{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/940/20/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"940","topic_title":"Financial Services—Brokers and Dealers","subtopic":"940-20","subtopic_title":"Broker-Dealer Activities","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Agency Transactions","paragraphs":[{"citation":"940-20-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_ECF50D4E-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Transactions executed by broker-dealers as agents for customers shall not be reflected in the statement of financial condition of the broker-dealer unless the transaction fails to settle on the contracted settlement date. </span></span><span class=\"sfragment\" id=\"sfr_ECF50E5A-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Because the broker-dealer typically delivers cash or financial instruments on behalf of the customer, if the customer fails on the settlement date, the broker-dealer shall record the transaction (for example, as a <a href=\"/glossary/f/#fail-to-receive\" class=\"term\" title=\"A fail-to-receive is a securities purchase from another broker-dealer not received from the selling broker-dealer by the close of business on the settlement date.\"><span>fail-to-receive</span></a> from customer, payable to customer, or stock borrowed or loaned on behalf of customer). </span></span></div></div>","snippet":"Transactions executed by broker-dealers as agents for customers shall not be reflected in the statement of financial condition of the broker-dealer unless the transaction fails to settle on the contracted settlement date…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:83d7f357a2d50d7cadfec4bc4eb2ecdf948cd718d0c1722ef7fe8eafde4689b8","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:30111cf185c18dba8ad4e53cafb219f7803b941f2e70d378984de56e7ecb4d39","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}},{"block":null,"heading":"Commissions","paragraphs":[{"citation":"940-20-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_ECF50F4B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For securities purchased, the commission shall be recorded as a receivable from customers; for securities sold, commission shall be recorded as reductions in the payable to customers. </span></span><span class=\"sfragment\" id=\"sfr_ECF51075-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The commission income shall be recognized in revenue by the broker-dealer when (or as) it satisfies its <a href=\"/glossary/p/#performance-obligation\" class=\"term\" title=\"A promise in a contract with a customer to transfer to the customer either: A good or service (or a bundle of goods or services) that is distinct A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.\"><span>performance obligations</span></a> under the <a href=\"/glossary/c/#contract\" class=\"term\" title=\"An agreement between two or more parties that creates enforceable rights and obligations.\"><span>contract</span></a> in accordance with Topic <a altsource=\"GUID-90450890-CA59-4C9A-A88C-D53D3DE3192F.ditamap\" class=\"ditamap\">606</a> on <a href=\"/glossary/r/#revenue\" class=\"term\" title=\"Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.\"><span>revenue</span></a> from contracts with <a href=\"/glossary/c/#customer\" class=\"term\" title=\"A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.\"><span>customers</span></a>. </span></span><span class=\"sfragment\" id=\"sfr_ECF5124B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Related expenses shall be accrued by the broker-dealer on the trade date, because substantially all the efforts in generating the commissions have been completed. </span></span></div></div>","snippet":"For securities purchased, the commission shall be recorded as a receivable from customers; for securities sold, commission shall be recorded as reductions in the payable to customers. The commission income shall be recog…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8467ef4cd008e41d1bbdab48aaf885014b251a95ba9f05d3261636087963a41f","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}},{"citation":"940-20-25-3","para":"25-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_ECF51371-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">At the date of the statement of financial condition, the broker-dealer should analyze both the commission income generated from soft-dollar customers and the research provided to the soft-dollar customers to determine whether a liability should be accrued for research due to customers based on the commission income generated or whether any soft-dollar expenses have been prepaid and need to be deferred. </span></span></div></div>","snippet":"At the date of the statement of financial condition, the broker-dealer should analyze both the commission income generated from soft-dollar customers and the research provided to the soft-dollar customers to determine wh…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:780e8fff411b6237acde98591dad10c9b216f9bb0028570b88eb8456b990d42b","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f40359bd45fd1163f8b280521f3b1d0167c3ef26244a85a1cc519d7d1fd8dd7d","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}},{"block":"Clearing","heading":"Fail-to-Deliver","paragraphs":[{"citation":"940-20-25-4","para":"25-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_ED048764-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A broker-dealer that sells securities, either for its own account or for a customer's account, but does not deliver the securities on the settlement date shall record the <a href=\"/glossary/f/#fail-to-deliver\" class=\"term\" title=\"A fail-to-deliver is a securities sale to another broker-dealer that has not been delivered to the buying broker-dealer by the close of business on the settlement date.