# ASC Topic 946: Financial Services—Investment Companies Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/946/) 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): 2026-09-10T02:18:44.566Z to 2026-09-10T02:20:03.597Z Record version: sha256:bf2f68cbfb73d2222221c48434360d9a4b0de0ba749fbc133cb2ed68a72ebf09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 946 is the specialized industry Topic for investment companies, which report their investments at fair value rather than consolidating or equity-method accounting. Subtopic 946-10 draws the scope line: entities regulated under the Investment Company Act of 1940 are automatically investment companies (946-10-15-4), while all others must have the two fundamental characteristics of 946-10-15-6 (obtaining funds from investors to provide investment management services solely for capital appreciation and/or investment income, and not obtaining returns not normally attributable to ownership) and are judged against five typical characteristics in 946-10-15-7; status is set at formation and revisited only on a change in purpose and design (946-10-25-1), with prospective treatment on loss of status and a cumulative-effect adjustment on gaining it (946-10-25-2 through 25-3). Subtopic 946-20 then prescribes the accounting for recurring fund activities — affiliate payments and credit enhancements, Rule 12b-1 distribution plans, expense limitation agreements, offering costs, and shareholder transactions — with heavy emphasis on where items appear in the statement of operations and financial highlights. The unifying idea is that qualifying as an investment company triggers a distinct fair-value-based reporting model whose presentation and disclosure conventions (single-line affiliate payment presentation, accrual of distributor excess costs but never an asset, offering-cost charge to paid-in capital) protect shareholders' understanding of fund performance. Source downloaded (UTC): 2026-09-10T02:18:44.566Z to 2026-09-10T02:19:25.136Z Record version: sha256:e9bdc72a74cb9c4106da80193e3e80353a4c07f5fcfcb28b5a66302f1969d70f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10: Financial Services—Investment Companies — Overall ### Machine-generated study aids ```json { "summary": "ASC 946-10 sets the scope of the Financial Services—Investment Companies Topic by defining which entities qualify as investment companies and therefore apply the Topic's specialized (fair value) accounting and reporting. Any entity regulated under the Investment Company Act of 1940 is automatically an investment company (946-10-15-4); all others must possess the two fundamental characteristics in 946-10-15-6 and are assessed against five typical characteristics in 946-10-15-7, applying judgment when a typical characteristic is absent. Status is determined at formation and reassessed only upon a change in purpose and design (or loss of 1940 Act regulation), with prescribed prospective or cumulative-effect accounting and disclosure for a change in status.", "key_points": [ "An entity regulated under the Investment Company Act of 1940 is an investment company (946-10-15-4); REITs are excluded from the Topic (946-10-15-3).", "The two fundamental characteristics (946-10-15-6) are: obtaining funds from investors and providing investment management services with a committed business purpose of investing solely for capital appreciation and/or investment income, and not obtaining (or seeking) returns or benefits from an investee that are not normally attributable to ownership interests.", "The five typical characteristics (946-10-15-7) are more than one investment, more than one investor, unrelated investors, ownership in the form of equity or partnership interests, and managing substantially all investments on a fair value basis; absence of one or more does not necessarily preclude investment company status but requires judgment (946-10-15-8).", "An entity investing for capital appreciation must have identified potential exit strategies; disposal only in liquidation or to satisfy redemptions is not an exit strategy, though a fund investing only for investment income needs no exit strategy (946-10-55-7).", "Relationships such as an affiliate holding an option to buy investees or investee assets at other than fair value, joint development/marketing arrangements, or non-arm's-length transactions with investees are inconsistent with investment company status (946-10-55-8).", "Status is determined at formation and reassessed only if there is a change in the entity's purpose and design or it ceases to be regulated under the 1940 Act (946-10-25-1); an entity losing status accounts prospectively using fair value at that date as the new carrying amount (946-10-25-2), and an entity gaining status records a cumulative-effect adjustment to net assets (946-10-25-3).", "Disclosure is required of investment company status (946-10-50-1), that a change in status occurred and why (946-10-50-2), and the effect of becoming an investment company on reported investment amounts (946-10-50-3)." ], "categories": [ "Industry-specific", "Recognition", "Disclosure", "Fair value" ], "audience_level": "intermediate", "student_note": "This scope test is the gateway to investment company accounting (fair value measurement of investments and no consolidation of operating investees), so getting it wrong distorts the entire financial statements. The most common misunderstanding is treating the five \"typical\" characteristics as bright-line requirements—they are judgment factors, while only the two \"fundamental\" characteristics in 946-10-15-6 are mandatory.", "related_topics": [ "946-320", "946-810", "820", "810", "825", "946-505" ], "key_concepts": [ "investment company assessment", "fundamental characteristics", "typical characteristics", "exit strategy", "fair value basis management", "master-feeder structure", "change in investment company status", "investment company act of 1940" ] } ``` Source downloaded (UTC): 2026-09-10T02:18:44.566Z to 2026-09-10T02:18:44.566Z Record version: sha256:ca798e65d24871d4bb0223cdf95f8d601cc5511b361406e3f5ac81505567784a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/946/10/#00-status) SEC content: no ##### [946-10-00-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:44.566Z to 2026-09-10T02:18:44.566Z Record version: sha256:9b6ab39fff352eda941f8f055928e367bb405650e46540ec5804ecf2135866aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
12b-1SupersededAccounting Standards Update No. 2013-0806/07/2013
AffiliateAmendedMaintenance Update 2018-12 (PDF)09/10/2018
AffiliateAddedAccounting Standards Update No. 2013-0806/07/2013
Closed-End FundsSupersededAccounting Standards Update No. 2013-0806/07/2013
Contingent-Deferred Sales LoadSupersededAccounting Standards Update No. 2013-0806/07/2013
Front-End LoadAddedAccounting Standards Update No. 2014-0603/14/2014
Investment CompanySupersededAccounting Standards Update No. 2013-0806/07/2013
Net Asset Value per ShareAddedAccounting Standards Update No. 2013-0806/07/2013
ParentAddedAccounting Standards Update No. 2013-0806/07/2013
946-10-05-1AmendedAccounting Standards Update No. 2013-0806/07/2013
946-10-05-2 through 05-6SupersededAccounting Standards Update No. 2013-0806/07/2013
946-10-05-5AmendedAccounting Standards Update No. 2014-0603/14/2014
946-10-15-1 through 15-6
AmendedAccounting Standards Update No. 2013-0806/07/2013
946-10-15-7 through 15-9
AddedAccounting Standards Update No. 2013-0806/07/2013
946-10-25-1 through 25-3
AddedAccounting Standards Update No. 2013-0806/07/2013
946-10-50-1AmendedAccounting Standards Update No. 2013-0806/07/2013
946-10-50-2AmendedAccounting Standards Update No. 2013-0806/07/2013
946-10-50-3AddedAccounting Standards Update No. 2013-0806/07/2013
946-10-55-1 through 55-45
AmendedAccounting Standards Update No. 2013-0806/07/2013
946-10-55-46 through 55-71SupersededAccounting Standards Update No. 2013-0806/07/2013
946-10-65-1AmendedAccounting Standards Update No. 2013-0806/07/2013
946-10-65-2AddedAccounting Standards Update No. 2013-0806/07/2013
Source downloaded (UTC): 2026-09-10T02:18:47.675Z to 2026-09-10T02:18:47.675Z Record version: sha256:cf84ecd6f1412a77122a757a77857e59b412d41a904b1c370da59a3e3fef66d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/946/10/#05-overview-and-background) SEC content: no ##### [946-10-05-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:47.675Z to 2026-09-10T02:18:47.675Z Record version: sha256:dc08335842acce0add80b5a3ae5fbc18a7d2d33d0f990017e5962e8e38185f53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Services—Investment Companies Topic includes the following Subtopics: 1. a Overall 2. b Investment Company Activities 3. c Presentation of Financial Statements 4. d Balance Sheet 5. e Income Statement 6. f Statement of Cash Flows 7. g Notes to Financial Statements 8. h Cash and Cash Equivalents 9. i Receivables 10. j Investments—Debt and Equity Securities 11. k Investments—Equity Method and Joint Ventures 12. kk Investments—Other 13. l Liabilities 14. m Equity 15. n Revenue Recognition 16. o Income Taxes 17. p Consolidation 18. q Foreign Currency Matters. ##### [946-10-05-2](https://asc.understandingaccounting.org/asc/946/10/#946-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:47.675Z to 2026-09-10T02:18:47.675Z Record version: sha256:7142ef60a9ed9f17128206a118385351c471e3351d9bd9ed09e181881f2be7e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 946-10-05-2 through 05-6 superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/asc/946/10/#946-10-05-2). Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:ce4d3c5f28b6859abc67b1edae48dfc38107a199ea3a37dae8737fa10a1b3250 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/946/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [946-10-15-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:186fdd05d3d030d1a11e4c308684f686020fcbbe16175ed99ee51177df6eba4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Services—Investment Companies Topic only provides incremental industry-specific guidance for the entities that meet the assessment of investment company status described in this Scope Section, with the exception of Subtopic 946-605, which has its own discrete scope. Entities within the scope of this Topic also shall comply with the applicable guidance not included in this Topic. The Scope Section of the Overall Subtopic establishes the pervasive scope for all Subtopics of the Financial Services—Investment Companies Topic. Unless explicitly addressed within specific Subtopics, the following scope guidance applies to all Subtopics of the Financial Services—Investment Companies Topic, with the exception of Subtopic 946-605. #### Entities ##### [946-10-15-2](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:85da428719cbf8f531850a7c3ff20be96d53926e62d0e4f808605e57cbca4990 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting principles discussed in this Topic apply to all investment companies. An investment company as discussed in this Topic is an entity that meets the assessment described in paragraphs [946-10-15-4 through 15-9](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-4) . 1. a [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 3. c [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 4. d [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). ##### [946-10-15-3](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:7b56c958f54fc8741c6410ea9696f4d098d874fd8b2f466aef3fd6862ba431b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Topic does not apply to real estate investment trusts. ##### [946-10-15-4](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:7cdc19aceb80d2e6458f9e553be88acbf16b472fcfb2ded0f5f0b346bbf6fe2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity regulated under the Investment Company Act of 1940 is an investment company under this Topic. ##### [946-10-15-5](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:c2b1cd322ac329714e343bf55db530ee32c7e26eca220a07c800f4260fefaee0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that is not regulated under the Investment Company Act of 1940 shall assess all the characteristics of an investment company in paragraphs [946-10-15-6 through 15-7](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-6) to determine whether it is an investment company. The entity shall consider its purpose and design when making that assessment. ##### [946-10-15-6](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:ae423181411eec9cd35d8d585ff318eb667d2b7edb8bfa409d549d48fbe9f777 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company has the following fundamental characteristics: 1. a It is an entity that does both of the following: 1. 1 Obtains funds from one or more investors and provides the investor(s) with investment management services 2. 2 Commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income, or both. 2. b The entity or its [affiliates](https://asc.understandingaccounting.org/glossary/a/#affiliate "A party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with an entity. See Control.") do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income. ##### [946-10-15-7](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:729fe5100cc8d1e1d16008a7b6e2944085a766b14a215285caa08287f929700e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company also has the following typical characteristics: 1. a It has more than one investment. 2. b It has more than one investor. 3. c It has investors that are not [related parties](https://asc.understandingaccounting.org/glossary/r/#related-parties "Related parties include: Affiliates of the entity Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity Trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management Principal owners of the entity and members of their immediate families Management of the entity and members of their immediate families Other parties with which the entity may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.") of the [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") (if there is a parent) or the investment manager. 4. d It has ownership interests in the form of equity or partnership interests. 5. e It manages substantially all of its investments on a [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") basis. ##### [946-10-15-8](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:c2e9b3dd69501e9237f1aced50feb18d05e944c7f97010105fdc33f92468acbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To be an investment company, an entity shall possess the fundamental characteristics in paragraph [946-10-15-6](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-6). Typically, an investment company also has all of the characteristics in paragraph [946-10-15-7](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-7). However, the absence of one or more of those typical characteristics does not necessarily preclude an entity from being an investment company. If an entity does not possess one or more of the typical characteristics, it shall apply judgment and determine, considering all facts and circumstances, how its activities continue to be consistent (or are not consistent) with those of an investment company. ##### [946-10-15-9](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:51.337Z to 2026-09-10T02:18:51.337Z Record version: sha256:3a1111e7309e67e60950e0740a030e9998f90e95f6e08ad621525fb78ff27686 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The implementation guidance in Section 946-10-55 is an integral part of assessing investment company status and provides additional guidance for that assessment. Source downloaded (UTC): 2026-09-10T02:18:56.377Z to 2026-09-10T02:18:56.377Z Record version: sha256:1e60fcec6f7ec5e4eb87288602178aeb734cae715ff7d69e8ad1b5b6dffa2368 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/946/10/#25-recognition) SEC content: no #### Reassessment of Investment Company Status ##### [946-10-25-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:56.377Z to 2026-09-10T02:18:56.377Z Record version: sha256:e4e0e3bfdcc9f445f3041ae51c33bf08cd8c769a693b6ad2a3e96236fadd3ae5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The initial determination of whether an entity is an investment company within the scope of this Topic shall be made upon formation of the entity. An entity shall reassess whether it meets (or does not meet) the assessment of investment company status in paragraphs [946-10-15-4 through 15-9](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-4) only if there is a subsequent change in the purpose and design of the entity or if the entity is no longer regulated under the Investment Company Act of 1940. ##### [946-10-25-2](https://asc.understandingaccounting.org/asc/946/10/#946-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:56.377Z to 2026-09-10T02:18:56.377Z Record version: sha256:b706408678806f40acfa0208056f61bc6bcb80ac3f9e7c0d45af762398c94925 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that is no longer an investment company under this Topic as a result of the reassessment of status shall discontinue applying the guidance in this Topic and shall account for the change in its status prospectively by accounting for its investments in accordance with other Topics as of the date of the change in status. The [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of an investment at the date of the change in status shall be the investment's initial carrying amount. ##### [946-10-25-3](https://asc.understandingaccounting.org/asc/946/10/#946-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:56.377Z to 2026-09-10T02:18:56.377Z Record version: sha256:fd38ef822bbabc2f349e94a53734663e95213eb3d5bc74a6bee88937661e491a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that subsequently is an investment company under this Topic as result of the reassessment of status shall account for the effect of the change in status from the date of the change in status. The effect of applying this Topic shall be recognized as a cumulative-effect adjustment to net assets at the date of the change in status. The cumulative-effect adjustment shall be included in the net asset value at the beginning of the period in the per-share information included in the financial highlights. The adjustment to net assets represents both of the following: 1. a The difference between the fair value and the carrying amount of the entity's investees (or [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)")'s portion of the assets minus liabilities for consolidated investments) at the date of the change in status 2. b Any amounts previously recognized in accumulated other comprehensive income. Source downloaded (UTC): 2026-09-10T02:18:59.816Z to 2026-09-10T02:18:59.816Z Record version: sha256:1390fcf3e41abbd47aaea4b35c2b786002142b1c016f67d529a7189ac9b44635 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/946/10/#50-disclosure) SEC content: no #### Investment Company Status ##### [946-10-50-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:59.816Z to 2026-09-10T02:18:59.816Z Record version: sha256:159f109972907b05a3a6654cf5607332ffd49d9e9a9bec9c1af50aae9e486d19 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company under this Topic shall disclose that it is an investment company following accounting and reporting guidance in this Topic. ##### [946-10-50-2](https://asc.understandingaccounting.org/asc/946/10/#946-10-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:59.816Z to 2026-09-10T02:18:59.816Z Record version: sha256:8058e726c3cea73f84d663db4b98f54df27b8098424f233f4728a8265e735875 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity with a change in status (as described in paragraphs [946-10-25-1 through 25-3](https://asc.understandingaccounting.org/asc/946/10/#946-10-25-1) ) shall disclose that a change in status occurred and the reasons for that change. ##### [946-10-50-3](https://asc.understandingaccounting.org/asc/946/10/#946-10-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:59.816Z to 2026-09-10T02:18:59.816Z Record version: sha256:2ab70ef8d026dfd437449217f0a44412d2c1ad097e9901a6a88eb19383d22150 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that previously was not an investment company under this Topic and becomes an investment company under this Topic shall disclose the effect of the change in status on the reported amounts of investments as of the date of the change in status. Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:66abcf25121d76a05d62abb97a077d3f5d5c7eb3ae12d441baf5ccd61bf08a70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/946/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [946-10-55-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:5dc5d6de50321872648e35078506b7a0f613023836021d54eb9f3896aaf13905 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides additional guidance for the assessment in paragraphs [946-10-15-5 through 15-9](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-5) to determine whether an entity that is not regulated under the Investment Company Act of 1940 is an investment company under this Topic. ##### [946-10-55-2](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:caa47a16ab8a143c46958276f7b27904cab2dd0a5d118a5474ea536f832261c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is organized as follows: 1. a Fundamental characteristics of an investment company 2. b Typical characteristics of an investment company 3. c Illustrative examples. ##### [946-10-55-3](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:86673b8b9a035002987376d93c00075e60da9b6e9dd3d15c3e7da7b39c1950fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To be an investment company, an entity shall possess the fundamental characteristics in paragraph [946-10-15-6](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-6). Paragraphs [946-10-55-4 through 55-10](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-4) provide additional guidance for determining whether an entity has the fundamental characteristics of an investment company. ##### [946-10-55-4](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:498ef0e73deea7fa76e08f29b3e087f24ffc96e9a7397c2a5297ecfcb4556c9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company should have no substantive activities other than its investing activities and should not have significant assets or liabilities other than those relating to its investing activities, subject to the exception in the following paragraph. ##### [946-10-55-5](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:80003838ce75ff68ce3e85b3c14ef4480c3d3cefc79e38ad986db51796e4ea12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company may provide investing-related services (for example, investment advisory or transfer agent services) to other entities, directly or indirectly through an investment in an entity that provides those services, as long as those services are not substantive. However, an investment company may provide substantive investing-related services, directly or indirectly through an investment in an entity that provides those services, if the substantive services are provided to the investment company only. ##### [946-10-55-6](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:e1d76690d72a6d14248f234609837acd760bfca9a080d208280b8370331e7fc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Evidence of the entity's business purpose and substantive activities may be included in the entity's offering memorandum, publications distributed by the entity, and other corporate or partnership documents that indicate the investment objectives of the entity. Evidence of the entity's business purpose and substantive activities also may include the manner in which the entity presents itself to other parties (such as potential investors or potential investees). For example, an entity that presents its business to its investors as having the objective of investing for capital appreciation has characteristics that are consistent with the business purpose and substantive activities of an investment company. Alternatively, an entity that presents itself as an investor whose objective is jointly developing, producing, or marketing products with its investees has characteristics that are inconsistent with the business purpose and substantive activities of an investment company. ##### [946-10-55-7](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:b3db9183a5af2d4a8b8e22f9ae63641d470a4351e85d1fd73b1704b74e1b385d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity's investment plans also provide evidence of its business purpose and substantive activities. Accordingly, an investment company whose business purpose and substantive activities include realizing capital appreciation should have an exit strategy for how it plans to realize the capital appreciation of its investments. Although the entity may not yet have determined the specific method or timing of disposing of an investment, the fact that it has identified potential exit strategies through which it can realize capital appreciation provides evidence that its business purpose and substantive activities are consistent with those of an investment company. The entity need not document specific exit strategies for each individual investment held for the purpose of realizing capital appreciation but should identify potential exit strategies for different types or portfolios of investments held with the purpose of realizing capital appreciation. Disposal of investments only during liquidation or to satisfy investor redemptions are not exit strategies. Therefore, an entity should have a plan to dispose of its investments before liquidation when its business purpose and substantive activities include realizing capital appreciation. An investment company whose business purpose and substantive activities are to invest for returns only from investment income does not require an exit strategy for its investments. ##### [946-10-55-8](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:7a62db6b50b9682b58d9c852423f3dbe0d9dac8f27c39a84fb26d4c195906006 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity would not be an investment company if the entity or its [affiliates](https://asc.understandingaccounting.org/glossary/a/#affiliate "A party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with an entity. See Control.") obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income. Examples of relationships and activities that would be inconsistent with the characteristics of an investment company include any of the following: 1. a The entity or its affiliates acquire, use, exchange, or exploit the processes, assets, or technology of an investee or its affiliates. This includes the entity or its affiliates having disproportionate or exclusive rights to acquire assets, technology, products, or services of an investee or its affiliates (for example, by holding an option to purchase an asset from an investee if the asset's development is deemed successful). 2. b There are other arrangements between the entity or its affiliates and an investee or its affiliates to jointly develop, produce, market, or provide products or services. 3. c An investee or its affiliates provide financing guarantees or assets to serve as collateral for borrowing arrangements of the entity or its affiliates to provide returns or with the objective of providing returns other than capital appreciation or investment income. The guidance in this paragraph does not prohibit an investment company from using its investments in its investees as collateral for any of its borrowings. 4. d An affiliate of the entity holds an option to purchase from the entity ownership interests in an investee at an amount other than [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."). 5. e There are transactions between the entity or its affiliates and an investee or its affiliates that meet any of the following: 1. 1 They are on terms that are unavailable to entities that are not affiliates of the investee. 2. 2 They are not at fair value or are not conducted at arm's length. 3. 3 They represent a substantive portion of the investee's or the entity's business activities, including business activities of affiliates of the entity or affiliates of the investee. ##### [946-10-55-9](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:ee958b5c1f9a0cf31b2e17dc6071888472587c2ee942a7e4ee1dd1cda8662ac6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company may have a strategy to invest in more than one investee in the same industry, market, or geographical area to benefit from synergies that increase the returns from capital appreciation and investment income from those investments. Transactions between an entity's investees should not affect the entity's assessment of whether it is an investment company unless those transactions result in the entity obtaining returns or benefits other than capital appreciation or investment income. ##### [946-10-55-10](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:36c1bbc3607edc134f139b33a55ba2f2620df6c066f127a93456e55b058959c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company may provide both of the following services to an investee, either directly or through an investment in an entity that provides those services, only if those services are provided for the purpose of maximizing returns from capital appreciation, investment income, or both (rather than other benefits) and do not represent a separate substantial business activity or separate substantial source of income for the investment company: 1. a Assistance with day-to-day management of the operations of an investee 2. b Financial support, such as a loan, capital commitment, or guarantee. ##### [946-10-55-11](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:b60d72f8c7bbf298144f00a8db17e6a34aa1559b590ae231563dfeedcf0bc8b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As required by paragraph [946-10-15-5](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-5), an entity shall assess all the typical characteristics in paragraph [946-10-15-7](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-7) to determine whether it is an investment company. If an entity does not possess one or more of the typical characteristics, it should apply judgment and determine, considering all facts and circumstances, how its activities continue to be consistent (or are not consistent) with those of an investment company. Paragraphs [946-10-55-12 through 55-29](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-12) provide additional guidance for determining whether an entity has a certain typical characteristic of an investment company. ##### [946-10-55-12](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:af0db23987a4f198a87ae08691bf3452dd23fb1c1be30e29c03c96ed62fac5b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company typically holds multiple investments at the same time to diversify its risk and maximize its returns from capital appreciation, investment income, or both. Investments typically consist of securities of other entities, but also may include commodities, securities based on indexes, securities sold short, derivative instruments, real estate properties, and other forms of investments. ##### [946-10-55-13](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:3959c600e5c8f3339abd58a8fc09912b6a9f890f3d46f61b1b39432c087789e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company may hold investments directly or indirectly through another investment company. For example, in a master-feeder structure, a feeder fund holds multiple investments indirectly through its investment in a master fund that holds multiple investments or, in a fund-of-funds structure, an investment company holds multiple investments indirectly through its investment in an underlying fund that holds multiple investments. ##### [946-10-55-14](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:6b53e350589e4b1aa3f1f640778538a84fa60073f6f14c061cc79eba08f6a48d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Holding a single investment does not necessarily preclude an entity from being an investment company. There may be times when an investment company holds a single investment, such as in any of the following examples: 1. a It is in its start-up period and has not yet identified suitable investments and, therefore, has not yet executed its investment plan to acquire multiple investments. 2. b It has not yet made other investments to replace those it has disposed of. 3. c It is in the process of liquidation. 4. d It is established to pool investors' funds to invest in a single investment when that investment is unobtainable by individual investors (for example, when the required minimum investment is too high for an individual investor). ##### [946-10-55-15](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:076468819430d5b1c408eb498dfea12698bf1a755ce085fb3ab2a11679951b8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company with a single investment also may be formed (for legal, regulatory, tax, or other business reasons) in conjunction with another investment company that holds multiple investments (for example, a master-feeder structure or blocker fund). Investment companies formed in conjunction with each other are not required to be formed at the same time. Holding a single investment for that reason does not necessarily preclude an entity from being an investment company. ##### [946-10-55-16](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:05f4aafa3eb60696b3defa95e8253743b479fdabe897524b2e7d5a45b2e6c184 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company typically pools funds from multiple investors and provides them with investment management services, including access to investment opportunities unobtainable by individual investors. Having multiple investors makes it less likely that the entity or its affiliates obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income. ##### [946-10-55-17](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:96ca1caba1fae63eca1cb07ece5bcaf3a1104cb7b9539b76e8b50f4fc99c70f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Having a single investor does not necessarily preclude an entity from being an investment company. There may be times when an investment company has a single investor, such as in any of the following examples: 1. a It is in its initial offering period, which has not expired, and it is actively identifying suitable investors. 2. b It is actively identifying investors but has not yet identified suitable investors to replace those that have redeemed their ownership interests. 3. c It is in the process of liquidation. ##### [946-10-55-18](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:5bbb961a2cb4cac44883827bf34f2f3c91dbd2c65461aab24bd54517b0f6c37f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company may be formed by, or for, a single investor that represents or supports the interests of a wider group of investors (for example, a pension fund, government investment fund, or endowment fund). An investment company with a single investor also may be formed (for legal, regulatory, tax, or other business reasons) in conjunction with another investment company that has multiple investors (for example, a master-feeder structure or a blocker fund). Investment companies formed in conjunction with each other are not required to be formed at the same time. Having a single investor for those reasons does not necessarily preclude an entity from being an investment company. ##### [946-10-55-19](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:e89c8b7a03586bf54ce168b7c8f337270ee968f9aa91a22f41d9781095e33a95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company typically has investors that are not [related parties](https://asc.understandingaccounting.org/glossary/r/#related-parties "Related parties include: Affiliates of the entity Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity Trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management Principal owners of the entity and members of their immediate families Management of the entity and members of their immediate families Other parties with which the entity may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.") of the [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") (if there is a parent) or the investment manager. Those unrelated investors, in aggregate, hold a significant interest in the investment company. Having investors that are not related parties of the parent or the investment manager makes it less likely that the entity or its affiliates obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income. ##### [946-10-55-20](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:a41d2f770b5b4be91359039b8a127258ff3cc51f87b53ab130c1976a85992416 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Investors that are related parties of the parent or investment manager should be combined and treated as a single investor, along with the parent or investment manager, for the purposes of evaluating the more-than-one-investor characteristic of an investment company in paragraph [946-10-15-7](https://asc.understandingaccounting.org/asc/946/10/#946-10-15-7). ##### [946-10-55-21](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:f5f7f928577f46648c85ef85b43410a4b40212c66c64cccd24ff487f69bbfb52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Having investors that are related parties of the parent or the investment manager does not necessarily preclude an entity from being an investment company. For example, an investment manager may form an investment company for its employees in conjunction with another investment company. Although the employees may be related parties of the investment manager, the investment company formed for its employees mirrors the business purpose and activities of the main investment company. ##### [946-10-55-22](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:36111c871f97a25824d0268adf546d0e09d15269f7456fcecf98ce68001556fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the parent or its related parties have an implicit or explicit arrangement that would require them to acquire another investor's ownership interest in the investment company at an amount other than fair value, those interests should be combined and treated as if they were owned by the parent for the purposes of evaluating the typical characteristics of an investment company. Examples of when interests would be combined and treated as if they were owned by the parent include any of the following: 1. a The parent or its related parties have a written option to acquire another investor's ownership interests in the entity at an amount other than fair value. 