ASC

ASC 970-10

Overall

970 Real Estate—General

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In brief

IntermediateIndustry-specificInventory and PP&ERecognitionInitial measurement

ASC 970-10 is the Overall subtopic of the Real Estate—General Topic; it maps the industry's guidance (statement of cash flows, equity method/joint ventures, other assets and deferred costs, PP&E, debt, other expenses, consolidation, interest) and sets the pervasive scope. The Topic supplies only incremental industry-specific guidance and applies to all entities with productive activities relating to real property, excluding property used primarily in the entity's non-real estate operations (970-10-15-3). Its guidance runs in three Subsections: General (real estate ventures, partnerships, joint ventures, tax increment financing entities), Real Estate Syndication (income recognition from syndication activities), and Real Estate Project Costs (acquisition, development, construction, selling and rental costs).

Key points (7)
  • Entities in the scope of this Topic must also comply with all other applicable GAAP; the Topic supplies only incremental industry-specific guidance (970-10-15-1).
  • Scope covers all entities with productive activities relating to real property but excludes property used primarily in the entity's non-real estate operations (970-10-15-3, 15-5, 15-7).
  • The Real Estate Project Costs Subsections do not apply to real estate developed by an entity for use in its own operations (other than for sale or rental), initial direct costs of leases (governed by Topic 842), or costs directly related to manufacturing, merchandising, or service activities (970-10-15-8).
  • Paragraphs 970-340-25-16 through 25-19 and 970-340-35-2 do not apply to real estate rental activity in which the predominant rental period is less than one month (970-10-15-9).
  • The Project Costs Subsections address preacquisition costs, taxes and insurance, project costs, amenities, incidental operations, cost allocation to project components, revisions of estimates, abandonments and changes in use, selling costs, rental costs, and impairment write-downs under the Subtopic 360-10 Impairment or Disposal of Long-Lived Assets Subsections (970-10-15-11).
  • The General Subsections cover real estate ventures, general and limited partnerships, corporate joint ventures, tax increment financing entities, and investor-lender accounting for interest on loans or advances to a real estate venture (970-10-05-4); limited liability companies are addressed at 272-10-05.
  • Several former subtopics and paragraphs (e.g., 970-10-05-2(c) and (h), 970-10-15-10) were superseded by ASU 2014-09, moving real estate sales revenue into Topic 606.

For students. This subtopic is mostly a roadmap and scope gate—know what it excludes (owner-occupied development, lease initial direct costs under 842, non-real-estate manufacturing/service costs) before applying the capitalization rules in 970-340 and 970-360. A common misunderstanding is thinking 970 is a self-contained rulebook; it is only incremental guidance layered on top of general GAAP, and ASU 2014-09 pulled real estate sales recognition out into Topic 606.

real estate project costsproductive activities relating to real propertyreal estate syndicationpreacquisition costscapitalization of rental and selling costsreal estate ventures and joint venturesincidental operationsamenities

Machine-generated study aid for ASC 970-10. Check the source paragraphs below.

970-10-00Status

Source downloaded: .Record version 6b9c33ec2877. Effective date must be checked in the source.

970-10-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
970-10-05-1AmendedAccounting Standards Update No. 2016-0202/25/2016
970-10-05-1AmendedAccounting Standards Update No. 2014-0905/28/2014
970-10-05-2AmendedAccounting Standards Update No. 2014-0905/28/2014
970-10-15-8AmendedAccounting Standards Update No. 2016-0202/25/2016
970-10-15-9AmendedAccounting Standards Update No. 2014-0905/28/2014
970-10-15-10SupersededAccounting Standards Update No. 2014-0905/28/2014

970-10-05Overview and Background

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970-10-05-1
  1. a
    Real Estate—General
  2. b
    Real Estate—Common Interest Realty Associations
  3. c
    Real Estate—Real Estate Investment Trusts
  4. d
    Real Estate—Retail Land
  5. e
    Real Estate—Time-Sharing Activities.
842-40
970-10-05-2
The Real Estate—General Topic provides general real estate industry guidance, and includes the following Subtopics:
  1. a
    Overall
  2. b
    Statement of Cash Flows
  3. c
    Subparagraph superseded by Accounting Standards Update No. 2014-09.
  4. d
    Investments—Equity Method and Joint Ventures
  5. e
    Other Assets and Deferred Costs
  6. f
    Property, Plant, and Equipment
  7. g
    Debt
  8. h
    Subparagraph superseded by Accounting Standards Update No. 2014-09.
  9. i
    Other Expenses
  10. j
    Consolidation
  11. k
    Interest.
970-10-05-3
The guidance throughout this Topic is presented in the following Subsections:
  1. a
    General
  2. b
    Real Estate Syndication
  3. c
    Real Estate Projects.
970-10-05-4
The General Subsections provide accounting guidance concerning various forms of real estate investment, including real estate ventures, general and limited partnerships, corporate joint ventures and tax increment financing entities. They also provide investor-lender guidance concerning interest on loans or advances to a real estate venture. See Section 272-10-05 regarding limited liability companies.

