ASC 810-978

Real Estate—Time-Sharing Activities

810 Consolidation

Download JSON Download Markdown7 paragraphs · 4 sectionsJump to summary

Source downloaded: 2026-09-10T01:34:24.202Z.Record version 283784e70095. Effective date must be checked in the source.

In brief

IntermediateConsolidation Presentation Industry-specific Inventory and PP&E

This Subtopic tells a time-sharing developer-seller how to account for special-purpose entities (SPEs) it establishes in connection with selling time-sharing intervals. If the SPE structure is legally required by the jurisdiction in order to sell intervals to nonresident customers and the SPE holds no assets other than the time-sharing intervals and has no debt, the SPE is viewed as lacking economic substance and existing solely to facilitate sales; the seller then reports the unsold interests in the SPE as time-sharing inventory on its balance sheet rather than applying consolidation or equity/cost method accounting. All other SPEs are evaluated under the normal consolidation, VIE, and investment models.

Key points (6)

A seller in time-sharing activities may establish a special-purpose entity, and Topic 810 governs whether an SPE that is a variable interest entity must be consolidated (810-978-25-1; 810-978-25-2).
An SPE is treated as lacking economic substance and established solely to facilitate sales only if both conditions in 810-978-25-3 are met: (a) the SPE structure is legally required by the applicable jurisdiction to sell intervals to the nonresident customers targeted by the developer-seller, and (b) the SPE has no assets other than the time-sharing intervals and no debt.
When both conditions are met, the seller presents the interests in the SPE not yet sold to end users as time-sharing inventory on its balance sheet and is not subject to consolidation, equity method, or cost method accounting (810-978-25-3).
If the conditions are not met, accounting and presentation follow the treatment of investments in other SPE structures, including consolidation of controlled SPEs and SPEs in which no other entity has adequate capital at risk (810-978-25-3).
For SPEs failing the test, apply the Variable Interest Entities Subsections of Subtopic 810-10 for VIEs, Topic 810 for non-VIE consolidation, and Subtopic 323-10 and Topic 321 when the investment is not consolidated (810-978-25-4).
The Subtopic follows the scope of the Overall Subtopic in Section 978-10-15 (810-978-15-1).

For students. This is a narrow industry exception: a legally mandated, asset-only, debt-free SPE used to sell intervals to foreign buyers is ignored as an entity and its unsold interests are simply shown as inventory. The common mistake is applying this inventory presentation to any developer-created SPE — both conditions in 810-978-25-3 must be met, or you fall back to the ordinary VIE/consolidation analysis.

special-purpose entity variable interest entity time-sharing intervals time-sharing inventory entity lacking economic substance consolidation equity method investment balance sheet presentation

Machine-generated study aid for ASC 810-978. Check the source paragraphs below.

810-978-00Status

Source downloaded: 2026-09-10T01:34:10.635Z.Record version 735f58e0b9cd. Effective date must be checked in the source.

810-978-00-1

The following table identifies the changes made to this Subtopic.

Paragraph	Action	Accounting Standards Update	Date

Time-Sharing	Amended	Accounting Standards Update No. 2014-06	03/14/2014
Undivided Interest (2nd def.)	Superseded	Accounting Standards Update No. 2014-06	03/14/2014

978-810-25-4	Amended	Accounting Standards Update No. 2016-01	01/05/2016

810-978-05Overview and Background

Source downloaded: 2026-09-10T01:34:14.522Z.Record version c7cf96c03599. Effective date must be checked in the source.

810-978-05-1

This Subtopic addresses consolidation and recognition issues for certain special-purpose entities related to real estate time-sharing activities.

810-978-15Scope and Scope Exceptions

Source downloaded: 2026-09-10T01:34:17.931Z.Record version 968eb5ab35db. Effective date must be checked in the source.

Overall Guidance

810-978-15-1

This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 978-10-15.

810-978-25Recognition

Source downloaded: 2026-09-10T01:34:24.202Z.Record version f6025721fbb8. Effective date must be checked in the source.

810-978-25-1

A seller may establish a special-purpose entity.

810-978-25-2

Topic 810 provides guidance on whether special-purpose entities that are variable interest entities (VIEs) should be consolidated.

810-978-25-3

For balance-sheet presentation purposes, a special-purpose entity shall be viewed as an entity lacking economic substance and established solely for the purpose of facilitating sales if both of the following conditions are met:

a
The special-purpose entity structure is legally required by the applicable jurisdiction(s) to sell time-sharing intervals to the nonresident customers that the developer-seller wishes to sell to (for example, for purposes of being able to sell intervals to United States citizens in a country in which citizens of other countries are not allowed to own real estate).
b
The special-purpose entity has no assets, other than the time-sharing intervals, and the special-purpose entity has no debt.

In those circumstances, the seller should show on its balance sheet as time-sharing inventory the interests in the special-purpose entity not yet sold to end users and the seller would not be subject to the consolidation, equity method investment, or cost method investment accounting standards. If a special-purpose entity does not meet the conditions above, the accounting and presentation shall be consistent with investments in other special-purpose entity structures (for example, the consolidation of controlled special-purpose entities and special-purpose entities in which no other entity has adequate capital at risk).

810-978-25-4

In such cases, see the following guidance:

a
The Variable Interest Entities Subsections of Subtopic 810-10 for guidance on whether special-purpose entities that represent VIEs should be consolidated
b
Topic 810 for consolidation of entities that are not VIEs
c
Subtopic 323-10 and Topic 321 for the accounting when the investment is not required to be consolidated.