2. b The parent finances another investor's ownership interests, and the ownership interests are collateral for the debt. ##### [946-10-55-23](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:f9139eb35b3f55b274ca1d8b294811f49261bc3d9e55dcc427f68c6faf2ae279 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Ownership interests in an investment company are typically in the form of equity or partnership interests. Each ownership interest represents a specifically identifiable portion of the net assets of the investment company. An investor in an investment company contributes funds to acquire ownership interests, and the value of those interests is dependent on the changes in the fair value of the underlying investments of the investment company. ##### [946-10-55-24](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:f9d106f6d60944859f3a49374671663beca85d7bc99aee17b6842c548c77358b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Having multiple classes of equity instruments, such as shares with distinct rights or rights that do not represent a proportionate interest in all of the underlying investments of the investment company, does not preclude an entity from meeting this characteristic of an investment company. ##### [946-10-55-25](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:793bc6db045b84186d9795bf2958648368f8985c6a17f04fe9f5646287b747d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company can be but is not required to be a separate legal entity. For example, separate accounts of life insurance companies may not be separate legal entities. However, investors in the separate accounts base their investment decisions on the changes in the fair value of the underlying investments held in those separate accounts. ##### [946-10-55-26](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:fda1aef911c8b9c42de7a221c03df374518111d25fa43c88f450e07b5a54a94f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, having significant ownership interests that are not considered equity interests in accordance with other Topics (for example, ownership interests in the form of debt) does not necessarily preclude an entity from being an investment company provided that the holders are exposed to variable returns from changes in the fair value of the underlying investments of the entity. The economic substance of the entity, rather than its legal form, should be evaluated to determine whether the entity has that characteristic of an investment company. ##### [946-10-55-27](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:279347ec6e98c1ff628a03b16009c8e0198bc6e7a498ec501ddf32bcfe2ab661 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company typically manages substantially all of its investments on a fair value basis. Determining whether an entity manages its investments on a fair value basis does not depend on the nature of its investments but, rather, includes an evaluation of whether fair value is a key component of any of the following: 1. a How the entity evaluates the performance of its investments 2. b How the entity transacts with its investors 3. c How asset-based fees are calculated. An investment company's activities typically demonstrate that fair value is the primary measurement attribute used to evaluate the financial performance of and to make investment decisions for substantially all of its investments. Also, an investment company typically transacts with investors on the basis of [net asset value per share](https://asc.understandingaccounting.org/glossary/n/#net-asset-value-per-share "Net asset value per share is the amount of net assets attributable to each share of capital stock (other than senior equity securities, that is, preferred stock) outstanding at the close of the period. It excludes the effects of assuming conversion of outstanding convertible securities, whether or not their conversion would have a diluting effect.") and incurs asset-based fees, both of which are based on the fair value of its investments. ##### [946-10-55-28](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:1f32516fc59f0fc6265eb4edb7cd22138bd13b9cf8a87e02c808f37e0e4f31dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assets held by an investment company that are used to service the investment company's own investments are not required to be managed on a fair value basis (see paragraph [946-10-55-5](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-5)). ##### [946-10-55-29](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:7c93f4907bdc5154e63aed1db9bc0d3c80c86fe0c1c3790cb80e779ab2d7c07c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Managing investments on another basis, such as a yield basis or an income basis, does not necessarily preclude an entity from being an investment company. For example, although a short-term investment fund may evaluate the performance of its investments on a yield (amortized cost) basis, fair value is the primary measurement attribute used to evaluate the financial performance of investments and to make investment decisions because the fund monitors the fair value of its investments to minimize the differences between the carrying value and the fair value. #### Illustrations ##### [946-10-55-30](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:2844947e60bf0e5523df70378e3b0e270a9af3f7ddbe356c6f3d81b0149d72a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Examples illustrate the assessment to determine whether an entity that is not regulated under the Investment Company Act of 1940 is an investment company under this Topic: 1. a Example 1: Limited partnership 2. b Example 2: Technology fund 3. c Example 3: Master-feeder structure. ##### [946-10-55-31](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:ae5f5e037733c6a82792aaa95497ed4f028517294d22a135f6233975323b0911 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A, a limited partnership, is formed in 20X1 with a 10-year life. The offering memorandum provides that Entity A's purpose is to invest in operating entities with rapid growth potential, with the only objective of realizing capital appreciation from investments in those entities over the life of Entity A. One percent of Entity A's capital was contributed by the general partner (the investment manager), who has the responsibility of identifying suitable investments for Entity A. The remaining 99 percent of Entity A's capital was contributed by 75 limited partners, who are not related parties of the general partner. ##### [946-10-55-32](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:60ca4b39c3d25cf65b8bd0d2d48841823f1475e1ff92166f9bbe5a0ccdc8ff03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A begins its investment activities in 20X1. However, no suitable investments are identified during that year. In 20X2, Entity A acquires a controlling financial interest in Entity B, a corporation. Entity A is unable to identify suitable investments and complete any other investment purchases until 20X3, at which time it acquires equity interests in five additional operating companies. Other than acquiring those equity interests, Entity A conducts no other activities. Entity A manages and evaluates the performance of its investments on a fair value basis. Information about Entity A's financial results, including changes in the fair value of its investments, are provided by the general partner to the limited partners periodically. ##### [946-10-55-33](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:65db6103f867e5672488b0bd39a3f35225b43f7e6fb7b4c70194a7bc0d0b68da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A has plans to dispose of its interests in each of its investees during the 10-year stated life of the partnership to realize returns from the capital appreciation of its investees. Those disposals include the sale of the interests for cash or the distribution of marketable equity securities to investors following a successful public offering of an investee's securities. ##### [946-10-55-34](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:f53fe000174ea1db0a7c234809067129b02a849a60b60645242de6b8363cddc9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. From formation in 20X1 to December 31, 20X3, Entity A has the fundamental characteristics of an investment company because all of the following conditions exist: 1. a Entity A obtained funds from investors (the general partner and the limited partners) and is providing those investors with investment management services. 2. b Entity A's business purpose and only substantive activity is acquiring interests in operating companies with the objective of realizing returns over its life from the capital appreciation of the investments. Entity A has identified exit strategies for its investments to realize the capital appreciation. 3. c Entity A does not have an objective of obtaining returns or benefits other than capital appreciation from its investments. ##### [946-10-55-35](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:d9ec4f8db2a343c83428bf759abfb92048e74889e226b3c1282d9efacfdcbb04 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A also has all of the following typical characteristics of an investment company: 1. a Entity A is funded by multiple investors. 2. b The limited partners of Entity A hold a significant interest in the partnership and are not related to the investment manager (the general partner). 3. c Ownership in Entity A is represented by partnership interests acquired through capital contributions. 4. d Investments are managed, and their performance is evaluated on a fair value basis. ##### [946-10-55-36](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:10379787ded184bfdb2ef671f4a703c9c79036729902556478286a3e93e49ba3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A does not hold more than one investment until 20X3. However, that is because during each of the years 20X1, 20X2, and part of 20X3, it is in its start-up period and has not yet fully executed its investment plan to acquire multiple investments because it could not identify suitable investment opportunities. ##### [946-10-55-37](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:9ea7e050bb44c5f4d6a0b608043edbe768bce4cb24b1a92edddd547b6f2f15bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A is an investment company from formation in 20X1 to December 31, 20X3. It has all the fundamental characteristics of an investment company. In addition, although Entity A does not possess all of the typical characteristics of an investment company, its activities are consistent with those of an investment company. ##### [946-10-55-38](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:22238f3678761870af977561543746491013ddf061b6b17989ce446166bf3b51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity C, an investment fund, is formed in 20X1 by six corporations in the technology industry to invest in multiple technology start-up companies for capital appreciation. Entity D, one of the corporations, holds a 70 percent controlling financial interest in Entity C. The remaining 30 percent of the fund is owned by the other 5 corporations, which are not related to each other or Entity D. Entity D holds options at amounts other than fair value to acquire controlling financial interests in the investees of the technology fund and options to purchase assets produced by the investees, if the technology developed by the investee is successful and would benefit the operations of Entity D. No plans for exiting the investments have been identified by Entity C. Entity C is managed by an investment manager that is not related to the investors. The investors in Entity C also provide significant advice to the investment manager about potential investments. ##### [946-10-55-39](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:37335aa98024a8ab5f8f81478f412ee3ae49671aea3c3e2ad59669e643d9a477 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Even though Entity C's business purpose and substantive activities include investing for returns from capital appreciation and it has many of the typical characteristics of an investment company, Entity C is not an investment company because of both of the following conditions: 1. a Entity D, the parent of Entity C, holds options at amounts other than fair value to acquire investees of the fund and assets of the investees if the technology developed by the investee is successful and would benefit Entity D's operations. That provides Entity D with a benefit that is other than returns from capital appreciation or investment income. 2. b The investment plans of Entity C do not include exit strategies for its investments to realize returns from the capital appreciation of investees. ##### [946-10-55-40](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:e6c6e9774cc8f74a4886ac74c015a012e16c5574ce791dea86159e32c1761b83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity E, a master fund, is formed in 20X1 with a 10-year life. The equity of Entity E is held by Entity F and Entity G, two affiliated feeder funds. Entity F and Entity G are established in conjunction with Entity E to meet legal, regulatory, tax, or other requirements. Entity F, the domestic feeder partnership, is capitalized with a 1 percent investment from the general partner and 99 percent from unaffiliated investors (with no party holding a controlling financial interest). Entity G, the offshore feeder fund, is capitalized with a 1 percent equity investment from the sponsor and 99 percent equity investments from unaffiliated investors (with no party holding a controlling financial interest). Entity H is the investment manager for the master-feeder structure and is the general partner of Entity F and the sponsor of Entity G. ##### [946-10-55-41](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:092c3d25ee8fd6ac671ba01f8db0fee20835a872bd0e37445bee8224f2238a52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This figure illustrates the master-feeder structure. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-E24AE302-B7CE-4B39-9E2C-EA036116AA3F-low.gif) ##### [946-10-55-42](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:fbb36b2441a173ae54a08552da4f242438286d05e215857e766fbbc8eb25a5c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purpose of Entity E is to invest in multiple investments to generate returns solely from capital appreciation and investment income. Entity F and Entity G have communicated to investors that the sole purpose of the master-feeder structure is to provide investment opportunities for investors in separate market niches to invest in a large pool of assets. Entity E has identified exit strategies for the investments that it holds for returns from capital appreciation. In addition, Entity E manages, and evaluates the performance of, its investments on a fair value basis. Entity F and Entity G provide their investors with periodic information about the financial results of the master-feeder structure. ##### [946-10-55-43](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:4c78bc9f8162ad042e538c857fba2a7fe71828859f13cc3d6a7e8076ad4ea5fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity E, Entity F, and Entity G each possess the fundamental characteristics of an investment company because all of the following conditions exist: 1. a Entity E, Entity F, and Entity G obtained funds from investors and are providing those investors with investment management services. 2. b The master-feeder structure's business purpose and only substantive activities, which were communicated to investors of Entity F and Entity G, are investing solely for returns from capital appreciation and investment income. 3. c Entity E has identified exit strategies for the investments it holds for returns from capital appreciation. Although Entity F and Entity G do not have an exit strategy for their interests in Entity E, they are considered to have an exit strategy for their investments because Entity E was formed in conjunction with Entity F and Entity G and holds investments on behalf of them. 4. d Entity E, Entity F, and Entity G do not have an objective of obtaining returns or benefits other than capital appreciation and investment income from their investments. ##### [946-10-55-44](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:4865815cb33c331b6d9f3b940797c612aa8eb6fb8aec1824074771b175961319 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity E, Entity F, and Entity G each also possess all of the following typical characteristics of an investment company: 1. a Entity E holds more than one investment. Both Entity F and Entity G also are considered to hold more than one investment because they were formed in conjunction with Entity E. 2. b Both Entity F and Entity G are funded by multiple investors. Entity E also is considered to be funded by multiple investors because it was formed in conjunction with Entity F and Entity G. 3. c Both Entity F and Entity G have investors that hold a significant interest in the partnership and are not related to the investment manager (Entity H). Although Entity F and Entity G are related to Entity E, Entity E is considered to have unrelated investors because it was formed in conjunction with Entity F and Entity G, which have unrelated investors. 4. d Ownership in Entity E and Entity G are represented by equity interests acquired through capital contributions. Ownership in Entity F is represented by partnership interests acquired through capital contributions. 5. e Entity E manages and evaluates the performance of investments on a fair value basis. Additionally, investors of Entity F and Entity G are provided with periodic financial information about the investing activities of Entity E, which includes information about the change in fair value of investments held. ##### [946-10-55-45](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:9f139258aa9b9da098de276ba532accee4ea88f14ffcf3fa6132e58dd76b020f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity E, Entity F, and Entity G are investment companies. They possess all the fundamental characteristics of an investment company and all the typical characteristics of an investment company, either directly or indirectly as a result of the master-feeder structure. ##### [946-10-55-46](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:02.934Z to 2026-09-10T02:19:02.934Z Record version: sha256:ad4313db55249a3260c6798a12ffbc8e3ed5fb2c83a4a1d0e665374c5975fe81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 946-10-55-46 through 55-71 superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-46). Source downloaded (UTC): 2026-09-10T02:19:05.475Z to 2026-09-10T02:19:05.475Z Record version: sha256:1ba8945e83da1fd66324adf8d082e5e1c7173742014896a4151b8da48942d44c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/946/10/#65-transition-and-open-effective-date-information) SEC content: no ##### [946-10-65-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:05.475Z to 2026-09-10T02:19:05.475Z Record version: sha256:6bc892543e1bb10bd625181520d23f2ad399e2a236b407628b7d52d45ffdb0d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/26/2015 after the end of the transition period stated in Accounting Standards Update No. 2013-08, _Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements_. ##### [946-10-65-2](https://asc.understandingaccounting.org/asc/946/10/#946-10-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:05.475Z to 2026-09-10T02:19:05.475Z Record version: sha256:65ff0fb2255543d9b78343659a7cbde816ea88f8a72c4c84434b22750da9288d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/26/2015 after the end of the transition period stated in Accounting Standards Update No. 2013-08, _Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements_. Source downloaded (UTC): 2026-09-10T02:19:10.768Z to 2026-09-10T02:19:10.768Z Record version: sha256:913365ec0379ad3247d855159922eff865a1f9272bd78b24696d7c6af4fdf109 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/946/10/#sec-00-status) SEC content: yes ##### [946-10-S00-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:10.768Z to 2026-09-10T02:19:10.768Z Record version: sha256:b1ba32c33ee8e5c46ced074023a4a3da14dcaaa396403b98bfd2786eaf743529 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
946-10-S99-1 through S99-3
AmendedAccounting Standards Update No. 2021-0608/09/2021
946-10-S99-1 through S99-3
AmendedAccounting Standards Update No. 2019-0707/26/2019
946-10-S99-3AAddedAccounting Standards Update No. 2021-0608/09/2021
