ASC Topic 940
Financial Services—Brokers and Dealers
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ASC 940 supplies the incremental, industry-specific GAAP for entities that are brokers and dealers in securities; the Overall subtopic (940-10) merely lists the Topic's subtopics and confirms that broker-dealers must also apply all other applicable GAAP outside the Topic (940-10-05-1; 15-1; 15-2). The substantive rules live in 940-20 (Broker-Dealer Activities), which is split into General, Clearing, and Underwriting Subsections covering commissions, soft dollars, agency transactions, fails, suspense accounts, trading errors, and underwriting commitments. The central idea is that agency transactions executed for customers stay off the broker-dealer's statement of financial condition unless they fail to settle on the contracted settlement date (940-20-25-1), with fails-to-deliver recorded as receivables at selling price and fails-to-receive as liabilities at purchase price, each including accrued interest (940-20-25-4; 30-1; 30-2). Commission income follows Topic 606 while the related expenses are accrued on trade date (940-20-25-2).
Subtopics
- 10Overall5 ¶
ASC 940-10 is the Overall subtopic of the Financial Services—Brokers and Dealers Topic, which lists the Topic's constituent subtopics (Broker-Dealer Activities, Receivables, Investments, Other Assets and Deferred Costs, Liabilities, Consolidation, and Fair Value Measurements) and sets its scope. The Topic applies to all entities that are brokers and dealers in securities and supplies only incremental industry-specific guidance; broker-dealers must still follow all other applicable GAAP outside the Topic.
- 20Broker-Dealer Activities32 ¶
ASC 940-20 governs specific broker-dealer activities, organized into General (commissions, soft-dollar arrangements, mutual fund distribution fees, agency transactions, financial presentation), Clearing (fails, due bills, suspense accounts, trading errors), and Underwriting Subsections. Its core rules are that agency transactions stay off the broker-dealer's statement of financial condition unless they fail to settle on the contracted settlement date, commission income is recognized under Topic 606 while related expenses accrue on trade date, and fails-to-deliver/fails-to-receive are recorded at selling/purchase price including accrued interest.