ASC

ASC 976-10

Overall

976 Real Estate—Retail Land

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In brief

IntermediateIndustry-specificRecognitionRevenue

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.

Key points (7)
  • The Real Estate—Retail Land Topic addresses accounting and reporting for retail land sales — volume sales of lots that are subdivisions of large tracts of land, with very small down payments and a sales contract or buyer's note for the balance (976-10-05-2).</p>
  • The Topic contains the Overall, Receivables, Inventory, and Cost of Sales and Services Subtopics; the former Revenue Recognition subtopic reference was superseded by ASU 2014-09 (976-10-05-2).
  • Guidance in the Topic is only incremental industry-specific guidance; entities in scope must also comply with applicable guidance outside the Topic (976-10-15-1).
  • Scope covers all entities selling lots on a volume basis where down payments are so small that local banks or S&Ls would not lend at market rates or buy the buyer's note without a substantial discount, and the seller cannot enforce the contract or note against the buyer's general credit (976-10-15-3).
  • Buyers who cancel within the established cancellation period receive a refund; defaults after that period result in the seller recovering the land and the buyer forfeiting at least some principal payments, subject to federal and state law limits (976-10-15-3).
  • Excluded from scope: sales of lots to builders; sales of homes, buildings, and parcels of land to builders and others; sales of corporate stock, partnership interests, or time-sharing interests that are in substance sales of real estate; and sales of options to purchase real estate (976-10-15-4).
  • Other real estate Topics exist for Real Estate—General, Common Interest Realty Associations, REITs, and Time-Sharing Activities; sale-leaseback of real estate is addressed in Subtopic 842-40 (976-10-05-1).

For students. This Overall subtopic is essentially a scope gate: it tells you when the specialized retail land sales guidance applies, and it is easy to overreach — sales to builders, sales of homes or whole parcels, in-substance real estate sales through stock or partnership interests, and option sales are all outside it. Note also that ASU 2014-09 superseded the revenue recognition portions, so revenue for these sales is now under ASC 606.

retail land salesvolume sales of subdivided lotsbuyer's notesmall down paymentcancellation period and forfeitureincremental industry guidancescope exclusionsin-substance sale of real estate

Machine-generated study aid for ASC 976-10. Check the source paragraphs below.

976-10-00Status

Source downloaded: .Record version 185b25be1df8. Effective date must be checked in the source.

976-10-00-1
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
976-10-05-1AmendedAccounting Standards Update No. 2016-0202/25/2016
976-10-05-1AmendedAccounting Standards Update No. 2014-0905/28/2014
976-10-05-2AmendedAccounting Standards Update No. 2014-0905/28/2014
976-10-15-2SupersededAccounting Standards Update No. 2014-0905/28/2014

976-10-05Overview and Background

Source downloaded: .Record version 74125fa59adc. Effective date must be checked in the source.

976-10-05-1
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—Retail Land
  5. e
    Real Estate—Time-Sharing Activities.
See also Subtopic 842-40 for accounting guidance for the sale of real estate that is part of a sale and leaseback transaction.
976-10-05-2
The Real Estate—Retail Land Topic addresses the unique accounting and reporting issues for retail land sales that are sales, on a volume basis, of lots that are subdivisions of large tracts of land. The sales are characterized by very small down payments and a sales contract or buyer's note for the balance of the purchase price. This Topic includes the following Subtopics:
  1. a
    Overall
  2. b
    Receivables
  3. c
    Inventory
  4. d
    Subparagraph superseded by Accounting Standards Update No. 2014-09.
  5. e
    Cost of Sales and Services.

976-10-15Scope and Scope Exceptions

Source downloaded: .Record version ca26f17e71f9. Effective date must be checked in the source.

Overall Guidance

976-10-15-1
The Subtopics within the Real Estate—Retail Land 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

976-10-15-3
This Topic provides guidance for all entities that sell, on a volume basis, lots that are subdivisions of large tracts of land. Such sales are characterized by down payments so small that local banks and savings and loan institutions would not loan money on the property at market rates or purchase the buyer's note for the remaining purchase price without a substantial discount. The seller is unable to enforce the sales contract or the buyer's note against the buyer's general credit. If the buyer cancels the contract within an established cancellation period, its money is refunded. Defaults by the buyer after the cancellation period result in recovery of the land by the seller and forfeiture of at least some principal payments made by the buyer. Federal and state laws may affect the amount that can be retained by the seller.

Transactions

976-10-15-4
The guidance in this Topic does not apply to the following transactions and activities:
  1. a
    Sales of lots to builders
  2. b
    Sales of homes, buildings, and parcels of land to builders and others
  3. c
    Sales of corporate stock of entities with substantial real estate, sales of partnership interests, and sales of time-sharing interests if the sales are in substance sales of real estate. An example of a sale of a partnership interest that is in substance a sale of real estate would be an entity forming a partnership, arranging for the partnership to acquire the property directly from third parties, and selling an interest in the partnership to investors who then become limited partners.
  4. d
    Sales of options to purchase real estate.

Related subtopics