# ASC 310-10-25: Receivables — Overall — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/310/10/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:c33b7836df919d1b1feb83a70e7b4f28cfee72a987f638b0207dd5b0044f3681 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 310-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/310/10/#25-recognition) SEC content: no ##### [310-10-25-1](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:66ce0b98a701e11526ece47290ea59328904ea1ff0cd065475e2436962193727 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The General Subsections provide recognition guidance organized as follows: 1. a Recognition of certain types of receivables 2. b Recognition of interest and fees for certain types of receivables. #### Recognition of Certain Types of Receivables ##### [310-10-25-2](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:bb8a42c1dd13ed8e81d888be8810a69c4f0dc4338954efa218788faa67c34e2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses issues related to recognition of various types of receivables, specifically: 1. a Factoring arrangements 2. b [Loan syndications](https://asc.understandingaccounting.org/glossary/l/#loan-syndication "A transaction in which several lenders share in lending to a single borrower. Each lender loans a specific amount to the borrower and has the right to repayment from the borrower. It is common for groups of lenders to jointly fund those loans when the amount borrowed is greater than any one lender is willing to lend.") and [loan](https://asc.understandingaccounting.org/glossary/l/#loan "A contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in the creditor's statement of financial position. Examples include but are not limited to accounts receivable (with terms exceeding one year) and notes receivable.") participations 3. c Standby commitments 4. d Credit card portfolio purchased 5. e Secured loans. Such receivables may be originated by an entity or purchased from a third party. ##### [310-10-25-3](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:9fcd84fb39c6f626028d77d56aea0c3f01adf09f149aa46e077fd538a30752c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transfers of receivables under factoring arrangements meeting the sale criteria of paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) shall be accounted for by the factor as purchases of receivables. The acquisition of receivables and accounting for purchase discounts such as factoring commissions shall be recognized in accordance with Subtopic 310-20. Factoring commissions under these arrangements shall be recognized over the period of the loan contract in accordance with that Subtopic. That period begins when a finance company or an entity with financing activities including trade receivables funds a customer's credit and ends when the customer's account is settled. ##### [310-10-25-4](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:680fdd94f71ec745c6482fbaf16b10feafef466a6046ce9c5bd7a1f9b596f638 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Each lender in a syndication shall account for the amounts it is owed by the borrower. Repayments by the borrower may be made to a lead lender that then distributes the collections to the other lenders of the syndicate. In those circumstances, the lead lender is simply functioning as a servicer and, therefore, shall not recognize the aggregate loan as an asset. ##### [310-10-25-5](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:6d5fb213b3e62ad0dc9656f43c05e4ab5d29cd2628337a0ce8ef8e9dd569c817 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [860-10-55-61](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-61) for guidance on accounting for loan participations. ##### [310-10-25-6](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:bdb77ed9ef72da453cb68b988b136ebcfe392b7ffb115400ab230b58daedab0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [815-10-15-70](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-70) states that commitments to purchase or sell mortgage loans or other types of loans at a future date must be evaluated under the definition of a derivative instrument to determine whether Subtopic 815-10 applies. This paragraph applies only to a standby commitment to purchase loans and only if that commitment is within the scope of this Subtopic. It does not apply to other customary kinds of commitments to purchase loans, nor does it apply to commitments to originate loans. If the settlement date is within a reasonable period, for example, a normal loan commitment period, and the entity has the intent and ability to accept delivery without selling assets, a standby commitment within the scope of this Subtopic shall be viewed as part of the normal production of loans. However, if the settlement date is not within a reasonable period, or the entity does not have the intent and ability to accept delivery without selling assets, the standby commitment shall be accounted for as a written put option. ##### [310-10-25-7](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:25b68ed46ffefd61522219da4158b73bf9d10ab0761d28e025a567b770b7a316 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When an entity purchases a credit card portfolio that includes the cardholder relationships at an amount that exceeds the sum of the amounts due under the credit card receivables, the difference between the amount paid and the sum of the balances of the credit card loans at the date of purchase (the premium) shall be allocated between the cardholder relationships acquired and the loans acquired. The premium relating to the cardholder relationships represents an identifiable intangible asset that shall be accounted for in accordance with Topic 350. ##### [310-10-25-8](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:39abd9f3d8eef15b378c64f3faf76d482c58e6dcb9e92acb5ebbc1dea8b94d0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transfers not meeting the sale criteria in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) shall be accounted for as secured loans, that is, loans collateralized by customer accounts or receivables. Paragraph [860-30-25-5](https://asc.understandingaccounting.org/asc/860/30/#860-30-25-5) provides additional guidance in those situations. #### Recognition of Interest and Fees for Certain