Source downloaded (UTC): 2026-09-10T02:19:12.851Z to 2026-09-10T02:19:12.851Z Record version: sha256:115f1a9e60410c04573a71c8be816401575b2ad61b04c4dfff0a87bba8b963f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-S15: SEC 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/946/10/#sec-15-scope-and-scope-exceptions) SEC content: yes #### Entities ##### [946-10-S15-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-S15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:12.851Z to 2026-09-10T02:19:12.851Z Record version: sha256:a66a478035ee25dee60646eace4409c72ec8c795e76ca98c2d5fffcf000ee790 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [946-10-S99-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-S99-1), Regulation S-X Rule 6-01, for entities required to comply with the SEC materials in this Subtopic. Source downloaded (UTC): 2026-09-10T02:19:19.703Z to 2026-09-10T02:19:19.703Z Record version: sha256:8aa75c707cd518d8e406d8c06f076fa8bdd42324bfd411efcab273f4eea0d2b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/946/10/#sec-25-recognition) SEC content: yes #### Organization and Offering Expenses and Selling Commissions ##### [946-10-S25-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:19.703Z to 2026-09-10T02:19:19.703Z Record version: sha256:49cb33402016eaeffe9dc60cc09725dc61ac224ab971a6eb511c1f8636592aab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [946-10-S99-4](https://asc.understandingaccounting.org/asc/946/10/#946-10-S99-4), SAB Topic 5.D, for SEC Staff views on the recognition of organization and offering expenses and selling commissions. Source downloaded (UTC): 2026-09-10T02:19:25.136Z to 2026-09-10T02:19:25.136Z Record version: sha256:a756bcbcb6caf16741d933eec113c4b8445749993f4d0ad6297c52e7378e2e0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/946/10/#sec-99-sec-materials) SEC content: yes #### SEC Rules, Regulations, and Interpretations ##### [946-10-S99-1](https://asc.understandingaccounting.org/asc/946/10/#946-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:25.136Z to 2026-09-10T02:19:25.136Z Record version: sha256:3fd732f38cf2d4b853f628e5fa3f10467939e9b502276772ef56ff960359bc2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 6-01, Application of Rules 6-01 through 6-11 (17 CFR 210.6-01). - Sections 210.6-01 through 210.6-11 shall be applicable to financial statements filed for registered investment companies and business development companies. \[81 FR 82010, Nov. 18, 2016, as amended at 85 FR 54064, Aug. 31, 2020\] ##### [946-10-S99-2](https://asc.understandingaccounting.org/asc/946/10/#946-10-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:25.136Z to 2026-09-10T02:19:25.136Z Record version: sha256:142a062305b86593d652c43e6e7355aa2fc2843ee86cc79e507d451ea920754d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 6-02, Definition of Certain Terms (17 CFR 210.6-02). - The following terms shall have the meaning indicated in this rule unless the context otherwise requires. (Also see § 210.1-02 of this part.) - (a) _[Affiliate](https://asc.understandingaccounting.org/glossary/a/#affiliate "See paragraph 946-10-S99-2, Regulation S-X Rule 6-02(a), for the definition of affiliate.")_. The term _affiliate_ means an _affiliated person_ as defined in section 2(a)(3) of the Investment Company Act of 1940 unless otherwise indicated. The term _control_ has the meaning in section 2(a)(9) of that Act. - (b) _[Value](https://asc.understandingaccounting.org/glossary/v/#value "See paragraph 946-10-S99-2, Regulation S-X Rule 6-02(b), or paragraph 946-320-S99-12, CFRR 404.03.b.i, for the definition of value.")_. As used in §§ 210.6-01 through 210.6-11, the term _value_ shall have the meaning given in section 2(a)(41)(B) of the Investment Company Act of 1940. - (c) _[Balance sheets](https://asc.understandingaccounting.org/glossary/b/#balance-sheets "See paragraph 946-10-S99-2, Regulation S-X Rule 6-02(c), for the definition of balance sheets."); statements of net assets_. As used in §§ 210.6-01 through 210.6-11, the term _balance sheets_ shall include statements of assets and liabilities as well as statements of net assets unless the context clearly indicates the contrary. - (d) _[Qualified assets](https://asc.understandingaccounting.org/glossary/q/#qualified-assets "See paragraph 946-10-S99-2, Regulation S-X Rule 6-02(d), for the definition of qualified assets.")_. - (1) For companies issuing face-amount certificates subsequent to December 31, 1940 under the provisions of section 28 of the Investment Company Act of 1940, the term _qualified assets_ means qualified investments as that term is defined in section 28(b) of the Act. A statement to that effect shall be made in the balance sheet. - (2) For other companies, the term _qualified assets_ means cash and investments which such companies do maintain or are required, by applicable governing legal instruments, to maintain in respect of outstanding face-amount certificates. - (3) Loans to certificate holders may be included as qualified assets in an amount not in excess of certificate reserves carried on the books of account in respect of each individual certificate upon which the loans were made. - (e) _Swing pricing_. The term _swing pricing_ shall have the meaning given in §270.22c-1(a)(3)(v)(C) of this chapter. \[47 FR 56838, Dec. 21, 1982, as amended at 81 FR 82137, Nov. 18, 2016; 85 FR 54064, Aug. 31, 2020\] ##### [946-10-S99-3](https://asc.understandingaccounting.org/asc/946/10/#946-10-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:25.136Z to 2026-09-10T02:19:25.136Z Record version: sha256:3fd55fa8f5ab13ce269eef84a2ea32fdd089d336aa943c10db0b0493f28fd931 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 6-03, Special Rules of General Application to Registered Investment Companies and Business Development Companies (17 CFR 210.6-03). - The financial statements filed for persons to which §§ 210.6-01 through 210.6-11 are applicable shall be prepared in accordance with the following special rules in addition to the general rules in §§ 210.1-01 to 210.4-10 (Articles 1, 2, 3, and 4). Where the requirements of a special rule differ from those prescribed in a general rule, the requirements of the special rule shall be met. - (a) _Content of financial statements_. The financial statements shall be prepared in accordance with the requirements of this part (Regulation S-X) notwithstanding any provision of the articles of incorporation, trust indenture or other governing legal instruments specifying certain accounting procedures inconsistent with those required in §§ 210.6-01 through 210.6-11. - (b) _Audited financial statements_. Where, under Article 3 of this part, financial statements are required to be audited, the independent accountant shall have been selected and ratified in accordance with section 32 of the Investment Company Act of 1940 (15 U.S.C. 80a-31). - (c) _Consolidated and combined statements_. - (1) Consolidated and combined statements filed for registered investment companies and business development companies shall be prepared in accordance with §§ 210.3A-02 and 210.3A-03 (Article 3A) except that: - (i) \[Reserved\] - (ii) A consolidated statement of the registrant and any of its investment company subsidiaries shall not be filed unless accompanied by a consolidating statement which sets forth the individual statements of each significant subsidiary included in the consolidated statement: _Provided, however_, That a consolidating statement need not be filed if all included subsidiaries are totally held; and - (iii) Consolidated or combined statements filed for subsidiaries not consolidated with the registrant shall not include any investment companies unless accompanied by consolidating or combining statements which set forth the individual statements of each included investment company which is a significant subsidiary. - (2) If consolidating or combining statements are filed, the amounts included under each caption in which financial data pertaining to affiliates is required to be furnished shall be subdivided to show separately the amounts: - (i) Eliminated in consolidation; and - (ii) Not eliminated in consolidation. - (d) _Valuation of investments_. The balance sheets of registered investment companies, other than issuers of face-amount certificates, and business development companies, shall reflect all investments at value, with the aggregate cost of each category of investment reported under §§ 210.6-04.1, 6-04.2, 6-04.3, and 6.04.9 or the aggregate cost of each category of investment reported under § 210.6-05.1 shown parenthetically. - State in a note the methods used in determining value of investments. - As required by section 28(b) of the Investment Company Act of 1940 (15 U.S.C. 80a-28(b)), qualified assets of face-amount certificate companies shall be valued in accordance with certain provisions of the Code of the District of Columbia. - (e) _Qualified assets_. State in a note the nature of any investments and other assets maintained or required to be maintained, by applicable legal instruments, in respect of outstanding face-amount certificates. If the nature of the qualifying assets and amount thereof are not subject to the provisions of section 28 of the Investment Company Act of 1940 (15 U.S.C. 80a-28), a statement to that effect shall be made. - (f) _Restricted securities_. State in a note unless disclosed elsewhere the following information as to investment securities which cannot be offered for public sale without first being registered under the Securities Act of 1933 (15 U.S.C. 77a _et seq_) (restricted securities): - (1) The policy of the person with regard to acquisition of restricted securities. - (2) The policy of the person with regard to valuation of restricted securities. Specific comments shall be given as to the valuation of an investment in one or more issues of securities of a company or group of affiliated companies if any part of such investment is restricted and the aggregate value of the investment in all issues of such company or affiliated group exceeds five percent of the value of total assets. (As used in this paragraph, the term _affiliated_ shall have the meaning given in § 210.6-02(a).) - (3) A description of the person's rights with regard to demanding registration of any restricted securities held at the date of the latest balance sheet. - (g) _Income recognition_. Dividends shall be included in income on the ex-dividend date; interest shall be accrued on a daily basis. Dividends declared on short positions existing on the record date shall be recorded on the ex-dividend date and included as an expense of the period. - (h) _Federal income taxes_. - (1) The company's status as a _regulated investment company_ as defined in subtitle A, chapter 1, subchapter M of the Internal Revenue Code, as amended, shall be stated in a note referred to in the appropriate statements. Such note shall also indicate briefly the principal assumptions on which the company relied in making or not making provisions for income taxes. However, a company which retains realized capital gains and designates such gains as a distribution to shareholders in accordance with section 852(b)(3)(D) of the Internal Revenue Code shall, on the last day of its taxable year (and not earlier), make provision for taxes on such undistributed capital gains realized during such year. - (2) State the following amounts based on cost for Federal income tax purposes: - (i) Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost; - (ii) The aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value; - (iii) The net unrealized appreciation or depreciation; and - (iv) The aggregate cost of investments for Federal income tax purposes. - (i) _Issuance and repurchase by a registered investment company or business development company of its own securities_. Disclose for each class of the company's securities: - (1) The number of shares, units, or principal amount of bonds sold during the period of report, the amount received therefor, and, in the case of shares sold by closed-end management investment companies, the difference, if any, between the amount received and the net asset value or preference in involuntary liquidation (whichever is appropriate) of securities of the same class prior to such sale; and - (2) The number of shares, units, or principal amount of bonds repurchased during the period of report and the cost thereof. Closed-end management investment companies shall furnish the following additional information as to securities repurchased during the period of report: - (i) As to bonds and preferred shares, the aggregate difference between cost and the face amount or preference in involuntary liquidation and, if applicable net assets taken at value as of the date of repurchase were less than such face amount or preference, the aggregate difference between cost and such net asset value; - (ii) As to common shares, the weighted average discount per share, expressed as a percentage, between cost of repurchase and the net asset value applicable to such shares at the date of repurchases. - Note to paragraphs (h)(2)(i) and (ii): The information required by paragraphs (h)(2)(i) and (ii) of this section may be based on reasonable estimates if it is impracticable to determine the exact amounts involved. - (j) _Series companies_. - (1) The information required by this part shall, in the case of a person which in essence is comprised of more than one separate investment company, be given as if each class or series of such investment company were a separate investment company; this shall not prevent the inclusion, at the option of such person, of information applicable to other classes or series of such person on a comparative basis, except as to footnotes which need not be comparative. - (2) If the particular class or series for which information is provided may be affected by other classes or series of such investment company, such as by the offset of realized gains in one series with realized losses in another, or through contingent liabilities, such situation shall be disclosed. - (k) _Certificate reserves_. - (1) For companies issuing face-amount certificates subsequent to December 31, 1940 under the provisions of section 28 of the Investment Company Act of 1940 (15 U.S.C. 80a-28), balance sheets shall reflect reserves for outstanding certificates computed in accordance with the provisions of section 28(a) of the Act. - (2) For other companies, balance sheets shall reflect reserves for outstanding certificates determined as follows: - (i) For certificates of the installment type, such amount which, together with the lesser of future payments by certificate holders as and when accumulated at a rate not to exceed 3 1/2 per centum per annum (or such other rate as may be appropriate under the circumstances of a particular case) compounded annually, shall provide the minimum maturity or face amount of the certificate when due. - (ii) For certificates of the fully-paid type, such amount which, as and when accumulated at a rate not to exceed 3 1/2 per centum per annum (or such other rate as may be appropriate under the circumstances of a particular case) compounded annually, shall provide the amount or amounts payable when due. - (iii) Such amount or accrual therefor, as shall have been credited to the account of any certificate holder in the form of any credit, or any dividend, or any interest in addition to the minimum maturity or face amount specified in the certificate, plus any accumulations on any amount so credited or accrued at rates required under the terms of the certificate. - (iv) An amount equal to all advance payments made by certificate holders, plus any accumulations thereon at rates required under the terms of the certificate. - (v) Amounts for other appropriate contingency reserves, for death and disability benefits or for reinstatement rights on any certificate providing for such benefits or rights. - (l) _Inapplicable captions_. Attention is directed to the provisions of §§ 210.4-02 and 210.4-03 which permit the omission of separate captions in financial statements as to which the items and conditions are not present, or the amounts involved not significant. However, amounts involving directors, officers, and affiliates shall nevertheless be separately set forth except as otherwise specifically permitted under a particular caption. - (m) _Swing pricing_. For a registered investment company that has adopted swing pricing policies and procedures, state in a note to the company's financial statements: - (1) The general methods used in determining whether the company's net asset value per share will swing; - (2) Whether the company's net asset value per share has swung during the year; and - (3) A general description of the effects of swing pricing. \[81 FR 82010, Nov. 18, 2016, as amended at 81 FR 82137, Nov. 18, 2016; 83 FR 50202, Oct. 4, 2018; 85 FR 54064, Aug. 31, 2020\] ##### [946-10-S99-3A](https://asc.understandingaccounting.org/asc/946/10/#946-10-S99-3A) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:25.136Z to 2026-09-10T02:19:25.136Z Record version: sha256:052df0256d395d848e716ae6e85432f05cc70ccb98741a6310513d0f479b2457 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 6-11, Financial Statements of Funds Acquired or to Be Acquired (17 CFR 210.6-11). - (a) _Financial statements required_. - (1) Financial statements described in §§210.3-01 and 210.3-02, or §210.3-18, as applicable, including the schedules specified in §§210.12-01 through 210.12-29 (Article 12), prepared and audited in accordance with Regulation S-X (including the independence standards in §210.2-01 or, alternatively if the fund is not a registrant, the applicable independence standards) for the periods specified in paragraph (b) of this section and the supplemental information specified in paragraph (d) of this section must be filed if any of the following conditions exist: - (i) During the most recent fiscal year or subsequent interim period for which a balance sheet is required by §210.3-01 or §210.3-18, a fund acquisition has occurred; or - (ii) After the date of the most recent balance sheet filed pursuant to §210.3-01 or §210.3-18 or, if no relevant balance sheet has been filed in connection with a post-effective amendment for a new series submitted pursuant to §230.485(a)(2) of this chapter (Rule 485(a)(2) under the Securities Act), the filing of such amendment, consummation of a fund acquisition has occurred or is probable. - (2) For purposes of this section: - (i) The term _fund_ includes any investment company as defined in section 3(a) of the Investment Company Act of 1940, including a business development company, or any company that would be an investment company but for the exclusions provided by sections 3(c)(1) or 3(c)(7) of that Act, or any private account managed by an investment adviser. - (ii) The determination of whether a fund has been acquired or will be acquired should be evaluated in light of the facts and circumstances involved. Among the facts and circumstances which should be considered in evaluating whether a fund acquisition has occurred or will occur are whether it will result in the acquisition by the registrant of all or substantially all of the portfolio investments held by another fund. - (3) Acquisitions of a group of related funds that are probable or that have occurred subsequent to the latest fiscal year-end for which audited financial statements of the registrant have been filed will be treated under this section as if they are a single acquisition. For purposes of this section, funds will be deemed to be related if: - (i) They are under common control or management; - (ii) The acquisition of one fund is conditional on the acquisition of each other fund; or - (iii) Each acquisition is conditioned on a single common event. - (4) This section does not apply to a fund which is totally held by the registrant prior to consummation of the transaction. - (b) _Periods to be presented_. - (1) If securities are being registered to be offered to the security holders of the fund to be acquired, the financial statements specified in §§210.3-01 and 210.3-02 or §210.3-18 for the fund to be acquired and the supplemental information specified in paragraph (d) of this section must be filed, except as provided otherwise for filings on Form N-14 (§239.23 of this chapter). The financial statements covering the fiscal year must be audited except as provided in Item 14 of Schedule 14A (§240.14a-101 of this chapter) with respect to certain proxy statements or in registration statements filed on Form N-14 (§239.23 of this chapter ). - (2) In all cases not specified in paragraph (b)(1) of this section, financial statements of the fund acquired or to be