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FASB ASC Guide > FASB ASC 340

The Financial Accounting Standards Board (FASB) released Accounting Standards Codification 340 (ASC 340) to address other assets, such as prepaid expenses, and deferred costs.  The main subtopics included in this area are as follows:

• The capitalization of advertising costs
• Insurance Contracts that Do Not Transfer Insurance Risk
• Capitalized Bond Issuance Costs – these are preferred to be amortized using the effective interest method however straight line is acceptable too

When discussing prepaid expenses, they discuss the definition of what a prepaid is and that it includes things such as insurance, interest, rents, taxes, unused royalties, paid advertising not received, and operating supplies.  The topic ASC 310 discusses the finer points of how to account for each of the different types of prepaid expenses and deferred costs and how to properly account for them given the certain circumstances that each of them present.

Check out more high level explanations of the FASB ASC in our Guide to the Accounting Standards Codification!

For more in depth information on this and other FASB ASC topics, check out the following books.