ASC

ASC 908-10

Overall

908 Airlines

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In brief

IntroductoryIndustry-specificRevenueInventory and PP&ECompensation and benefits

ASC 908-10 is the Overall subtopic of the Airlines industry Topic; it lists the industry Subtopics (segment reporting, inventory, takeoff and landing slots, PP&E, compensation, other expenses, nonmonetary transactions) and describes the operating and accounting characteristics that make airlines distinctive. Its only substantive rule is scope: Topic 908 supplies incremental industry-specific guidance for airline entities, which must still comply with all other applicable GAAP (908-10-15-1). Background paragraphs highlight the complex revenue cycle (advance ticket sales, third-party sellers, refundable/exchangeable tickets), mobile flight equipment, maintenance programs, and flight-crew compensation.

Key points (7)
  • Topic 908 contains only incremental industry-specific guidance for airline entities; those entities must also comply with all applicable standards outside the Topic (908-10-15-1).
  • The Topic applies to all entities in the airline industry—providers of passenger and cargo carrier services, often as joint operations, plus ancillary services such as maintenance or food service for other carriers (908-10-15-2; 908-10-05-2).
  • The Airlines Topic comprises Subtopics on Overall, Segment Reporting, Inventory, Intangibles—Takeoff and Landing Slots, Property, Plant, and Equipment, Compensation—General, Other Expenses, and Nonmonetary Transactions; the revenue subparagraph 908-10-05-1(f) was superseded by ASU 2014-09.
  • The airline revenue cycle is the industry's most unusual feature: tickets are sold in advance and often through third parties, the sale date rarely coincides with the service date, tickets may be used on other carriers, and terms range from refundable to nonrefundable and nonexchangeable (908-10-05-3).
  • Because aircraft and other flight equipment constantly change locations, custody and control responsibilities differ substantially from those for nonmobile fixed assets (908-10-05-5).
  • Maintenance timing and extent are set by each carrier through experience-based studies demonstrating airworthiness to the FAA, and may be performed in-house at specially equipped facilities (908-10-05-6).
  • Flight personnel compensation is a significant operating expense and varies with flying status, equipment type, hours flown, day versus night flights, and seniority (908-10-05-7).

For students. Remember that industry Topics like 908 layer on top of, not in place of, general GAAP—the common mistake is assuming an airline-specific rule overrides a general standard when none exists. Also note the old airline revenue recognition guidance was superseded by ASU 2014-09, so ticket sales, breakage, and frequent flyer programs are now analyzed under ASC 606.

airline industry scopeincremental industry-specific guidanceadvance ticket salesrevenue cycleflight equipmenttakeoff and landing slotsmaintenance programsflight crew compensation

Machine-generated study aid for ASC 908-10. Check the source paragraphs below.

908-10-00Status

Source downloaded: .Record version a2e682abe31f. Effective date must be checked in the source.

908-10-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
908-10-05-1AmendedAccounting Standards Update No. 2014-0905/28/2014
908-10-05-3AmendedAccounting Standards Update No. 2014-0905/28/2014

908-10-05Overview and Background

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908-10-05-1
The Airlines Topic includes the following Subtopics relating specifically to entities in the airline industry:
  1. a
    Overall
  2. b
    Segment Reporting
  3. c
    Inventory
  4. d
    Intangibles—Takeoff and Landing Slots
  5. e
    Property, Plant, and Equipment
  6. f
    Subparagraph superseded by Accounting Standards Update No. 2014-09.
  7. g
    Compensation—General
  8. h
    Other Expenses
  9. i
    Nonmonetary Transactions.
Each Subtopic provides background on the guidance provided.
908-10-05-2
Entities in the airline industry primarily provide carrier services for passengers and cargo, frequently as joint operations. Other services, such as maintenance or food service for other carriers, may also be provided.
908-10-05-3
The most unusual characteristic of the airline industry is its revenue cycle. Sales may be made at numerous locations by either the carrier or third parties (travel agents or other carriers); for some carriers, third parties handle a substantial portion of the ticket transactions. Paper tickets and electronic tickets usually are sold in advance of the transportation date, and the ticket sales date usually does not coincide with the revenue recognition date (the date that service is provided). Tickets sold are not necessarily used, in whole or in part, on the carrier making the sale, and some tickets are refundable if not used by the customer for up to one year after the sales date. Other tickets are nonrefundable but exchangeable with payment of a fee, and other tickets are nonrefundable and nonexchangeable. The determination of revenue recognized may be complex.
908-10-05-5
A major portion of an airline's fixed assets comprises aircraft and other flight equipment. Because such assets are constantly changing locations, the responsibility for physical custody and control of aircraft is substantially different from that of nonmobile fixed assets.
908-10-05-6
Maintenance requirements are dictated by the highly sophisticated nature of the industry's equipment. The timing and extent of maintenance procedures are determined by individual carriers using studies based on actual experience that demonstrate airworthiness to the Federal Aviation Administration. Maintenance may be provided in-house, which requires maintenance facilities outfitted with specifically designed equipment.
908-10-05-7
Compensation of flight personnel usually represents a significant portion of an airline's operating expenses. The amount of compensation is generally dependent on a number of variables, including, among others, flying status, type of equipment flown, hours flown, whether flights are made during the day or at night, and employee seniority.

908-10-15Scope and Scope Exceptions

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Overall Guidance

908-10-15-1
The Subtopics within the Airlines Topic only provide incremental industry-specific guidance for the entities defined in the Scope Sections of the individual Subtopics. Entities within the scope of this Topic shall also comply with the applicable standards not included in this Topic.

Entities

908-10-15-2
This Topic provides guidance for all entities in the airline industry. See Section 908-10-05 for a description of such entities and their operations.

Related subtopics