ASC

ASC 972-10

Overall

972 Real Estate—Common Interest Realty Associations

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In brief

IntroductoryIndustry-specificPresentationDisclosure

ASC 972-10 is the Overall subtopic that sets the scope and background for accounting by common interest realty associations (CIRAs) — associations of owners such as homeowners associations, condominium associations, time-share associations, planned-unit developments, and cooperative housing corporations. It provides only incremental, industry-specific guidance; CIRAs must also follow all other applicable GAAP. Topic 972 is one of several real estate topics, each addressing a different real estate subindustry.

Key points (6)
  • The Codification splits real estate guidance among Real Estate—General, Common Interest Realty Associations, Real Estate Investment Trusts, Time-Sharing Activities, and Retail Land; sale of real estate in a sale and leaseback is addressed in Subtopic 842-40 (972-10-05-1).
  • Topic 972 addresses unique accounting and reporting issues of CIRAs through Subtopics on Overall, Presentation of Financial Statements, Notes to Financial Statements, Property, Plant, and Equipment, Other Expenses, Income Taxes, and Related Party Disclosures; two former subparagraphs were superseded by ASU 2014-09 (972-10-05-2).
  • A common interest realty association is an association of owners responsible for providing services and maintaining property that all owners share or own in common, such as homeowners' and condominium associations (972-10-05-3).
  • The defining characteristics are individual ownership of a lot, defined interior space, or shares of stock; an undivided interest in common property subject to covenant, restriction, or contract; automatic membership in an association formed under state law; and funding through periodic assessments of all owners (972-10-05-4).
  • Topic 972 provides only incremental industry-specific guidance, so entities within its scope must also comply with applicable guidance not included in the Topic (972-10-15-1).
  • The Topic applies to all entities that are CIRAs — including time-share associations, planned-unit developments, and cooperative housing corporations — and to all transactions they conduct (972-10-15-2 through 15-3).

For students. This Overall subtopic is pure scope and background — it tells you who is a CIRA and reminds you that Topic 972 layers on top of, rather than replaces, general GAAP. A common misunderstanding is treating Topic 972 as a complete accounting model; its revenue-related subparagraphs were superseded by ASU 2014-09, so assessments revenue is analyzed under Topic 606.

common interest realty associationhomeowners associationcondominium associationcooperative housing corporationundivided interest in common propertyperiodic assessmentsincremental industry-specific guidancescope

Machine-generated study aid for ASC 972-10. Check the source paragraphs below.

972-10-00Status

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972-10-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Time-SharingAmendedAccounting Standards Update No. 2014-0603/14/2014
Undivided Interest (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
972-10-05-1AmendedAccounting Standards Update No. 2016-0202/25/2016
972-10-05-1AmendedAccounting Standards Update No. 2014-0905/28/2014
972-10-05-2AmendedAccounting Standards Update No. 2014-0905/28/2014

972-10-05Overview and Background

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972-10-05-1
The Codification contains several Topics for real estate due to the differing accounting treatment for various real estate subindustries. The Topics include:
  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—Time-Sharing Activities
  5. e
    Real Estate—Retail Land.
See also Subtopic 842-40 for accounting guidance for the sale of real estate that is part of a sale and leaseback transaction.
972-10-05-2
The Real Estate—Common Interest Realty Associations Topic addresses the unique accounting and reporting issues for common interest realty associations. This Topic includes the following Subtopics:
  1. a
    Overall
  2. b
    Presentation of Financial Statements
  3. c
    Notes to Financial Statements
  4. d
    Property, Plant, and Equipment
  5. e
    Subparagraph superseded by Accounting Standards Update No. 2014-09.
  6. f
    Subparagraph superseded by Accounting Standards Update No. 2014-09.
  7. g
    Other Expenses
  8. h
    Income Taxes
  9. i
    Related Party Disclosures.

Other Considerations

972-10-05-3
Although housing cooperatives have been around since the 1920s, and planned unit developments since the 1840s, it was not until new forms of real estate ownership, such as condominiums and time-share associations, emerged in the 1960s that the terms used to describe them became common. A key feature of these forms of real estate ownership is the existence of an association of owners, referred to in this Topic as a common interest realty association, which is responsible for providing certain services and maintaining certain property that all the owners share or own in common. Homeowners' associations and condominium associations are two examples of common interest realty associations.
972-10-05-4
The main characteristics of such ownership are the following:
  1. a
    Individual ownership of a lot, defined interior space, or shares of stock
  2. b
    Ownership of an undivided interest in the common property, with all owners bound by covenant, restriction, or contract through an association of owners
  3. c
    Automatic membership in a common interest realty association that has been established under state laws and that performs maintenance and other service activities for the owners
  4. d
    Funding of the common interest realty association's activities by periodic assessments of all owners.

972-10-15Scope and Scope Exceptions

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Overall Guidance

972-10-15-1
The Subtopics within the Real Estate—Common Interest Realty Associations 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.

Entities

972-10-15-2
The Real Estate—Common Interest Realty Associations Topic provides guidance for all entities that are common interest realty associations. A key feature of these forms of real estate ownership is the existence of an association of owners, which is responsible for providing certain services and maintaining certain property that all owners share or own in common. Some examples of common interest realty associations are:
  1. a
    Homeowners associations
  2. b
    Condominium associations
  3. c
    Time-share associations
  4. d
    Planned-unit developments
  5. e
    Cooperative housing corporations.

Transactions

972-10-15-3
The guidance in the Real Estate—Common Interest Realty Associations Topic applies to all transactions conducted by common interest realty associations.

Related subtopics