\"><span>fail-to-deliver</span></a> as an asset in the receivable account due from broker-dealers. </span></span></div></div>","snippet":"A broker-dealer that sells securities, either for its own account or for a customer's account, but does not deliver the securities on the settlement date shall record the fail-to-deliver as an asset in the receivable acc…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8b951e00c6403cb5c49e167a100579ecd0fc65700ead0f64c5c27f27da0918f7","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:12910343d718b404fdb7c11193e6b43cf72ec35fd94274e72fcfac092d8ceff3","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}},{"block":"Clearing","heading":"Fail-to-Receive","paragraphs":[{"citation":"940-20-25-5","para":"25-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_ED048863-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A broker-dealer that purchases securities, either for its own account or for a customer's account, but does not receive the securities on the settlement date shall record the <a href=\"/glossary/f/#fail-to-receive\" class=\"term\" title=\"A fail-to-receive is a securities purchase from another broker-dealer not received from the selling broker-dealer by the close of business on the settlement date.\"><span>fail-to-receive</span></a> as a liability to the selling broker-dealer. </span></span></div></div>","snippet":"A broker-dealer that purchases securities, either for its own account or for a customer's account, but does not receive the securities on the settlement date shall record the fail-to-receive as a liability to the selling…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a638a060b3ad24442b56db2cfd8157f800d23c935a407c3a4d4ba638737a954c","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c724acfc00b09ff3902f6d2610996bae6dab2c5cb132649502707c2c3054269d","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}},{"block":"Clearing","heading":"Suspense Accounts","paragraphs":[{"citation":"940-20-25-6","para":"25-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_ED048954-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Trading errors shall be recorded in the broker-dealer's error suspense account until they are resolved. </span></span><span class=\"sfragment\" id=\"sfr_ED048A25-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Unreconciled differences shall be recognized at the amount of the transaction with an appropriate valuation account until a determination of the cause of the differences is made and the differences are resolved. </span></span></div></div>","snippet":"Trading errors shall be recorded in the broker-dealer's error suspense account until they are resolved. Unreconciled differences shall be recognized at the amount of the transaction with an appropriate valuation account …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bdc16786f6c3d30c04525b0cdb97c7787233b045bdf361b55ca1795f40de7d02","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d8ef46f323b5cdffbcddb60f63444a3d26bcae975c0a1e83228c89f11d0645ea","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}},{"block":"Clearing","heading":"Conditional Transactions","paragraphs":[{"citation":"940-20-25-7","para":"25-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_ED048B04-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Certain transactions (for example, those for when-issued securities) are, by their nature, conditional; that is, their completion is dependent on the occurrence of a future event or events. </span></span><span class=\"sfragment\" id=\"sfr_ED048BD1-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For those conditional transactions in which completion is assured beyond a reasonable doubt, the recognition of the transactions and related profit and loss shall be the same as for unconditional transactions. </span></span><span class=\"sfragment\" id=\"sfr_ED048C90-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For those conditional transactions in which completion is not assured beyond a reasonable doubt, only fair value losses shall be recognized, while fair value gains shall be deferred. </span></span></div></div>","snippet":"Certain transactions (for example, those for when-issued securities) are, by their nature, conditional; that is, their completion is dependent on the occurrence of a future event or events. For those conditional transact…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d03b0fcfc648aa5e854c9dc1d34931cd8e4e23eb10e41c9a4de08ba84fce0a2","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10daf43663900142bb8c0bf8b7081c2e5b2950235c655355a8d509e964ca7bed","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}},{"block":"Clearing","heading":"Floor Broker","paragraphs":[{"citation":"940-20-25-8","para":"25-8","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_ED048D5C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the <a href=\"/glossary/f/#floor-broker\" class=\"term\" title=\"A member of a securities exchange who executes transactions on the floor of an exchange for the account of that member's own entity or for the account of other member entities. Broker-dealers often engage floor brokers, who are responsible for executing securities transactions on the exchanges for the account of the broker-dealer. Floor brokers employed by the entity may execute trades on behalf of other broker-dealers, for which the entity is paid a brokerage fee. The purchase and sale department of the broker-dealer maintains the records of floor brokerage fees that are due to other broker-dealers who execute orders on the entity's behalf and brokerage fees due from other broker-dealers.\"><span>floor broker</span></a> is employed by the broker-dealer, any costs associated with the floor broker's employment are generally reported as employee compensation. </span></span><span class=\"sfragment\" id=\"sfr_ED048E1B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Costs paid to independent floor brokers or floor brokers of other entities for trades on behalf of the broker-dealer are generally reported as floor brokerage expense. </span></span></div></div>","snippet":"If the floor broker is employed by the broker-dealer, any costs associated with the floor broker's employment are generally reported as employee compensation. Costs paid to independent floor brokers or floor brokers of o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:62c4ebcefaecd24f82615eecf567d4d5f5fb26ad8230ec45818d41dc50beebc3","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:40dfc635e8225339f8d0595c74ac22cf59fe06860956e7f347fcd5a4baa3680d","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c521726d2d842ffb834096f011de238425fce0c83a2043922a7d141063e19fa","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c521726d2d842ffb834096f011de238425fce0c83a2043922a7d141063e19fa","downloaded_from":"2026-09-10T02:13:41.428Z","last_downloaded_at":"2026-09-10T02:13:41.428Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481913","source_sha256":"b566045e4808479f63ae2cbd43f7b6deee7fd8c5014aca65c4e8ebb80c852ecf"}}