excess distribution costs

Industry1

1. 946-20Investment Company Activities946 Financial Services—Investment Companies

   ASC 946-20 governs specific "investment company activities" — payments by affiliates to reimburse fund losses or cure investment-restriction violations, Rule 12b-1 distribution plans, expense limitation/waiver arrangements, offering costs, shareholder and distribution transactions, and related presentation and disclosure. Its core rules: affiliate payments and gains/losses on non-conforming investments are combined in one line within net realized/unrealized gains (losses) and quantified in the financial highlights (946-20-45-1; 946-20-50-2); a fund with an enhanced 12b-1 plan (or a board-contingent plan once the board commits) accrues a liability and expense for the distributor's excess distribution costs (946-20-25-3), while an excess of fees collected over distributor costs may never be booked as an asset (946-20-45-2). Offering costs are charged to paid-in capital for closed-end funds, partnerships and unit investment trusts, but deferred and amortized straight-line over 12 months for open-end funds and continuously offered closed-end funds (946-20-25-5 through 25-6; 35-5; 35-6).