Wiley GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles

23   ASC 340 OTHER ASSETS AND DEFERRED COSTS

Perspective and Issues

Subtopics

Scope and scope exceptions

Overview

Definitions of Terms

Concepts, Rules, and Examples

Prepaid Expenses

Types of prepaid expenses

Amortization

Example of prepaid expenses

Preproduction Costs Related to Long-term Supply Arrangements

Capitalized Advertising Costs

Insurance Contracts that do not Translate Insurance Risk

Deposit accounting

Other Sources

PERSPECTIVE AND ISSUES

Subtopics

ASC 340, Other Assets and Deferred Costs, contains three subtopics:

• ASC 340-10, Overall, which provides guidance on certain deferred costs and prepaid expenses.
• ASC 340-20, Capitalized Advertising Costs, which provides guidance on the initial measurement, amortization, realizability, and disclosure of direct response advertising costs reported as assets.
• ASC 340-30, Insurance Contracts that Do Not Transfer Insurance Risk, which provides guidance on how to apply the deposit method of accounting when it is required for insurance and reinsurance contracts that do not transfer risk.

The guidance in ASC 340-10 is limited to a discussion of the nature of prepaid expenses and guidance for preproduction costs related to long-term supply arrangements. The specific guidance for many other deferred costs is included in various other areas of the Codification.

Scope and Scope Exceptions

Per ASC 340-20-15-4:

“Direct-response advertising activities exclude advertising that, though related to the direct-response advertising, is directed ...