.org/glossary/p/#project "A time-sharing development; some projects may be completed in a single phase, such as a single, one-story building containing several time-sharing units. Other projects may be completed in several phases, for example: A hotel that is being converted to time-sharing units one floor at a time while the unconverted units continue to be rented A number of buildings, each containing several time-sharing units, being built on a piece of property over an extended period of time.") sellout, there are typically not enough dues-paying time-sharing [interval](https://asc.understandingaccounting.org/glossary/i/#interval "The specific period (generally, a specific week) during the year that a time-sharing unit is specified by agreement to be available for occupancy by a particular customer. Also denoted Time-Sharing Interest or Time-Share.") owners to support the financial obligations of the [owners association](https://asc.understandingaccounting.org/glossary/o/#owners-association "A body of owners formed to administer the rules and regulations of a time-sharing project. Also denoted homeowners association, interval owners association, property owners association, or vacation owners association."). Often a [time-share](https://asc.understandingaccounting.org/glossary/t/#time-share "See Interval.") seller, for a limited period of time, subsidizes the operations of the owners association rather than paying the dues or maintenance fees on the time-sharing intervals that it owns (that is, the unsold intervals in the project). Subsequent to that period, the time-share seller pays dues or maintenance fees on the time-sharing intervals that it owns. Payments by the seller of dues or maintenance fees, except when accounted for as [incidental operations](https://asc.understandingaccounting.org/glossary/i/#incidental-operations "Revenue-producing activities engaged in during the holding or development period to reduce the cost of developing the property for its intended use, as distinguished from activities designed to generate a profit or a return from the use of the property.") during holding periods under paragraphs [978-330-35-3 through 35-6](https://asc.understandingaccounting.org/asc/330/978/#330-978-35-3) , shall be charged to expense as incurred. Payments by the seller of additional amounts to subsidize losses shall be charged to expense as incurred. If a seller is contractually entitled to recover from the owners association all or a portion of its subsidy, the seller shall record a receivable only if recovery is probable and measurable with reasonable reliability.