Real Estate—Retail Land

ASC 97X covers the real estate industry Topics, and this digest focuses on ASC 976, Real Estate—Retail Land, and specifically its Overall Subtopic (976-10). Retail land sales are high-volume sales of lots subdivided from large tracts, made with very small down payments and a sales contract or buyer's note for the balance that a local bank or S&L would not lend against at market rates or buy without a substantial discount, and where the seller cannot enforce against the buyer's general credit (976-10-05-2; 976-10-15-3). The Topic's Subtopics (Overall, Receivables, Inventory, and Cost of Sales and Services) supply only incremental industry-specific guidance, so entities in scope must also apply all other applicable GAAP (976-10-15-1); the former Revenue Recognition subtopic reference was superseded by ASU 2014-09. The key takeaway is scope discipline: sales of lots to builders, sales of homes/buildings/parcels, in-substance real estate sales of stock, partnership or time-sharing interests, and sales of options to purchase real estate are all excluded (976-10-15-4), and sale-leaseback of real estate is addressed in Subtopic 842-40.

Subtopics

1. 10Overall7 ¶

   ASC 976-10 is the Overall subtopic of the Real Estate—Retail Land Topic, which provides incremental industry-specific guidance for retail land sales — high-volume sales of lots subdivided from large tracts of land, characterized by very small down payments and a sales contract or buyer's note for the balance. It defines the scope of the Topic (entities selling such lots on a volume basis where the note could not be sold to a bank without substantial discount and the seller cannot enforce against the buyer's general credit) and lists the transactions excluded from that scope. Entities in scope must also apply all other applicable GAAP not contained in this Topic.

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