Types of Receivables ##### [310-10-25-9](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:b67769f4f1cf82a96d17882375d4230ffd6ef317ecb9741fdbcffaa7467bb20b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses the recognition of interest income and certain fees for various types of receivables, specifically: 1. a Interest income on receivables 2. b Impact of rebates on accrued interest income 3. c Prepayment fees 4. d Delinquency fees. Such interest or fees may relate to receivables that are originated by the entity or purchased from a third party. ##### [310-10-25-10](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:e3aa929c39a952fffce090fb5a37f8a26b30f1098ac2bc1ee6aadf5c7e516047 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Subtopic 835-30 for guidance on the imputation of interest for receivables that represent contractual rights to receive money or contractual obligations to pay money on fixed or determinable dates, whether or not there is any stated provision for interest. ##### [310-10-25-11](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:1325fa8de20eaaae88dc209cf9770fd8388a6d9fdbe2b235e8052903b3bb53f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accrual of interest income on installment loans or trade receivables shall not be affected by the possibility that rebates may be calculated on a method different from the interest method, except that the possibility of rebates affects the accounting resulting from the application of paragraph [310-20-35-18(a)](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-18). Differences between rebate calculations and accrual of interest income merely adjust original estimates of interest income and shall be recognized in income when loans or trade receivables are prepaid or renewed. ##### [310-10-25-12](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:0aeb358e5ee1173d18e118fcc855c6589e20f84162185f296fc10670a4872df0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prepayment penalties shall not be recognized in income until loans or trade receivables, if applicable, are prepaid, except that the existence of prepayment penalties may affect the accounting resulting from the application of paragraph [310-20-35-18(a)](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-18). ##### [310-10-25-13](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:70bc1751e0c66eecceb0a6a03c2c43059c491fc9bb16ab6739f25f1d5391c35c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Delinquency fees shall be recognized in income when chargeable, assuming collectibility is reasonably assured. ### Acquisition, Development, and Construction Arrangements ##### [310-10-25-14](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:2f34d2a2d27464065cf5ac9b5247105c4a35b45be5ed7416baa5f876a2f6076c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection provides recognition guidance for [acquisition, development, and construction arrangements](https://asc.understandingaccounting.org/glossary/a/#acquisition-development-and-construction-arrangements "Acquisition, development, or construction arrangements, in which a lender, usually a financial institution, participates in expected residual profit from the sale or refinancing of property."), specifically: 1. a [Expected residual profit](https://asc.understandingaccounting.org/glossary/e/#expected-residual-profit "The amount of profit, whether called interest or another name, such as equity kicker, above a reasonable amount of interest and fees expected to be earned by a lender.") 2. b Characteristics implying investment in real estate or joint ventures 3. c Characteristics implying loans 4. d Accounting for an arrangement as a [loan](https://asc.understandingaccounting.org/glossary/l/#loan "A contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in the creditor's statement of financial position. Examples include but are not limited to accounts receivable (with terms exceeding one year) and notes receivable.") or an investment in real estate 5. e Participations in acquisition, development, and construction arrangements. #### Expected Residual Profit ##### [310-10-25-15](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:dd6349d552bac5b328a3d9684660b5771cd29a75435a3239ce3be6d5f6ee1a4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The extent of participation in expected residual profit and its forms may vary. An example of a simple form might be one in which the contractual interest and fees, if any, on a condominium project are considered to be at fair market rates. The expected sales prices are sufficient to cover at least principal, interest, and fees, and the lender shares in an agreed proportion, for example, 20 percent, 50 percent, or 90 percent, of any profit on sale of the units. ##### [310-10-25-16](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:5236999f29aff3668cb9a1476fa2364eef8e0ead9aa0b7bdad07e10231961a31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A slightly different form of arrangement may produce approximately the same result. For example, the interest rate and/or fees may be set at a level higher than in the preceding example, and the lender may receive a smaller percentage of any profit on sale of the units. Thus, a greater portion of the expected sales price is required to cover the contractual interest and/or fees, leaving a smaller amount to be allocated between the lender and the borrower. The lender's share of expected residual profit in such an arrangement may be approximately the same as in the preceding example. ##### [310-10-25-17](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:b03c3e9f769ccc4d3afd82784abbf4acda44d2234cae5603fc7bde437c565c5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A different arrangement may cause the same result if the interest rate and/or fees are set at a sufficiently high level and the lender does not share in any proportion of profit on sale of the units. Another variation in these arrangements is one in which the lender shares in gross rents or net cash flow from a commercial project, for example, an office building or an apartment complex. ##### [310-10-25-18](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:f27e7b5c75be728894bcb92fdce451f372c372b0dc12a9e3d9e958e1aa364860 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The profit participation agreement may or may not be part of the mortgage loan agreement. #### Characteristics Implying Investment in Real Estate or Joint Ventures ##### [310-10-25-19](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:5fd1d580d20555058a541f7d9cb869df0ac13e750d7f59463bf4f4db8d85cc9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In an acquisition, development, and construction arrangement in which the lender participates in expected residual profit, in addition to the lender's participation in expected residual profit, the following characteristics suggest that the risks and rewards of the arrangement are similar to those associated with an investment in real estate or joint venture: 1. a The lender agrees to provide all or substantially all necessary funds to acquire, develop, or construct the property. The borrower has title to but little or no equity in the underlying property. 2. b The lender funds the commitment or origination fees or both by including them in the amount of the loan. 3. c The lender funds all or substantially all interest and fees during the term of the loan by adding them to the loan balance. 4. d The lender's only security is the acquisition, development, and construction project. The lender has no [recourse](https://asc.understandingaccounting.org/glossary/r/#recourse "The right of a transferee of receivables to receive payment from the transferor of those receivables for any of the following: Failure of debtors to pay when due The effects of prepayments Adjustments resulting from defects in the eligibility of the transferred receivables.") to other assets of the borrower, and the borrower does not guarantee the debt. 5. e In order for the lender to recover the investment in the project, the property must be sold to independent third parties, the borrower must obtain refinancing from another source, or the property must be placed in service and generate sufficient net cash flow to service debt principal and interest. 6. f The arrangement is structured so that foreclosure during the project's development as a result of delinquency is unlikely because the borrower is not required to make any payments until the project is complete, and, therefore, the loan normally cannot become delinquent. #### Characteristics Implying Loans ##### [310-10-25-20](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:f05e08ef4fef291593b9ddd868de4f51810770a3587f7b6b1f698ca306899aa3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Even though the lender participates in expected residual profit, the following characteristics suggest that the risks and rewards of an acquisition, development, and construction arrangement are similar to those associated with a loan: 1. a The lender participates in less than a majority of the expected residual profit. 2. b The borrower has an equity investment, substantial to the project, not funded by the lender. The investment may be in the form of cash payments by the borrower or contribution by the borrower of land (without considering value expected to be added by future development or construction) or other assets. The value attributed to the land or other assets should be net of encumbrances. There may be little value to assets with substantial prior liens that make foreclosure to collect less likely. Recently acquired property generally shall be valued at no higher than cost. 3. c The lender has either of the following: 1. 1 Recourse to substantial tangible, saleable assets of the borrower, with a determinable sales value, other than the acquisition, development, and construction project that are not pledged as collateral under other loans 2. 2 An irrevocable letter of credit from a creditworthy, independent third party provided by the borrower to the lender for a substantial amount of the loan over the entire term of the loan. 4. d A take-out commitment for the full amount of the lender's loans has been obtained from a creditworthy, independent third party. Take-out commitments often are conditional. If so, the conditions should be reasonable and their attainment [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur."). 5. e Noncancelable sales contracts or lease commitments from creditworthy, independent third parties are currently in effect that will provide sufficient net cash flow on completion of the project to service normal loan amortization, that is, principal and interest. Any associated conditions should be probable of attainment. ##### [310-10-25-21](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:413765c97e51be057cd0ca86e2baa7b91f3c9c74b5ab5cab2dd5220dc4503fdd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some acquisition, development, and construction arrangements include personal guarantees of the borrower and/or a third party. The existence of a personal guarantee alone rarely provides a sufficient basis for concluding that an acquisition, development, and construction arrangement should be accounted for as a loan. In instances where the substance of the guarantee and the ability of the guarantor to perform can be reliably measured, and the guarantee covers a substantial amount of the loan, concluding that an acquisition, development, and construction arrangement supported by a personal guarantee should be accounted for as a loan may be justified. ##### [310-10-25-22](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:c8764549b2de8762cf5de89e395647d4bb7ed7e58c808b0ff7555bb2a5650343 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The substance of a personal guarantee depends on all of the following: 1. a The ability of the guarantor to perform under the guarantee 2. b The practicality of enforcing the guarantee in the applicable jurisdiction 3. c A demonstrated intent to enforce the guarantee. ##### [310-10-25-23](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-23) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:be5be0b4116a751988996e659792862cb326f072bff3715b246ba39a42a0ceb8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of personal guarantees that have the ability to perform would include those supported by liquid assets placed in escrow, pledged marketable securities, or irrevocable letters of credit from a creditworthy, independent third party in amounts sufficient to provide necessary equity support for an acquisition, development, and construction arrangement to be considered a loan. In the absence of such support for the guarantee, the financial statements and other information of the guarantor may be considered to determine the guarantor's ability to perform. ##### [310-10-25-24](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-24) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:054ec50d7230b28495c7f270423386460075443abf56bf76814c512220f8db45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Particular emphasis should be placed on the following factors when considering the financial statements of the guarantor: 1. a Liquidity and net worth of the guarantor. There should be evidence of sufficient liquidity to perform under the guarantee. There may be little substance to a personal guarantee if the guarantor's net worth consists primarily of assets pledged to secure other debt. 2. b Guarantees provided by the guarantor to other projects. If the financial statements do not disclose and quantify such information, inquiries should be made as to other guarantees. Also, it may be appropriate to obtain written representation from the guarantor regarding other contingent liabilities. ##### [310-10-25-25](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-25) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:b98018e9d65c87c98472e11fda1bfe810462dfc925208efedce889fd715d5430 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The enforceability of the guarantee in the applicable jurisdiction should also be determined. Even if the guarantee is legally enforceable, business reasons that might preclude the lender from pursuing the guarantee shall be assessed. Those business reasons could include the length of time required to enforce a personal guarantee, whether it is normal business practice in that jurisdiction to enforce guarantees on similar transactions, and whether the lender must choose between pursuing the guarantee or the project's assets, but cannot pursue both. ##### [310-10-25-26](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-26) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:14187ed3650248cf6c74c935edbe6bb65e84ce07f76a67f6fb1bcc587109e833 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some acquisition, development, and construction arrangements recognize value, not funded by the lender, for the builder's efforts after inception of the arrangement, sometimes referred to as sweat equity. Sweat equity is not at risk by the borrower at the inception of an acquisition, development, and construction project. Consequently, sweat equity shall not be considered a substantial equity investment on the part of the borrower in determining whether the acquisition, development, and construction arrangement should be treated as a loan. #### Accounting for an Arrangement as a Loan or an Investment in Real Estate ##### [310-10-25-27](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-27) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:838aed5fceeee2b8b28264293ea26063d690ab4c40f844cf41b98cf16acd5393 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An acquisition, development, and construction arrangement shall be accounted for as follows: 1. a If the lender is expected to receive over 50 percent of the expected residual profit from the project, the lender shall account for income or loss from the arrangement as a real estate investment as specified by Topic 970. 2. b If the lender is expected to receive 50 percent or less of the expected residual profit, the entire arrangement shall be accounted for either as a loan or as a real estate joint venture, depending on the circumstances. At least one of the characteristics identified in paragraph [310-10-25-20(b) through (e)](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-20) or a qualifying personal guarantee shall be present for the arrangement to be accounted for as a loan. Otherwise, real estate joint venture accounting would be appropriate. ##### [310-10-25-28](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-28) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:f4fa0ce8cc1b31babb243a7d13cd36a999bb508e42316129c9ee291fdb77d6da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the arrangement is accounted for as a loan, interest and fees shall be recognized as income subject to recoverability. Topic 974 provides guidance that may be relevant in assessing the recoverability of such loan amounts and accrued interest. ##### [310-10-25-29](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-29) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:16aeff0f7e468172e9094158d46b65aae52c6fce0b06b989a63d7e1ac7346df9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the arrangement is accounted for as a real estate joint venture, the provisions of Subtopics 970-323 and 835-20 provide guidance for such accounting. In particular, paragraph [970-835-35-1](https://asc.understandingaccounting.org/asc/835/970/#835-970-35-1) provides guidance on the circumstances under which interest income shall not be recognized. #### Participations in Acquisition, Development, and Construction Arrangements ##### [310-10-25-30](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-30) Pending content: no Source downloaded (UTC): 2026-09-09T23:24:54.968Z to 2026-09-09T23:24:54.968Z Record version: sha256:4f5aa0939227ff23835c90d0507cae3cbe66b9aabedbb5ed4e710b5510eaec2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many participations in loans or whole loans are bought and sold. The accounting treatment for a purchase that involves acquisition, development, and construction arrangements shall be based on a review of the transaction at the time of purchase in accordance with this guidance. In applying this guidance, a participant would look to its individual percentage of expected residual profit. For example, a participant who will not share in any of the expected residual profit is not subject to this guidance. However, the responsibility to review collectibility and provide allowances applies equally to purchased acquisition, development, and construction arrangements. Any reciprocal transactions between institutions, including multiparty transactions, shall be viewed in their entirety and accounted for in accordance with their combined effects.