acquired for the periods specified in this paragraph (b)(2) or such shorter period as the fund has been in existence and the supplemental information specified in paragraph (d) of this section must be filed. Whether such financial statements and supplemental information are to be filed must be determined using the conditions specified in the definition of significant subsidiary in §210.1-02(w)(2)(i) and (w)(2)(ii)(B) as follows: - (i) If none of the conditions set forth in §210.1-02(w)(2)(i) and (w)(2)(ii)(B), substituting 20 percent for 10 percent each place it appears therein, are satisfied, the financial statements and supplemental financial information in paragraph (d) of this section are not required. - (ii) If any of the conditions set forth in §210.1-02(w)(2)(i) and (w)(2)(ii)(B), substituting 20 percent for 10 percent each place it appears therein, are satisfied, the financial statements of the acquired fund must be filed. If the acquired fund is subject to §210.3-18, then the financial statements for the periods described therein must be filed. For all other acquired funds, the financial statements for the most recent fiscal year and the most recent interim period must be filed. The registrant must also provide the supplemental financial information in paragraph (d) of this section. - (iii) If the aggregate impact of funds acquired or to be acquired since the date of the most recent audited balance sheet filed for the registrant, for which financial statements are not required by paragraph (b)(2)(i) of this section, satisfies any of the conditions set forth in §210.1-02(w)(2)(i) and (w)(2)(ii)(B), substituting 50 percent for 10 percent each place it appears therein, the registrant must provide financial statements for any fund acquired or to be acquired for which financial statements are not yet required by paragraph (b)(2)(i) of this section. If any of the acquired funds are subject to §210.3-18, then the financial statements for the periods described therein must be filed. For any other acquired funds, the financial statements for the most recent fiscal year and the most recent interim period must be filed. The registrant must also provide the supplemental financial information in paragraph (d) of this section for such funds. - (3) The determination must be made by comparing the most recent annual financial statement of each such fund, or for acquisitions each group of related funds on a combined basis, to the registrant's most recent annual financial statements filed at or prior to the date of acquisition. However, the determination may be made by using pro forma amounts as calculated by the registrant for the periods specified in §210.1-02(w)(2) that only give effect to an acquisition consummated after the latest fiscal year-end for which the registrant's financial statements are required to be filed when the registrant has filed audited financial statements of such acquired fund and provided the supplemental financial information for the periods required by this section. - (4) Separate financial statements of the acquired fund and the supplemental information specified in paragraph (d) of this section need only to be filed once and not included in any subsequent filing or shareholder report. - (c) _Acquisitions involving private funds or private accounts_. If the fund acquired or to be acquired would be an investment company under the Investment Company Act but for the exclusion provided from that definition by either sections 3(c)(1) or 3(c)(7) of that Act, then the required financial statements may comply with U.S. Generally Accepted Accounting Principles and only Article 12. In situations of any private account managed by an investment adviser provide the schedules specified in Article 12 for the assets acquired or to be acquired. - (d) _Supplemental financial information_. - (1) Supplemental financial information must consist of: - (i) A table showing the current fees for the registrant and the acquired fund and pro forma fees, if different, for the registrant after giving effect to the acquisition using the format prescribed in the appropriate registration statement under the Investment Company Act; - (ii) If the transaction will result in a material change in the acquired fund's investment portfolio due to investment restrictions, a schedule of investments of the acquired fund modified to reflect such change and accompanied by narrative disclosure describing the change; and - (iii) Narrative disclosure about material differences in accounting policies of the acquired fund when compared to the registrant. - (2) With respect to any fund acquisition, registered investment companies and business development companies must provide the supplemental financial information required in this section in lieu of any pro forma financial information required by §§210.11-01 through 210.11-03 . \[85 FR 54064, Aug. 31, 2020\] #### SEC Staff Guidance ##### [946-10-S99-4](https://asc.understandingaccounting.org/asc/946/10/#946-10-S99-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:25.136Z to 2026-09-10T02:19:25.136Z Record version: sha256:dfc88eb35102dd31642a2434fa6a261829a601dd3af549c32afd5eb7254079a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.D, Organization and Offering Expenses and Selling Commissions—Limited Partnerships Trading in Commodity Futures. - Facts: Partnerships formed for the purpose of engaging in speculative trading in commodity futures contracts sell limited partnership interests to the public and frequently have a general partner who is an affiliate of the partnership's commodity broker or the principal underwriter selling the limited partnership interests. The commodity broker or a subsidiary typically assumes the liability for all or part of the organization and offering expenses and selling commissions in connection with the sale of limited partnership interests. Funds raised from the sale of partnership interests are deposited in a margin account with the commodity broker and are invested in Treasury Bills or similar securities. The arrangement further provides that interest earned on the investments for an initial period is to be retained by the broker until it has been reimbursed for all or a specified portion of the aforementioned expenses and commissions and that thereafter interest earned accrues to the partnership. - In some instances, there may be no reference to reimbursement of the broker for expenses and commissions to be assumed. The arrangements may provide that all interest earned on investments accrues to the partnership but that commissions on commodity transactions paid to the broker are at higher rates for a specified initial period and at lower rates subsequently. - Question 1: Should the partnership recognize a commitment to reimburse the commodity broker for the organization and offering expenses and selling commissions? - Interpretive Response: Yes. A commitment should be recognized by reducing partnership capital and establishing a liability for the estimated amount of expenses and commissions for which the broker is to be reimbursed. - Question 2: Should the interest income retained by the broker for reimbursement of expenses be recognized as income by the partnership? - Interpretive Response: Yes. All the interest income on the margin account investments should be recognized as accruing to the partnership as earned. The portion of income retained by the broker and not actually realized by the partnership in cash should be applied to reduce the liability for the estimated amount of reimbursable expenses and commissions. - Question 3: If the broker retains all of the interest income for a specified period and thereafter it accrues to the partnership, should an equivalent amount of interest income be reflected on the partnership's financial statements during the specified period? - Interpretive Response: Yes. If it appears from the terms of the arrangement that it was the intent of the parties to provide for full or partial reimbursement for the expenses and commissions paid by the broker, then a commitment to reimbursement should be recognized by the partnership and an equivalent amount of interest income should be recognized on the partnership's financial statements as earned. - Question 4: Under the arrangements where commissions on commodity transactions are at a lower rate after a specified period and there is no reference to reimbursement of the broker for expenses and commissions, should recognition be given on the partnership's financial statements to a commitment to reimburse the broker for all or part of the expenses and commissions? - Interpretive Response: If it appears from the terms of the arrangement that the intent of the parties was to provide for full or partial reimbursement of the broker's expenses and commissions, then the estimated commitment should be recognized on the partnership's financial statements. During the specified initial period commissions on commodity transactions should be charged to operations at the lower commission rate with the difference applied to reduce the aforementioned commitment. Source downloaded (UTC): 2026-09-10T02:19:28.974Z to 2026-09-10T02:20:03.597Z Record version: sha256:2d98f0e7afd9e2cf0019a5d080a90844d929d898a64c10a3f48fbcfd9249bc4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20: Financial Services—Investment Companies — Investment Company Activities ### Machine-generated study aids ```json { "summary": "ASC 946-20 governs specific \"investment company activities\" — payments by affiliates to reimburse fund losses or cure investment-restriction violations, Rule 12b-1 distribution plans, expense limitation/waiver arrangements, offering costs, shareholder and distribution transactions, and related presentation and disclosure. Its core rules: affiliate payments and gains/losses on non-conforming investments are combined in one line within net realized/unrealized gains (losses) and quantified in the financial highlights (946-20-45-1; 946-20-50-2); a fund with an enhanced 12b-1 plan (or a board-contingent plan once the board commits) accrues a liability and expense for the distributor's excess distribution costs (946-20-25-3), while an excess of fees collected over distributor costs may never be booked as an asset (946-20-45-2). Offering costs are charged to paid-in capital for closed-end funds, partnerships and unit investment trusts, but deferred and amortized straight-line over 12 months for open-end funds and continuously offered closed-end funds (946-20-25-5 through 25-6; 35-5; 35-6).", "key_points": [ "Affiliate payments to reimburse investment losses or losses from investments violating fund guidelines are combined into a single statement of operations line, 'net increase from payments by affiliates and net gains (losses) realized on the disposal of investments in violation of restrictions,' within net realized and unrealized gains (losses) (946-20-45-1), with amounts, circumstances, and the effect on total return disclosed (946-20-50-2).", "A credit enhancement provided by an affiliate is recognized when it becomes available to the fund (946-20-25-2), measured initially at the cost of obtaining a similar enhancement in an arm's-length transaction (946-20-30-1), with subsequent changes in value recorded as unrealized appreciation or depreciation (946-20-35-1).", "Funds with enhanced 12b-1 plans must accrue a liability and expense for the distributor's excess costs, and board-contingent plans accrue only when the board commits to pay; the liability equals cumulative distribution costs less cumulative 12b-1 fees, cumulative CDSL payments, and reasonably estimable future CDSL payments by current shareholders, discounted only if cash flows are reliably determinable and not subject to a reasonable interest charge (946-20-25-3; 30-3 through 30-5; 35-3).", "An excess of cumulative 12b-1 fees and CDSL payments (including estimated future CDSL) over the distributor's cumulative costs shall not be reported as an asset (946-20-45-2); principal plan terms and recoverable distribution costs must be disclosed for board-contingent and enhanced plans (946-20-50-3).", "Excess expenses potentially reimbursable to the adviser under an expense limitation agreement are recorded as a liability only if the Concepts Statement 6 liability criteria and ASC 450-20-25-2 are met — usually they are not — but the agreements and carryover amounts must be disclosed (946-20-25-4; 50-6).", "Offering costs of closed-end funds and investment partnerships are charged to paid-in capital upon sale of shares/units; open-end funds and continuously offered closed-end funds defer them and amortize straight-line over 12 months from commencement of operations; unit investment trust offering costs are charged to paid-in capital pro rata as units are sold and written off when issuance is no longer probable (presumed after one year) (946-20-25-5; 25-6; 35-5; 35-6; 40-1).", "Shareholder purchases and redemptions of open-end funds are recorded on trade date with an offsetting receivable/payable for fund shares (946-20-25-7); distribution liabilities are recorded on the ex-dividend date rather than the declaration date (946-20-25-9); and all voluntary and involuntary fee waivers are shown on the face of the statement of operations as a reduction of total expenses, with the effect of voluntary waivers disclosed in the financial highlights (946-20-50-7)." ], "categories": [ "Industry-specific", "Presentation", "Disclosure", "Recognition" ], "audience_level": "advanced", "student_note": "This subtopic is where fund-specific quirks live: trade-date share accounting, ex-dividend-date distribution liabilities, and the asymmetric 12b-1 rule that a distributor's excess costs can create a fund liability while excess fees collected can never be an asset. A common misunderstanding is assuming adviser expense-reimbursement carryovers are automatically liabilities — under 946-20-25-4 they usually are only disclosed, not accrued.", "related_topics": [ "946-10", "946-205", "946-740", "720-15", "450-20", "850-10" ], "key_concepts": [ "investment company", "payments by affiliates", "12b-1 plan", "contingent-deferred sales load", "excess distribution costs", "expense limitation agreement", "offering costs", "financial highlights and total return" ] } ``` Source downloaded (UTC): 2026-09-10T02:19:28.974Z to 2026-09-10T02:19:28.974Z Record version: sha256:57c93ac74f32350e072d80a2910fc80565487cf41b2f4cbb6cb97483466d6c78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/946/20/#00-status) SEC content: no ##### [946-20-00-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:28.974Z to 2026-09-10T02:19:28.974Z Record version: sha256:eee901ec7db000efd0183d12cf29f0a013fda7a6fdd42682ce33c3a77aac6104 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Front-End LoadAddedAccounting Standards Update No. 2014-0603/14/2014
946-20-05-1AmendedAccounting Standards Update No. 2013-0806/07/2013
946-20-05-1A through 05-1E
AddedAccounting Standards Update No. 2013-0806/07/2013
946-20-05-1DAmendedAccounting Standards Update No. 2014-0603/14/2014
946-20-25-1SupersededAccounting Standards Update No. 2013-0806/07/2013
946-20-25-4AmendedAccounting Standards Update No. 2024-0203/29/2024
946-20-50-1SupersededAccounting Standards Update No. 2013-0806/07/2013
946-20-50-11AmendedAccounting Standards Update No. 2023-0610/09/2023
946-20-50-15AddedAccounting Standards Update No. 2013-0806/07/2013
946-20-50-16AddedAccounting Standards Update No. 2013-0806/07/2013
Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:019a5288735b8dc88d66530882d575fc9b5cfac8061648dfbc0053923ceaba8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/946/20/#05-overview-and-background) SEC content: no ##### [946-20-05-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:c10bd2365a6b576162398df4d436a4997f0667ae860634aa700993855147dcdc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses accounting for certain activities engaged in by investment companies. 1. a [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 3. c [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 4. d [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 5. e [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 6. f [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). #### Background Information about Investment Company Activities ##### [946-20-05-1A](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:362822ee1307fd5375f4fdd40c2c11f1075e51784d4b19f1d6d257e4f8f297f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Typically, an investment company sells its ownership interests, invests the proceeds to achieve its investment objectives, and provides returns to its investors from the net income earned on its investments and net gains realized on the disposal of its investments. ##### [946-20-05-1B](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-1B) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:e8ab3aea5e529cc3a43df9069033c98d83c1fa3f43e051bddfdf1c7d65b2ee6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Several kinds of investment companies exist: management investment companies, unit investment trusts, common (collective) trust funds, exchange-traded funds, investment partnerships, certain separate accounts of life insurance companies, and offshore funds. Management investment companies may be open-end funds (commonly known as mutual funds), [closed-end funds](https://asc.understandingaccounting.org/glossary/c/#closed-end-funds "Closed-end funds are investment companies that issue a fixed number of shares (that generally trade on an open market) to raise capital, similar to the way in which an entity sells stock in an initial public offering."), special purpose funds, venture capital investment companies, small business investment companies, and business development companies. Investment companies are organized as corporations (in the case of mutual funds, under the laws of certain states that authorize the issuance of common shares redeemable on demand of individual shareholders), common law trusts (sometimes called business trusts), limited partnerships, limited liability investment partnerships and companies, and other more specialized entities, such as separate accounts of insurance companies that are not in themselves legal entities. ##### [946-20-05-1C](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-1C) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:aba4d11ec20150a8d10e87982f5b809ff9ad4ca7d5c97804465f92de0febede0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Once an investment company has been organized to do business, it usually engages immediately in its planned principal operations, that is, the sale of capital stock and investment of funds. Employee training, development of markets for the sale of capital stock, and similar activities are usually performed by the investment adviser or other agent, and the costs of these activities are not borne directly by the investment company. However, an investment company, particularly one not engaging an agent to manage its portfolio and to perform other essential functions, may engage in such activities and may bear those costs directly during its development stage. ##### [946-20-05-1D](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-1D) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:c9f15cbfed2d3c79b1d03ab6eab29fe67487a4136cd9d8ab1cfcbd386518e3c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Multiple-class funds issue more than one class of shares. Each class of shares typically has a different kind of sales charge, such as a [front-end load](https://asc.understandingaccounting.org/glossary/f/#front-end-load "A sales commission or charge payable at the time of purchase of mutual fund shares."), [contingent-deferred sales load](https://asc.understandingaccounting.org/glossary/c/#contingent-deferred-sales-load "A sales charge imposed directly on redeeming shareholders based on a percentage of the lesser of the redemption proceeds or original cost. The percentage may decrease or be eliminated based on the duration of share ownership (frequently decreases by 1 percent a year). Also referred to as back-end load."), [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940.") fee (referring to Rule 12b-1 in Chapter 17 of the Code of Federal Regulations, which implements the Investment Company Act of 1940), or combinations thereof. Multiple-class funds may charge different classes of shares for specific or incremental expenses, such as transfer-agent, registration, and printing expenses related to each class. ##### [946-20-05-1E](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-1E) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:11fa509bb0a9bde9021c5855e63f3fd40a1276552203191d54379b814c916214 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Venture capital investment companies, including most small business investment companies and private equity investment companies, differ from other types of investment companies. The typical open-end or closed-end investment company is a more passive investor, whereas a venture capital investment company is more actively involved with its investees. In addition to providing funds, whether in the form of loans or equity, a venture capital investment company often provides technical and management assistance to its investees as needed and requested. That assistance is provided for maximizing the overall value of the investment rather than for other benefits. The portfolio of a venture capital investment company may be illiquid by the very nature of the investments, which are usually securities with no public market. Often, gains on those investments are realized over a relatively long holding period. The nature of the investments therefore requires valuation procedures that may differ from those used by the typical investment company primarily addressed by this Subtopic. Venture capital investment companies also may incur liabilities not generally found in other investment companies. #### Payments by Affiliates ##### [946-20-05-2](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:6f9fca653c0363ff2298cd17e3dbbcc37fa3f7bd6b093ee613581d80c060df7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Affiliates may make payments to a fund related to investment losses for either of the following reasons: 1. a Payments by affiliates. To reimburse the effect of a loss (realized or unrealized) on a portfolio investment, often caused by a situation outside the fund's, or its affiliates', direct control, such as an issuer default or a decline in [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."). 