insurance entity

ASC 340-944 governs how insurance entities account for and report certain deferred costs and prepaid expenses, organized into a General Subsection and a Reinsurance Contracts Subsection. Its operative rule is that amounts an insurer pays a reinsurer for the unexpired portion of reinsured contracts — prepaid reinsurance premiums — must be reported separately as assets (340-944-25-1), rather than netted against related liabilities.

ASC 944-720 tells insurance entities which costs must be expensed as incurred rather than capitalized as deferred acquisition costs. Because 944-30-25-1A permits capitalization only of incremental direct acquisition costs relating to successful contract acquisitions or renewals, everything else — non-qualifying acquisition-related costs and all indirect costs — is charged to expense as incurred (944-720-25-2).

ASC 944-10 is the Overall subtopic of the Financial Services—Insurance Topic; it serves as the roadmap and scope gate for all insurance-specific accounting guidance. It lists the Topic's Subtopics (acquisition costs, claim costs and liabilities for future policy benefits, policyholder dividends, premium deficiency, separate accounts, and the statement/disclosure subtopics) and identifies the four contract-type Subsections used throughout: short-duration, long-duration, reinsurance, and financial guarantee insurance contracts. The guidance is incremental industry-specific guidance—entities in scope must still apply all other applicable GAAP.