relative sales value method

This Subtopic governs the accounting for notes receivable arising from time-sharing interval sales, which are typically seller-financed recourse promissory notes with 5- to 10-year terms. It requires uncollectibility (of both principal and interest) to be measured on actual collection experience rather than on proceeds from receivable sales or securitizations, and requires an allowance for credit losses estimated each reporting period (at least quarterly) under Subtopic 326-20. It also prescribes specific disclosures about note maturities, interest rates, and allowance activity, including receivables sold with recourse.

ASC 330-978 governs how time-share sellers measure time-sharing inventory (intervals) and cost of sales. Sellers must use the relative sales value method, applied phase by phase, with common costs (including amenities) allocated among benefited phases, and must recalculate total estimated time-sharing revenue and total costs at least quarterly. Changes in estimate are recorded as current-period adjustments, and rental/other activity during the holding period is treated as incidental operations that reduce the pool of inventory costs.

ASC 605-978 formerly contained the specialized revenue recognition guidance for real estate time-sharing transactions (interval sales, vacation clubs), including profit recognition tests, buyer's commitment and continuing investment thresholds, relative sales value accounting, and reload/upgrade transactions. Every paragraph in every section of the subtopic was superseded by Accounting Standards Update No. 2014-09. Time-sharing revenue is now accounted for under ASC 606, with transfers of real estate outside a customer contract addressed in ASC 610-20.