2. b Investment restriction violations (investments not meeting investment guidelines). Occasionally, a fund adviser may purchase an investment for a fund that clearly violates the fund's investment restrictions (investment restrictions are described in the prospectus or statement of additional information for registered funds and in partnership agreements or offering memorandums for nonregistered funds). The investment held in violation of the fund's investment restrictions may appreciate or depreciate in value. In the case where the investment has depreciated in value and the fund has consequently incurred a loss, the fund adviser may make a payment to the fund in lieu of settlement of a potential claim resulting from the violation of the fund's investment restrictions. This payment, in effect, makes the fund whole relative to the loss that it has incurred. This type of transaction is in essence a payment to put the fund's shareholders in the position they would have been in had the violation not occurred. ##### [946-20-05-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:640e71da5b7bca95ba725e6dc9dd1f0264346462fe7737439bd1c8bbb76d9c15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payments by affiliates may take several forms, such as any of the following: 1. a A direct cash contribution to the fund to offset the effect of a realized loss on a portfolio investment 2. b Purchase of securities from the fund at prices in excess of the securities' current fair value 3. c Provision of a credit enhancement to maintain the investment's value. #### Certain Distribution Costs ##### [946-20-05-4](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:7002813a6df2ff1e985400d73a2e50b8ae2a8658078c23589a10a04158003dc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Open-end investment companies, also known as funds, are permitted to finance the distribution of their shares under a plan pursuant to Rule [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940.") in Chapter 17 of the Code of Federal Regulations. (Rule 12b-1 is one of the regulations implementing the Investment Company Act of 1940.) Under Rule 12b-1, a fund's board of directors is required to perform an annual review of the plan and determine whether to continue or terminate it. Under a [traditional 12b-1 plan](https://asc.understandingaccounting.org/glossary/t/#traditional-12b-1-plan "A compensation or reimbursement plan pursuant to Rule 12b-1 that permits the use of a fund's assets to pay distribution-related expenses under certain conditions. The 12b-1 fees under traditional 12b-1 plans are normally discontinued upon plan termination, but may continue to be paid after plan termination under a board-contingent plan."), a fund's [distributor](https://asc.understandingaccounting.org/glossary/d/#distributor "Usually the principal underwriter that sells the fund's capital shares by acting as an agent (intermediary between the fund and an independent dealer or the public) or as a principal, buying capital shares from the fund at net asset value and selling shares through dealers or to the public (see definition of underwriter in section 2(a)(40) of the Investment Company Act of 1940).") may be compensated or reimbursed for its [distribution costs](https://asc.understandingaccounting.org/glossary/d/#distribution-costs "Costs, as defined in a distribution agreement between a distributor and a fund, incurred by a distributor in distributing a fund's shares. Such costs may include commission payments to sales representatives, promotional materials, overhead allocations, and interest.") or efforts through any of the following methods: 1. a A 12b-1 fee, payable by the fund, based on an annual percentage of the fund's average net assets (a [compensation plan](https://asc.understandingaccounting.org/glossary/c/#compensation-plan "A plan that provides for a 12b-1 fee, payable by the fund, based on a percentage of the fund's average net assets. The 12b-1 fee may be more or less than the costs incurred by the distributor.")) or based on an annual percentage of the fund's average net assets limited to actual costs incurred, after deducting [contingent-deferred sales loads](https://asc.understandingaccounting.org/glossary/c/#contingent-deferred-sales-load "A sales charge imposed directly on redeeming shareholders based on a percentage of the lesser of the redemption proceeds or original cost. The percentage may decrease or be eliminated based on the duration of share ownership (frequently decreases by 1 percent a year). Also referred to as back-end load.") received by the distributor (a [reimbursement plan](https://asc.understandingaccounting.org/glossary/r/#reimbursement-plan "A plan that provides for a 12b-1 fee, payable by the fund, that may not exceed the lesser of an annual percentage of the fund's average net assets or actual costs incurred by the distributor net of contingent-deferred sales load received by the distributor.")). Therefore, a compensation plan differs from a reimbursement plan only in that the latter provides for annual or cumulative limits, or both, on fees paid. Fees for both kinds of plans are treated as expenses in a fund's statement of operations. 2. b A front-end load, which is assessed on purchasing shareholders at the time fund shares are sold. 3. c A contingent-deferred sales load imposed directly on redeeming shareholders. The contingent-deferred sales load usually is expressed as a percentage, which declines with the passage of time, of the lesser of redemption proceeds or original cost. The contingent-deferred sales load normally ranges from 4 percent to 6 percent and typically is reduced by 1 percent (for example, from 6 percent to 5 percent) a year until the sales charge reaches 0 percent. ##### [946-20-05-5](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:a0024d31bee009d1ee554b2a21b5db1a1398fbb8a3581fdc651cf14f380908e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Rule [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940.") plans historically have provided that a fund's board of directors may terminate the plan with no penalty to the fund. (Termination of the plan does not necessitate termination of the fund.) Redeeming shareholders still would be subject to the contingent-deferred sales load, which would be paid to the distributor that sold the shares to those shareholders. However, with a traditional 12b-1 plan, the 12b-1 fees normally would be discontinued on plan termination. Some traditional reimbursement 12b-1 plans provide that, when the plan is terminated, the fund's board of directors has the option, but not the requirement, to pay the distributor for any costs incurred by the distributor in excess of the cumulative contingent-deferred sales load and 12b-1 fees the distributor has received. Such a plan is referred to as a [board-contingent plan](https://asc.understandingaccounting.org/glossary/b/#board-contingent-plan "A reimbursement 12b-1 plan that provides that, on the plan's termination, a fund's board of directors has the option, but not the requirement, to pay the distributor for any excess costs incurred by the distributor."). Under traditional reimbursement 12b-1 plans, including board-contingent plans, contingent-deferred sales load payments by shareholders continue to be remitted to the distributor until [excess costs](https://asc.understandingaccounting.org/glossary/e/#excess-costs "The cumulative distribution costs incurred by the distributor less the sum of cumulative 12b-1 fees paid, cumulative contingent-deferred sales load payments, and future cumulative contingent-deferred sales load payments by current shareholders, if reasonably estimable.") are fully recovered, after which the contingent-deferred sales load payments usually are remitted to the fund instead of the distributor. ##### [946-20-05-6](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:922899d13c7aa1f053805bad9b2effd226690b9a0b8742f5c4fedcd189f5fed1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. With an [enhanced 12b-1 plan](https://asc.understandingaccounting.org/glossary/e/#enhanced-12b-1-plan "A reimbursement 12b-1 plan that provides that, on termination of the plan, the fund is required to continue paying the 12b-1 fee to the extent the distributor has excess costs."), the fund is required to continue paying the 12b-1 fee after termination of the plan to the extent the distributor has excess costs. Contingent-deferred sales load payments by shareholders would continue to be remitted to the distributor to further offset excess costs. Thus, the major distinction between traditional and enhanced 12b-1 plans is the requirement for the fund to continue such payments upon plan termination. ##### [946-20-05-7](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:8c1020853d7d4ade83dfbb6135dbbb6eacc79e996a17991a6e677aac99a45c29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table summarizes the 12b-1 plan attributes. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F8E707FC-AD76-412C-A2AA-147B9B7456DA-low.gif) Traditional Enhanced Compensation Reimbursement Nonboard Contingent Board Contingent "Annual review and approval of plan by board, with ability to terminate plan" X X X X Fund Payment Terms (a) Payment based on average net assets X X X X "Annual or cumulative limitation, or both, based on actual distribution costs" X X X "Upon termination of 12b-1 plan, board has option, but not obligation, to pay excess costs" X "Upon termination of 12b-1 plan, fund is required to continue paying 12b-1 fee to the extent the distributor has excess costs" X (a) "Excludes front-end and contingent deferred sales load payments, which are made by shareholders and not the fund." #### Expense Limitation Agreements ##### [946-20-05-8](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:482e37f9629ee91d811532d9cf1dbfc368e2dbc977e3e6bd36a1543d82b52b6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some expense limitation agreements may provide that reimbursements by the fund adviser of expenses incurred by the fund in excess of the maximum permitted by the prospectus or offering document will be carried over to a future period and reimbursed to the fund adviser when, and to the extent that, the total expense ratio falls below the permitted maximum. Such agreements may provide that reimbursement of excess expenses to the fund adviser is not required after a specified date or upon conclusion of a specified period from the time the fund initially incurred, or the adviser initially reimbursed, the expenses, such as three years. Under most excess expense plans, a fund is obligated to repay a servicer for expenses incurred previously only if, during a defined period, the fund retains the service provider and can reduce its expense ratio to a low enough level to permit payment, and maintain that ratio at a sufficiently low level thereafter. Many substantive conditions could cause the fund to have no obligation to the servicer, including failure to attract assets, significant redemptions of shares by investors, market depreciation, and significant increases in other expenses, all of which could drive expenses up to or beyond the maximum under which payment would otherwise be made. #### Brokerage Service Arrangements ##### [946-20-05-9](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:76e5579f65e471e4ad5f52f1ca948ab322d35ab46bd996fa27b2728ff86e1883 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company may have a brokerage service arrangement with a broker-dealer or an affiliate of a broker-dealer under which the broker-dealer (or its affiliate), in connection with the investment company's brokerage transactions directed to the broker-dealer, provides or pays for services to the investment company (other than brokerage and research services as those terms are used in section 28(e) of the Securities Exchange Act of 1934). #### General Partner Advisory Services ##### [946-20-05-10](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:54abb0129672634b30d8ba946ef465ada1df752268b5203de86a5b12a118b605 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Investment companies organized as limited partnerships typically receive advisory services from the general partner. For such services, a number of partnerships pay fees chargeable as expenses to the partnership, whereas others allocate net income from the limited partners' capital accounts to the general partner's capital account, and still others employ a combination of the two methods. #### Fee Waivers ##### [946-20-05-11](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:51526c401fc6fb949bd06c0f5c2c3bd38c10a27ef5c0a2cf5f3950657a5af6bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An adviser or a third party may voluntarily or involuntarily waive its fee and reimburse expenses (waivers). An example of an involuntary waiver is when the advisory agreement (or other regulation or agreements that are either outside the adviser's control or require shareholder approval) provides that the adviser should reimburse the investment company for expenses in excess of a specified percentage of average net assets. #### Portfolio Insurance ##### [946-20-05-12](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:31.828Z to 2026-09-10T02:19:31.828Z Record version: sha256:bb600134870eb5bd3514baa4ed2c5e973b8cf074bd601e42cd59d1b83adce66d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many municipal bond funds, primarily those organized as unit investment trusts with fixed portfolios, arrange for insurance for the payment of principal and interest when due. The insurance applies to portfolio securities only while they are owned by the fund, and its coverage is not transferable to buyers of the securities. That arrangement differs from those in which the issuer of the securities acquires the insurance, making the insurance feature an element of the securities and transferable on changes in ownership. Source downloaded (UTC): 2026-09-10T02:19:35.385Z to 2026-09-10T02:19:35.385Z Record version: sha256:c1267e5d279154247e45fd8711aeea07fbd7230c4c45ceea9346aa23365a2de5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/946/20/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [946-20-15-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:35.385Z to 2026-09-10T02:19:35.385Z Record version: sha256:c3a301a581a744df7c9cfe4546feece3d3b1687ebb3f11a101f8c5a6d6983e8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 946-10-15. Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:4f03611f64a5ed1c5acfe02779d0b9871a42aa90397cd35d4d8e384b54ad9f3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/946/20/#25-recognition) SEC content: no ##### [946-20-25-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:e459081a5ba3402fc6da0a403cc2af5b1d7da6993e8d4ebc481ff816037f588e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). #### Payments by Affiliates ##### [946-20-25-2](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:bbd36630ad753db4b6f89683b2283f4f3d03d000f5a7c2133821af4be3b8f9c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A credit enhancement provided by an affiliate to maintain an investment's value shall be recognized when the enhancement becomes available to the fund. #### Certain Distribution Costs ##### [946-20-25-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:955dfbd503dd5acb68ec5e3b405bafe6752c89a48ff4005fd9028ea1ee73828d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this paragraph applies to annual and interim financial statements of investment companies that adopt plans that comply with Rule [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940."). A liability, with a corresponding charge to expense, shall be recognized by a fund with an [enhanced 12b-1 plan](https://asc.understandingaccounting.org/glossary/e/#enhanced-12b-1-plan "A reimbursement 12b-1 plan that provides that, on termination of the plan, the fund is required to continue paying the 12b-1 fee to the extent the distributor has excess costs.") for [excess costs](https://asc.understandingaccounting.org/glossary/e/#excess-costs "The cumulative distribution costs incurred by the distributor less the sum of cumulative 12b-1 fees paid, cumulative contingent-deferred sales load payments, and future cumulative contingent-deferred sales load payments by current shareholders, if reasonably estimable."). A liability for excess costs, computed in the same way as for an enhanced 12b-1 plan, shall be recorded by a fund with a [board-contingent plan](https://asc.understandingaccounting.org/glossary/b/#board-contingent-plan "A reimbursement 12b-1 plan that provides that, on the plan's termination, a fund's board of directors has the option, but not the requirement, to pay the distributor for any excess costs incurred by the distributor.") when the fund's board commits to pay such costs. Example 1 (see paragraph [946-20-55-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-55-1)) illustrates this guidance. #### Expense Limitation Agreements ##### [946-20-25-4](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-4) Pending content: yes Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:7c7cf2d1e6f4200e0b77234261f5fe8e1e71c9c3b73778c8fd60fc12ca997bec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A liability for excess expenses shall be recognized if, and to the extent that, the expense limitation agreement's established terms for repayment of the excess expenses to the adviser by the fund and the attendant circumstances meet the criteria in paragraphs 36(a), 36(b), and 36(c) of FASB Concepts Statement No. 6, Elements of Financial Statements, and the criteria in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). In most instances, a liability will not be recorded because it is not likely that excess expenses under such plans will meet those criteria before amounts are actually due to the adviser under the reimbursement agreement. If an assessment of the specific circumstances (such as an agreement to reimburse for either an unlimited period or a period substantially greater than that necessary for the fund to demonstrate its economic viability or an obligation to reimburse the servicer remains even after the cancellation of the fund's contract with the servicer) indicates that those criteria are met, a liability shall be recorded. Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [105-10-65-9](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-9)A liability for excess expenses shall be recognized if, and to the extent that, the expense limitation agreement's established terms for repayment of the excess expenses to the adviser by the fund and the attendant circumstances meet all of the following criteria: 1. a The excess expense or expenses embody a present duty or responsibility to one or more other entities that entails settlement by probable future transfer or use of assets at a specified or determinable date, on occurrence of a specified event, or on demand. 2. b The duty or responsibility obligates a particular entity, leaving it little or no discretion to avoid the future sacrifice. 3. c The transaction or other event obligating the entity has already happened. 4. d The guidance in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). In most instances, a liability will not be recorded because it is not likely that excess expenses under such plans will meet those criteria before amounts are actually due to the adviser under the reimbursement agreement. If an assessment of the specific circumstances (such as an agreement to reimburse for either an unlimited period or a period substantially greater than that necessary for the fund to demonstrate its economic viability or an obligation to reimburse the servicer remains even after the cancellation of the fund's contract with the servicer) indicates that those criteria are met, a liability shall be recorded. #### Offering Costs ##### [946-20-25-5](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:b4d6369945b82b37c98733bfa1add690c4975074ca0a81fcd460f969d1fba560 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Offering costs](https://asc.understandingaccounting.org/glossary/o/#offering-costs "Offering costs include all of the following: Legal fees pertaining to the investment company's shares offered for sale Securities and Exchange Commission (SEC)and state registration fees Underwriting and other similar costs Costs of printing prospectuses for sales purposes Initial fees paid to be listed on an exchange Tax opinion costs related to offering of shares Initial agency fees of securing the rating for bonds or preferred stock issued by closed-end funds.") of [closed-end funds](https://asc.understandingaccounting.org/glossary/c/#closed-end-funds "Closed-end funds are investment companies that issue a fixed number of shares (that generally trade on an open market) to raise capital, similar to the way in which an entity sells stock in an initial public offering.") and investment partnerships shall be charged to paid-in capital upon sale of the shares or units. ##### [946-20-25-6](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:4c843a8b8cd9c4d0e5e6a522ed628244d8e45d35b0b47da96c241abbdec7977c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Offering costs of open-end investment companies and of closed-end funds with a continuous offering period shall be recognized as a deferred charge. #### Capital Share Transactions ##### [946-20-25-7](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:bad4b31b312de2f85a2d90cc96a6a2703b50c7c7295bf1d214e829ba45299fd2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting for shareholder transactions of open-end funds differs from the accounting followed by commercial entities in several key aspects. Sales of fund shares are recorded daily by crediting capital stock for the par value of the stock to be issued and additional paid-in capital for the amount paid over the par value; redemptions are recorded daily by debiting those accounts. The offsetting debit (credit), however, is made to an asset (liability) account, typically captioned as receivable for fund shares sold (payable for fund shares redeemed). These entries are made on or as of the date the order to purchase or sell fund shares is received (trade date), not on the day the payment is due (settlement date) as is typical practice for the recording of issuance of equity shares by commercial entities. ##### [946-20-25-8](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:4ab3c757a518dd989fbe36ad3ba44ae3c911f11b196febc91a5e51179bea8c93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Investment partnerships shall record capital subscription and redemption commitments as of the date required by the partnership agreement. Cash received before this date shall be recorded as an advance capital contribution liability. #### Dividends ##### [946-20-25-9](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:47a7c92b94b65bfb70f6a58e92ea55d2a689b6ac13232be114224d7a931e1a43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Both closed-end and open-end investment companies record distribution liabilities on the ex-dividend date rather than the declaration date. For closed-end investment companies, a purchaser typically is not entitled to a dividend for shares purchased on the ex-dividend date. Open-end investment companies record the liability on the ex-dividend date to properly state the net asset value at which sales and redemptions are made. When large (in excess of 15 percent of a closed-end fund's net asset value) dividends or distributions are declared, it is the policy of some exchanges to postpone the ex-dividend date until the dividend has been paid. In such circumstances, the liability for the dividend distribution would be recorded on the books of the fund on the payment date. #### Performance Fees ##### [946-20-25-10](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:54164ad9ee653b972974a40c1732c45ce3d30a5a2ee91bb672ba5166d9868fd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Performance fees by an investment adviser under an investment advisory agreement shall be accrued at interim dates based on actual performance through the accrual date. #### Portfolio Insurance ##### [946-20-25-11](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:42.174Z to 2026-09-10T02:19:42.174Z Record version: sha256:c82a68a9b29bd8c5b67ef1a21b54dc9f6b2c64bb7709cae1f0a968a6ac4af7ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If insurance applies only to the fund's portfolio, it does not have a measurable [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") in the absence of default of the underlying securities or of indications of the probability of default and, accordingly, the cost of the policy should be treated as an operating expense. Source downloaded (UTC): 2026-09-10T02:19:44.628Z to 2026-09-10T02:19:44.628Z Record version: sha256:a1a236d51afa9ace18deb33c899fcabfa1608790cf1585549558acbcc1fc4ada Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/946/20/#30-initial-measurement) SEC content: no #### Payments by Affiliates ##### [946-20-30-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:44.628Z to 2026-09-10T02:19:44.628Z Record version: sha256:f31975569c94e9d70c9b3f0d8ca164dd468082643b8096a29adfeb727f355366 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of the payment from a credit enhancement to maintain the investment's value shall be measured initially by the cost of obtaining a similar enhancement in an arm's-length transaction. #### Certain Distribution Costs ##### [946-20-30-2](https://asc.understandingaccounting.org/asc/946/20/#946-20-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:44.628Z to 2026-09-10T02:19:44.628Z Record version: sha256:af3ecc67e28855f4c939e45c22fbe2c63fe0faa1fecae9ef6984cd0e57e28743 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [946-20-30-3 through 30-5](https://asc.understandingaccounting.org/asc/946/20/#946-20-30-3) applies to annual and interim financial statements of investment companies that adopt plans that comply with Rule [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940."). ##### [946-20-30-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:44.628Z to 2026-09-10T02:19:44.628Z Record version: sha256:428b696d54a551cf7e9a03139bc2c8fb26a9a251ef8c89e0992cb0636b720c8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability and expense recognized under paragraph [946-20-25-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-3) shall be measured initially in an amount equal to the cumulative [distribution costs](https://asc.understandingaccounting.org/glossary/d/#distribution-costs "Costs, as defined in a distribution agreement between a distributor and a fund, incurred by a distributor in distributing a fund's shares. Such costs may include commission payments to sales representatives, promotional materials, overhead allocations, and interest.") incurred by the [distributor](https://asc.understandingaccounting.org/glossary/d/#distributor "Usually the principal underwriter that sells the fund's capital shares by acting as an agent (intermediary between the fund and an independent dealer or the public) or as a principal, buying capital shares from the fund at net asset value and selling shares through dealers or to the public (see definition of underwriter in section 2(a)(40) of the Investment Company Act of 1940).") less the sum of all of the following: 1. a Cumulative 12b-1 fees paid 2. b Cumulative [contingent-deferred sales load](https://asc.understandingaccounting.org/glossary/c/#contingent-deferred-sales-load "A sales charge imposed directly on redeeming shareholders based on a percentage of the lesser of the redemption proceeds or original cost. The percentage may decrease or be eliminated based on the duration of share ownership (frequently decreases by 1 percent a year). Also referred to as back-end load.") payments 3. c Future cumulative contingent-deferred sales load payments by [current shareholders](https://asc.understandingaccounting.org/glossary/c/#current-shareholders "Shareholders of a fund, or a class of shares of a fund, at an evaluation or measurement date. Amounts attributable to current shareholders are based on shares outstanding at that date and do not include estimates of future reinvestments or other share purchases."), if reasonably estimable. ##### [946-20-30-4](https://asc.understandingaccounting.org/asc/946/20/#946-20-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:44.628Z to 2026-09-10T02:19:44.628Z Record version: sha256:6939c5af506193f1316fe165bf09771ae88959440077790efaa375df91d50076 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability and expense recognized under paragraph [946-20-25-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-3) shall be measured at its present value, calculated using an appropriate current interest rate, if both of the following criteria are met: 1. a The amount and timing of cash flows are reliably determinable. 2. b The distribution costs are not subject to a reasonable interest charge. ##### [946-20-30-5](https://asc.understandingaccounting.org/asc/946/20/#946-20-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:44.628Z to 2026-09-10T02:19:44.628Z Record version: sha256:3340f72172cb750b3ed5bd3205385e67563b3bbbb64b45c67b82501886091128 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If these conditions are not met, the liability recognized under paragraph [946-20-25-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-3) shall be calculated without discounting to present value. Source downloaded (UTC): 2026-09-10T02:19:47.616Z to 2026-09-10T02:19:47.616Z Record version: sha256:16f2d63b70483f34f11389c3b31be102076a684845279210f32506b0c942a644 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/946/20/#35-subsequent-measurement) SEC content: no #### Payments by Affiliates ##### [946-20-35-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:47.616Z to 2026-09-10T02:19:47.616Z Record version: sha256:022540897ec038c7885bbd403651338cbb1cc36bdc69590e65c92ba5432916ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any subsequent change in the value of a credit enhancement to maintain the investment's value shall be accounted for as unrealized appreciation or depreciation. #### Certain Distribution Costs ##### [946-20-35-2](https://asc.understandingaccounting.org/asc/946/20/#946-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:47.616Z to 2026-09-10T02:19:47.616Z Record version: sha256:163acb9778cdd105b6acdc1d4ac5f35c5941f9d83cfb934cbd7d492dcc7b09bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the following paragraph and paragraph [946-20-35-4](https://asc.understandingaccounting.org/asc/946/20/#946-20-35-4) applies to annual and interim financial statements of investment companies that adopt plans that comply with Rule [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940."). ##### [946-20-35-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:47.616Z to 2026-09-10T02:19:47.616Z Record version: sha256:b4609feb39ab6514c8e4ddee3fb48101b6f74cd03118d7501cf6a68b05ca329a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability recognized under paragraph [946-20-25-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-3) shall be subsequently measured using the guidance in paragraphs [946-20-30-4 through 30-5](https://asc.understandingaccounting.org/asc/946/20/#946-20-30-4) . Changes in the liability shall be recognized in the statement of operations as an expense or reduction in expense. ##### [946-20-35-4](https://asc.understandingaccounting.org/asc/946/20/#946-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:47.616Z to 2026-09-10T02:19:47.616Z Record version: sha256:b6d9887e82c0c183c0a6283287dbe243f8dc1b9339284c42a4530c17986f652c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any future cumulative [contingent-deferred sales load](https://asc.understandingaccounting.org/glossary/c/#contingent-deferred-sales-load "A sales charge imposed directly on redeeming shareholders based on a percentage of the lesser of the redemption proceeds or original cost. The percentage may decrease or be eliminated based on the duration of share ownership (frequently decreases by 1 percent a year). Also referred to as back-end load.") payments shall be based on all of the following: 1. a Current [net asset value per share](https://asc.understandingaccounting.org/glossary/n/#net-asset-value-per-share "Net asset value per share is the amount of net assets attributable to each share of capital stock (other than senior equity securities, that is, preferred stock) outstanding at the close of the period. It excludes the effects of assuming conversion of outstanding convertible securities, whether or not their conversion would have a diluting effect.") 2. b The number of shares currently outstanding and the number of years that they have been outstanding 3. c Estimated shareholder [persistency](https://asc.understandingaccounting.org/glossary/p/#persistency "The length of time a shareholder owns shares of a particular fund or class of shares of a fund before redemption.") based on historical fund data or, if historical fund data are not available, group or industry data for a similar class of shares. #### Offering Costs ##### [946-20-35-5](https://asc.understandingaccounting.org/asc/946/20/#946-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:47.616Z to 2026-09-10T02:19:47.616Z Record version: sha256:904ea2500fe82090411a3fe99054ce026097aa4d8f1f554103e6c0d0c54b7675 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Offering costs](https://asc.understandingaccounting.org/glossary/o/#offering-costs "Offering costs include all of the following: Legal fees pertaining to the investment company's shares offered for sale Securities and Exchange Commission (SEC)and state registration fees Underwriting and other similar costs Costs of printing prospectuses for sales purposes Initial fees paid to be listed on an exchange Tax opinion costs related to offering of shares Initial agency fees of securing the rating for bonds or preferred stock issued by closed-end funds.") recognized as a deferred charge under paragraph [946-20-25-6](https://asc.understandingaccounting.org/asc/946/20/#946-20-25-6) shall be amortized to expense over 12 months on a straight-line basis when operations begin. ##### [946-20-35-6](https://asc.understandingaccounting.org/asc/946/20/#946-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:47.616Z to 2026-09-10T02:19:47.616Z Record version: sha256:b150f175cde32ff10e93ff1a9e2fc8bf830f77c4945bfff4c216c045501e44e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Offering costs of unit investment trusts shall be charged to paid-in capital on a pro rata basis as the units or shares are issued or sold by the trust (when the units are purchased by the underwriters). Units sold to underwriters on a firm basis are considered sold by the trust, and the offering costs associated with those units shall be charged to paid-in capital when the units are purchased by the underwriters. Offering costs that remain unamortized at the end of the year shall be reviewed for impairment. (For guidance concerning organization and offering costs, see Subtopic 720-15.) Source downloaded (UTC): 2026-09-10T02:19:49.444Z to 2026-09-10T02:19:49.444Z Record version: sha256:3ec1619d8cf61ec914d6283aa55c6d3a66463ac30bb1c085833a1c8cb85de9e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/946/20/#40-derecognition) SEC content: no #### Offering Costs ##### [946-20-40-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:49.444Z to 2026-09-10T02:19:49.444Z Record version: sha256:0b297fa17945512244211bb71c88ff57eb04d40a824e96b7ed0f1c3e741972ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Offering costs](https://asc.understandingaccounting.org/glossary/o/#offering-costs "Offering costs include all of the following: Legal fees pertaining to the investment company's shares offered for sale Securities and Exchange Commission (SEC)and state registration fees Underwriting and other similar costs Costs of printing prospectuses for sales purposes Initial fees paid to be listed on an exchange Tax opinion costs related to offering of shares Initial agency fees of securing the rating for bonds or preferred stock issued by closed-end funds.") of unit investment trusts that have not yet been charged to paid-in capital shall be written off when it is no longer probable that the shares to which the offering costs relate will be issued in the future. It is presumed that those costs will not have a future benefit one year from the initial offering. Source downloaded (UTC): 2026-09-10T02:19:52.764Z to 2026-09-10T02:19:52.764Z Record version: sha256:c21df030be9b562c2ee44c343d8398e112ab208ce42d3d59d28a7855e2648910 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/946/20/#45-other-presentation-matters) SEC content: no #### Payments by Affiliates ##### [946-20-45-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:52.764Z to 2026-09-10T02:19:52.764Z Record version: sha256:7d9b10c7bdfef47591d448a88708fe1559e3a8aa9ec78b005f9341c911b210c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payments made by affiliates for the two reasons in paragraph [946-20-05-2](https://asc.understandingaccounting.org/asc/946/20/#946-20-05-2) shall be combined and reported as a separate line item entitled net increase from payments by affiliates and net gains (losses) realized