Real Estate Syndication

970-10-05-5
The Real Estate Syndication Subsections provide accounting guidance concerning the recognition of income from real estate syndication activities.

Real Estate Project Costs

970-10-05-6
The Real Estate Project Costs Subsections establish accounting and reporting standards for acquisition, development, construction, selling, and rental costs associated with real estate projects. They also provide guidance for the accounting for initial rental operations and criteria for determining when the status of a rental project changes from nonoperating to operating.

970-10-15Scope and Scope Exceptions

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Overall Guidance

970-10-15-1
The Subtopics within the Real Estate—General Topic only provide incremental industry-specific guidance for the entities defined in this Scope Section, or as further defined in the Scope Sections of the individual Subtopics. Entities within the scope of this Topic shall also comply with the applicable guidance not included in this Topic.
970-10-15-2
The General Subsection of this Section establishes the pervasive scope for this Subtopic, with specific qualifications noted in the other Subsections of this Section.

Entities

970-10-15-3
The guidance in this Topic applies to all entities with productive activities relating to real property, excluding property used primarily in the entity's non-real estate operations.

Real Estate Syndication

Overall Guidance

970-10-15-4
The Real Estate Syndication Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic, see the General Subsectionof Section 970-10-15, with specific qualifications noted below.

Entities

970-10-15-5
The guidance in this Topic applies to all entities with productive activities relating to real property, excluding property used primarily in the entity's non-real estate operations.

Real Estate Project Costs

Overall Guidance

970-10-15-6
The Real Estate Project Costs Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic, see the General Subsection of Section 970-10-15, with specific qualifications noted below.

Entities

970-10-15-7
The guidance in the Real Estate Project Costs Subsections applies to all entities with productive activities relating to real property, excluding property used primarily in the entity's non-real estate operations.

Transactions

970-10-15-8
The guidance in the Real Estate Project Costs Subsections does not apply to the following transactions and activities:
  1. a
    Real estate developed by an entity for use in its own operations, other than for sale or rental. In this context, real estate developed by a member of a consolidated group for use in the operations of another member of the group (for example, a manufacturing facility developed by a subsidiary for use in its parent's operations) when the property is reported in the group's consolidated financial statements. However, this does not include property reported in the separate financial statements of the entity that developed it.
  2. b
    Initial direct costs of leases, which are defined in Topic 842. The accounting for initial direct costs of leases is prescribed in that Topic.
  3. c
    Costs directly related to manufacturing, merchandising, or service activities as distinguished from real estate activities.
970-10-15-9
Paragraphs
970-340-25-16 through 25-19
and 970-340-35-2 do not apply to real estate rental activity in which the predominant rental period is less than one month.
970-10-15-11
This Subsection specifies the accounting for the following as they relate to real estate projects:
  1. a
    Preacquisition costs
  2. b
    Taxes and insurance
  3. c
    Project costs
  4. d
    Amenities
  5. e
    Incidental operations
  6. f
    Allocation of capitalized costs to components of a real estate project
  7. g
    Revisions of estimates
  8. h
    Abandonments and changes in use
  9. i
    Selling costs
  10. j
    Rental costs
  11. k
    Reductions in the carrying amounts of real estate assets prescribed by the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

970-10-S50DisclosureSEC

Source downloaded: .Record version 223bb117d0ad. Effective date must be checked in the source.

Supplemental Schedules

970-10-S50-1
See paragraph 948-310-S99-1, Regulation S-X, Rule 12-29, for the required supplemental schedule disclosing mortgage loans on real estate.
970-10-S50-2
See paragraph 970-10-S99-1, SAB Topic 7.C, for SEC Staff views on the inclusion of certain supplemental schedules in annual reports.

970-10-S99SEC MaterialsSEC

Source downloaded: .Record version 93380ec5051d. Effective date must be checked in the source.

SEC Staff Guidance

970-10-S99-1
The following is the text of SAB Topic 7.C, Schedules of Real Estate and Accumulated Depreciation, and of Mortgage Loans on Real Estate.
  • Facts: Whenever investments in real estate or mortgage loans on real estate are significant, the schedules of such items (see Rules 12-28 and 12-29 of Regulation S-X) are required in a prospectus.
  • Question: Is such information also required in annual reports to shareholders?
  • Interpretive Response: Although Rules 14a-3 and 14c-3 permit the omission of financial statement schedules from annual reports to shareholders, the staff is of the view that the information required by these schedules is of such significance within the real estate industry that the information should be included in the financial statements in the annual report to shareholders.

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