# ASC 940-20-25: Financial Services—Brokers and Dealers — Broker-Dealer Activities — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/940/20/#25-recognition) 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): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:2c521726d2d842ffb834096f011de238425fce0c83a2043922a7d141063e19fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 940-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/940/20/#25-recognition) SEC content: no #### Agency Transactions ##### [940-20-25-1](https://asc.understandingaccounting.org/asc/940/20/#940-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:83d7f357a2d50d7cadfec4bc4eb2ecdf948cd718d0c1722ef7fe8eafde4689b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. 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 [fail-to-receive](https://asc.understandingaccounting.org/glossary/f/#fail-to-receive "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.") from customer, payable to customer, or stock borrowed or loaned on behalf of customer). #### Commissions ##### [940-20-25-2](https://asc.understandingaccounting.org/asc/940/20/#940-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:8467ef4cd008e41d1bbdab48aaf885014b251a95ba9f05d3261636087963a41f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 recognized in revenue by the broker-dealer when (or as) it satisfies its [performance obligations](https://asc.understandingaccounting.org/glossary/p/#performance-obligation "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.") under the [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") in accordance with Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "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.") from contracts with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "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."). 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. ##### [940-20-25-3](https://asc.understandingaccounting.org/asc/940/20/#940-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:780e8fff411b6237acde98591dad10c9b216f9bb0028570b88eb8456b990d42b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ### Clearing #### Fail-to-Deliver ##### [940-20-25-4](https://asc.understandingaccounting.org/asc/940/20/#940-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:8b951e00c6403cb5c49e167a100579ecd0fc65700ead0f64c5c27f27da0918f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/f/#fail-to-deliver "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.") as an asset in the receivable account due from broker-dealers. #### Fail-to-Receive ##### [940-20-25-5](https://asc.understandingaccounting.org/asc/940/20/#940-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:a638a060b3ad24442b56db2cfd8157f800d23c935a407c3a4d4ba638737a954c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/f/#fail-to-receive "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.") as a liability to the selling broker-dealer. #### Suspense Accounts ##### [940-20-25-6](https://asc.understandingaccounting.org/asc/940/20/#940-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:bdc16786f6c3d30c04525b0cdb97c7787233b045bdf361b55ca1795f40de7d02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 until a determination of the cause of the differences is made and the differences are resolved. #### Conditional Transactions ##### [940-20-25-7](https://asc.understandingaccounting.org/asc/940/20/#940-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:0d03b0fcfc648aa5e854c9dc1d34931cd8e4e23eb10e41c9a4de08ba84fce0a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 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. 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. #### Floor Broker ##### [940-20-25-8](https://asc.understandingaccounting.org/asc/940/20/#940-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:13:41.428Z to 2026-09-10T02:13:41.428Z Record version: sha256:62c4ebcefaecd24f82615eecf567d4d5f5fb26ad8230ec45818d41dc50beebc3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the [floor broker](https://asc.understandingaccounting.org/glossary/f/#floor-broker "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.") 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 other entities for trades on behalf of the broker-dealer are generally reported as floor brokerage expense.