on the disposal of investments in violation of restrictions in the statement of operations as part of net realized and unrealized gains (losses) from investments and foreign currency. That separate line item would comprise amounts related to all of the following: 1. a Voluntary reimbursements by the affiliate for investment transaction losses 2. b Realized and unrealized losses on investments not meeting the investment guidelines of the fund 3. c Reimbursements from the affiliate for losses on investments not meeting the investment guidelines of the fund 4. d Realized and unrealized gains on investments not meeting the investment guidelines of the fund. #### Certain Distribution Costs ##### [946-20-45-2](https://asc.understandingaccounting.org/asc/946/20/#946-20-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:52.764Z to 2026-09-10T02:19:52.764Z Record version: sha256:e25eaa8d782bf57f7b3c90a88dd6c810fd9dcab24fbd476a34aab1445dc6c88a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this paragraph applies to annual and interim financial statements of investment companies that adopt plans that comply with Rule [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940."). An excess of cumulative 12b-1 fees and [contingent-deferred sales load](https://asc.understandingaccounting.org/glossary/c/#contingent-deferred-sales-load "A sales charge imposed directly on redeeming shareholders based on a percentage of the lesser of the redemption proceeds or original cost. The percentage may decrease or be eliminated based on the duration of share ownership (frequently decreases by 1 percent a year). Also referred to as back-end load.") payments to date and future contingent-deferred sales load payments by [current shareholders](https://asc.understandingaccounting.org/glossary/c/#current-shareholders "Shareholders of a fund, or a class of shares of a fund, at an evaluation or measurement date. Amounts attributable to current shareholders are based on shares outstanding at that date and do not include estimates of future reinvestments or other share purchases.") over the cumulative costs incurred by the [distributor](https://asc.understandingaccounting.org/glossary/d/#distributor "Usually the principal underwriter that sells the fund's capital shares by acting as an agent (intermediary between the fund and an independent dealer or the public) or as a principal, buying capital shares from the fund at net asset value and selling shares through dealers or to the public (see definition of underwriter in section 2(a)(40) of the Investment Company Act of 1940).") shall not be reported as an asset. #### Brokerage Service Arrangements ##### [946-20-45-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:52.764Z to 2026-09-10T02:19:52.764Z Record version: sha256:82e13bdccf41215ffac67c357fb9868c1cd7b8174632a1d73d4c075b05ce86a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The relevant expense caption on the statement of operations and the expense ratio in the financial highlights shall include the amount that would have been incurred by the investment company for brokerage services had it paid for the services directly in an arm's-length transaction. Such amounts shall also be shown as a corresponding reduction in total expenses, captioned as fees paid indirectly. #### General Partner Advisory Services ##### [946-20-45-4](https://asc.understandingaccounting.org/asc/946/20/#946-20-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:52.764Z to 2026-09-10T02:19:52.764Z Record version: sha256:446d686ac7b2328401736ddcbe45da8698e3bc1c57f8b2f7844992c92d4aa342 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amounts of any payments or allocations for advisory services from the general partner shall be presented in either the statement of operations or the statement of changes in partners' capital. #### Expense Offset Arrangements ##### [946-20-45-5](https://asc.understandingaccounting.org/asc/946/20/#946-20-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:52.764Z to 2026-09-10T02:19:52.764Z Record version: sha256:e198f12c716d5804666c8211af4e26e2508be22b2f369ca7f4374d713703d87b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Expense offset arrangements, under which a third party explicitly reduces its fees by a specified or readily ascertainable amount for services provided to the investment company in exchange for use of the investment company's assets, shall be presented in the statement of operations, the expense ratio in the financial highlights, and notes to financial statements in the same manner as brokerage service arrangements. #### Small Business Investment Companies ##### [946-20-45-6](https://asc.understandingaccounting.org/asc/946/20/#946-20-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:52.764Z to 2026-09-10T02:19:52.764Z Record version: sha256:37fa9f232e581d2c98e331101685b36ee19342d31015b577a4e9cdf29d2bd6b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The unique features (primarily the existence of significant debt) of small business investment companies often make it desirable that their financial statements be presented in a conventional balance sheet format. #### Venture Capital Investment Companies ##### [946-20-45-7](https://asc.understandingaccounting.org/asc/946/20/#946-20-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:52.764Z to 2026-09-10T02:19:52.764Z Record version: sha256:0bed636300465a1e36ce05b622120455bec862a05800e84574d3d153a50a0551 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Though all venture capital investment companies shall prepare their financial statements in conformity with generally accepted accounting principles (GAAP), the statement presentation of some venture capital investment companies may need to be tailored to present the information in a manner most meaningful to their particular group of investors. For example, if debt is a significant item, a balance sheet might be more appropriate than a statement of net assets. Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:3be31c489c21068c024df5b1c101b241106ede245cc04a421ec1db2638cbfb1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/946/20/#50-disclosure) SEC content: no ##### [946-20-50-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:c4ecf7ed0527deecb2ec7b56daef40d82908626ebfac3f63df47f9de510a1d39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). #### Payments by Affiliates ##### [946-20-50-2](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:21e729d6e532f03034f7b7c776646146e308aedcbdfeb7966c33a9481228991b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amounts and circumstances of payments by affiliates to reimburse the fund for losses on investment transactions shall be described in the notes to financial statements. The gains and losses on investments not meeting investment guidelines of the fund shall also be disclosed in the notes to financial statements. In addition, the effect on total return of the payments, as well as any gains or losses on investments not meeting investment guidelines of the fund, shall be quantified and disclosed in the financial highlights in a manner similar to disclosure of the effect of voluntary waivers of fees and expenses on expense ratios. (See Subtopic 850-10.) Total return shall be presented in the financial highlights. #### Certain Distribution Costs ##### [946-20-50-3](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:5d3f780bd690deb6e03da348b25068c8f769a71cc7609cef4a1e1f8915b965ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this paragraph applies to annual and interim financial statements of investment companies that adopt plans that comply with Rule [12b-1](https://asc.understandingaccounting.org/glossary/b/#12b-1 "Rule 12b-1 in Chapter 17 of the Code of Federal Regulations is one of the regulations implementing the Investment Company Act of 1940."). For both [board-contingent plans](https://asc.understandingaccounting.org/glossary/b/#board-contingent-plan "A reimbursement 12b-1 plan that provides that, on the plan's termination, a fund's board of directors has the option, but not the requirement, to pay the distributor for any excess costs incurred by the distributor.") and [enhanced 12b-1 plans](https://asc.understandingaccounting.org/glossary/e/#enhanced-12b-1-plan "A reimbursement 12b-1 plan that provides that, on termination of the plan, the fund is required to continue paying the 12b-1 fee to the extent the distributor has excess costs."), funds shall disclose in their financial statements the principal terms of such plans and any plan provisions permitting or requiring payments of [excess costs](https://asc.understandingaccounting.org/glossary/e/#excess-costs "The cumulative distribution costs incurred by the distributor less the sum of cumulative 12b-1 fees paid, cumulative contingent-deferred sales load payments, and future cumulative contingent-deferred sales load payments by current shareholders, if reasonably estimable.") after plan termination. For board-contingent and enhanced plans, the aggregate amount of [distribution costs](https://asc.understandingaccounting.org/glossary/d/#distribution-costs "Costs, as defined in a distribution agreement between a distributor and a fund, incurred by a distributor in distributing a fund's shares. Such costs may include commission payments to sales representatives, promotional materials, overhead allocations, and interest.") subject to recovery through future payments by the fund pursuant to the plan and through future [contingent-deferred sales load](https://asc.understandingaccounting.org/glossary/c/#contingent-deferred-sales-load "A sales charge imposed directly on redeeming shareholders based on a percentage of the lesser of the redemption proceeds or original cost. The percentage may decrease or be eliminated based on the duration of share ownership (frequently decreases by 1 percent a year). Also referred to as back-end load.") payments by [current shareholders](https://asc.understandingaccounting.org/glossary/c/#current-shareholders "Shareholders of a fund, or a class of shares of a fund, at an evaluation or measurement date. Amounts attributable to current shareholders are based on shares outstanding at that date and do not include estimates of future reinvestments or other share purchases.") shall be disclosed. For enhanced plans, funds shall disclose the methodology used to estimate future contingent-deferred sales load payments by current shareholders. ##### [946-20-50-4](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:6b52de203e332dab9409b7613032c10409b6a55b85efedbfa60870cc9d352fbe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a 12b-1 distribution [reimbursement plan](https://asc.understandingaccounting.org/glossary/r/#reimbursement-plan "A plan that provides for a 12b-1 fee, payable by the fund, that may not exceed the lesser of an annual percentage of the fund's average net assets or actual costs incurred by the distributor net of contingent-deferred sales load received by the distributor.") provides for the carryover of unreimbursed costs to subsequent periods, the terms of reimbursement and the unreimbursed amount shall be disclosed. #### General Partner Advisory Services ##### [946-20-50-5](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:16d8f11311b653a6dd1c8575d2b6736e9eec8c600421e6da687ba9957d7afcef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The method of computing payments or allocations for advisory services from the general partner shall be described in the notes to financial statements. #### Expense Limitation Agreements ##### [946-20-50-6](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:f4d6cfa537f2bfddfce952e998ef580edf68a6a6c88768505a6442a5df905f36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The existence of reimbursement agreements and the carryover of excess expenses potentially reimbursable to the adviser but not recorded as a liability shall be disclosed in the notes to financial statements. #### Fee Waivers ##### [946-20-50-7](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:f5d61d0a787837b7eaf7613f639d64b4781515f864cc6639e536b002ac47e138 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All voluntary and involuntary fee waivers shall be disclosed on the face of the statement of operations as a reduction of total expenses. The expense ratio in the financial highlights shall be shown net of voluntary and involuntary waivers. The effect of only voluntary waivers on the expense ratio shall be disclosed (either as the basis point effect on the ratio or as the gross expense ratio) in a note to, or as part of, the financial highlights. In addition, the terms of all voluntary and involuntary waivers shall be disclosed in the notes to financial statements. #### Dividends ##### [946-20-50-8](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:37e7975a0b4bdcb052177db8e371d29ae0105bebb29c0c8cdd7441bdaf6d44e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Dividends paid to investors shall be disclosed as a single line item in the statement of changes in net assets, except tax [return of capital](https://asc.understandingaccounting.org/glossary/r/#return-of-capital "Distributions by investment companies in excess of tax-basis earnings and profits.") distributions, which shall be disclosed separately. The notes shall disclose the tax basis components of the dividends paid (that is, either from ordinary income, capital gains, or tax return of capital). Disclosing dividends on a tax basis is consistent with how dividends are reported to shareholders during and at the end of the calendar year. The financial highlights table would disclose per-share information that is consistent with the statement of changes in net assets. ##### [946-20-50-9](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:f2eb3fbc10dc88f4e8ca688bc3b8b214f3a04f725909f9b3af1514f226c6cedf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Dividends from affiliates and controlled companies shall be disclosed. ##### [946-20-50-10](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:6cf39a5b88f808ec50b0f491932ff84b0af911fdd6458b4f0d99fc9ce858a265 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If management of a fund determines that a tax return of capital is likely to occur for the fund's fiscal year, although the exact amount may not be estimable, that fact shall be disclosed in a note to the interim financial statements. #### Components of Capital and Distributable Earnings ##### [946-20-50-11](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-11) Pending content: yes Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:0244bed059099e67dd2bc79d12b91acd0a8b4b1190699cfd478500592e652ce6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance requires all investment companies to disclose only two components of capital on the balance sheet: shareholder capital and distributable earnings. The components of distributable earnings, on a tax basis, shall be disclosed in a note to financial statements. This information enables investors to determine the amount of accumulated and undistributed earnings they potentially could receive in the future and on which they could be taxed. Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance: [105-10-65-7](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-7) This guidance requires all investment companies to disclose two components of capital on the balance sheet: shareholder capital and distributable earnings. The components of distributable earnings, on a tax basis, shall be disclosed in a note to financial statements. This information enables investors to determine the amount of accumulated and undistributed earnings they potentially could receive in the future and on which they could be taxed. ##### [946-20-50-12](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:97be99dd2591194b251d034e04bdc8cd156d38641ff6f234113bacd564ea3173 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The notes shall disclose all of the following tax-basis components of distributable earnings as of the most recent tax year end: 1. a Undistributed ordinary income 2. b Undistributed long-term capital gains 3. c Capital loss carryforwards 4. d Unrealized appreciation (depreciation). ##### [946-20-50-13](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:c086608370405ec5e3d42ddc7fd6f541012e657974209f1c0e11270d8dafc8c9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [946-740-35-1](https://asc.understandingaccounting.org/asc/740/946/#740-946-35-1) and [946-740-50-1](https://asc.understandingaccounting.org/asc/740/946/#740-946-50-1) require that, if a provision for deferred income taxes on unrealized appreciation exists, it be charged against the unrealized gains account and disclosed as such in the statement of operations. Explanations shall be provided for the differences between the total of these amounts and distributable earnings (accumulated losses). ##### [946-20-50-14](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:36d1ba60223e8f529eafefade241e5458970d29622057624f48f5e78331ef611 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Investment partnerships and other pass-through entities shall aggregate all elements of equity into partners' capital, because the results from operations are deemed distributed to each partner. #### Financial Support to Investees ##### [946-20-50-15](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:4d323528b1c973cadc6013a5f88cd46a902b250b56c12fa075fab400f39a85a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, during the periods presented, an investment company provides financial support to an investee, it shall disclose information about both of the following items, disaggregated by financial support that it was contractually required to provide and financial support that it was not previously contractually required to provide: 1. a The type and amount of financial support provided, including situations in which the investment company assisted the investee in obtaining financial support 2. b The primary reasons for providing the financial support. ##### [946-20-50-16](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:19:56.221Z to 2026-09-10T02:19:56.221Z Record version: sha256:ca9ee18f429628f405c06d6d4d0a5d4a3aabf253f440cac1624841e273072913 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company also shall separately disclose both of the following items about financial support that it is contractually required to provide to any of its investees but has not yet provided: 1. a The type and amount of financial support to be provided, including situations in which the investment company must assist the investee in obtaining financial support 2. b The primary reasons for the contractual requirement to provide the financial support. Source downloaded (UTC): 2026-09-10T02:20:00.026Z to 2026-09-10T02:20:00.026Z Record version: sha256:0052115d52dfc4d6bb4809820996764e4b24ac44dc6b72b8ad997379a9dc0315 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 946-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/946/20/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [946-20-55-1](https://asc.understandingaccounting.org/asc/946/20/#946-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:20:00.026Z to 2026-09-10T02:20:00.026Z Record version: sha256:938725afdceddf0bd8dc07aa7b687d2ccd654e1f3512147caf63e60aa341dcd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the guidance in paragraph [946-20-50-2](https://asc.understandingaccounting.org/asc/946/20/#946-20-50-2). An entity might disclose the following. - In 20XX, a.aa% of the fund's total return consists of a voluntary reimbursement by the adviser for a realized investment loss, and another b.bb% consists of a gain on an investment not meeting the fund's investment restrictions. Excluding these items, total return would have been c.cc%. Additionally, the adviser fully reimbursed the fund for a loss on a transaction not meeting the fund's investment guidelines, which otherwise would have reduced total return by d.dd%.