Real Estate—Time-Sharing Activities

ASC 978 supplies incremental, industry-specific guidance for real estate time-sharing activities; entities in its scope must still apply all other applicable GAAP (978-10-15-1). The Overall subtopic (978-10) defines the covered transaction structures — fee simple sales, sales where title remains with or reverts to the seller, and reseller transactions — and excludes time-sharing in other long-lived assets such as cruise ships, corporate jets, and transportation equipment (978-10-15-2 through 15-5). It also requires a seller to delineate the time-share project and its phases at the outset and account for each phase separately (978-10-15-6; 978-10-25-1), and it tests whether a transaction is in substance a sale of real estate by looking at the entire real estate component (land plus improvements and integral equipment) without bifurcation (978-10-15-7), with equipment "integral" when removal cost plus the decrease in fair value from removal exceeds 10 percent of the installed fair value (978-10-15-8 through 15-11). The core idea: time-sharing sales — marked by high-volume homogeneous intervals, seller financing, heavy selling and marketing costs, and recovery of the interval with buyer principal forfeiture on default (978-10-05-5) — are accounted for as real estate sales, phase by phase.

Subtopics

1. 10Overall20 ¶

   ASC 978-10 is the Overall subtopic for real estate time-sharing activities, describing the scope of the industry guidance and the transaction structures it covers. It applies to all entities that sell real estate time-share interests — fee simple sales, sales where title remains with or reverts to the seller, and reseller transactions — but not to time-sharing in other long-lived assets like cruise ships or corporate jets. It also supplies the tests for determining what constitutes real estate (including integral equipment) and requires that each phase of a time-share project be delineated at the outset and accounted for separately.

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