# ASC 944-30-05: Financial Services—Insurance — Acquisition Costs — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/30/#05-overview-and-background) 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): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:2c024772be79a667c4d6b21d149edb8b4a54321099baf7a2ac75c8548f7e8049 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/30/#05-overview-and-background) SEC content: no ##### [944-30-05-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:472a38035bd3cc4ca911bd62d52148a7a174fa8d2ea35bbb3672e8a9500f61c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") including related considerations for [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transactions. The guidance in this Subtopic is presented in the following five Subsections: 1. a General 2. b Short-Duration Contracts 3. c Long-Duration Contracts 4. d Internal Replacement Transactions 5. e [Reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") Contracts. ### Short-Duration Contracts ##### [944-30-05-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:5a714b3ce8dafb0a26d06fbd8eec27a15536bd0639bbf578dea98cab11dfbb69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") involving short-duration contracts. ### Long-Duration Contracts ##### [944-30-05-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:8449a676e2d34f4e9d8289e006879be1429633a0fa1e9d9c15fa15def47cd57f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") involving long-duration contracts. ### Internal Replacement Transactions ##### [944-30-05-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:06d53ab2fe7cc4842d0cca865afc1cd5bfdaa7807c084359b11014d245966f5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Internal Replacement Transactions Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of unamortized [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") in the event of an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transaction. ##### [944-30-05-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:a7aec4a99fc955a1fb126c94e889b46e2c741bf7978ffa99400bd9cef1a3a288 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Policyholders often purchase universal life-type contracts as replacements for other insurance contracts issued by the same entity (sometimes referred to as internal replacement transactions). In those cases, the policyholder often uses the cash surrender value of the previous contract to pay an initial lump-sum premium for the new contract. ### Reinsurance Contracts ##### [944-30-05-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:bfad88ce11303f3a9b5a8c84913c8388c73e7ae67824018a9ed8f1b2564e4e07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") involving [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts.