# ASC 310-20-35: Receivables — Nonrefundable Fees and Other Costs — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/310/20/#35-subsequent-measurement) 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): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:809240746aa5960e76d6543a31949c703c3752c7c479ca3e382394967919e01b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 310-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/310/20/#35-subsequent-measurement) SEC content: no ##### [310-20-35-1](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:15a400201692c44b5b73114ea406ce989492431a99e86f3ecbc05b9fb704f2ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section addresses measurement issues for certain fees and costs related to various forms of lending, specifically: 1. a [Loan origination fees](https://asc.understandingaccounting.org/glossary/l/#loan-origination-fees "Origination fees consist of all of the following: Fees that are being charged to the borrower as prepaid interest or to reduce the loan's nominal interest rate, such as interest buy-downs (explicit yield adjustments) Fees to reimburse the lender for origination activities Other fees charged to the borrower that relate directly to making the loan (for example, fees that are paid to the lender as compensation for granting a complex loan or agreeing to lend quickly) Fees that are not conditional on a loan being granted by the lender that receives the fee but are, in substance, implicit yield adjustments because a loan is granted at rates or terms that would not have otherwise been considered absent the fee (for example, certain syndication fees addressed in paragraph 310-20-25-19) Fees charged to the borrower in connection with the process of originating, refinancing, or restructuring a loan. This term includes, but is not limited to, points, management, arrangement, placement, application, underwriting, and other fees pursuant to a lending or leasing transaction and also includes syndication and participation fees to the extent they are associated with the portion of the loan retained by the lender.") and costs 2. b [Commitment fees](https://asc.understandingaccounting.org/glossary/c/#commitment-fees "Fees charged for entering into an agreement that obligates the entity to make or acquire a loan or to satisfy an obligation of the other party under a specified condition. Commitment fees include fees for letters of credit and obligations to purchase a loan or group of loans and pass-through certificates.") and costs 3. c [Credit card fees](https://asc.understandingaccounting.org/glossary/c/#credit-card-fees "The periodic uniform fees that entitle cardholders to use credit cards. The amount of such fees generally is not dependent upon the level of credit available or frequency of usage. Typically the use of credit cards facilitates the cardholder's payment for the purchase of goods and services on a periodic, as-billed basis (usually monthly), involves the extension of credit, and, if payment is not made when billed, involves imposition of interest or finance charges. Credit card fees include fees received in similar arrangements, such as charge card and cash card fees.") and costs 4. d [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. This definition encompasses loans accounted for as debt securities.") refinancing or restructuring 5. e Purchase of a loan or group of loans 6. f Interest method and other amortization matters 7. g Estimating principal prepayments 8. h Lending transactions unrelated to the origination of loans 9. i [Blended-rate loans](https://asc.understandingaccounting.org/glossary/b/#blended-rate-loans "Blended-rate loans involve lending new funds at market interest rates combined with existing loans at rates currently lower than market rates. (Those funds are not advanced under a line of credit.)"). #### Loan Origination Fees and Costs ##### [310-20-35-2](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:4c07c1da6e20854aa3c41dab1c2d0c99b03914c1a356b2205db04c93f33951f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Loan origination fees deferred in accordance with paragraph [310-20-25-2](https://asc.understandingaccounting.org/asc/310/20/#310-20-25-2) shall be recognized over the life of the loan as an adjustment of yield (interest income). Likewise, [direct loan origination costs](https://asc.understandingaccounting.org/glossary/d/#direct-loan-origination-costs "Direct loan origination costs represent costs associated with originating a loan. Direct loan origination costs of a completed loan shall include only the following: Incremental direct costs of loan origination incurred in transactions with independent third parties for that loan Certain costs directly related to specified activities performed by the lender for that loan. Those activities include all of the following: Evaluating the prospective borrower's financial condition Evaluating and recording guarantees, collateral, and other security arrangements Negotiating loan terms Preparing and processing loan documents Closing the transaction. The costs directly related to those activities shall include only that portion of the employees' total compensation and payroll-related fringe benefits directly related to time spent performing those activities for that loan and other costs related to those activities that would not have been incurred but for that loan. See Section 310-20-55 for examples of items.") deferred in accordance with that paragraph shall be recognized as a reduction in the yield of the loan. Paragraph [310-20-30-2](https://asc.understandingaccounting.org/asc/310/20/#310-20-30-2) explains that loan origination fees and related direct loan origination costs for a given loan shall be offset and only the net amount shall be amortized. For loans that are refinanced or restructured, see paragraphs [310-20-35-9 through 35-10](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-9) . #### Commitment Fees and Costs ##### [310-20-35-3](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:2750fc6596b9d28bbeaed84bbf0465c7749b6321eb6261f802b3cf4da9e0090a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as set forth in this paragraph, fees received for a commitment to originate or purchase a loan or group of loans shall be, if the commitment is exercised, recognized over the life of the loan as an adjustment of yield or, if the commitment expires unexercised, recognized in income upon expiration of the commitment: 1. a If the entity's experience with similar arrangements indicates that the likelihood that the commitment will be exercised is remote, the commitment fee shall be recognized over the commitment period on a straight-line basis as service fee income. If the commitment is subsequently exercised during the commitment period, the remaining unamortized commitment fee at the time of exercise shall be recognized over the life of the loan as an adjustment of yield. The term _remote_ is used here, consistent with its use in Topic 450, to mean that the likelihood is slight that a loan commitment will be exercised before its expiration. 2. b If the amount of the commitment fee is determined retrospectively as a percentage of the line of credit available but unused in a previous period, if that percentage is nominal in relation to the stated interest rate on any related borrowing, and if that borrowing will bear a market interest rate at the date the loan is made, the commitment fee shall be recognized as service fee income as of the determination date. #### Credit Card Fees and Costs ##### [310-20-35-4](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:3f9aaa3a5e42439e7ffc167e39ed5b13b98b52090e38297d93cc3c8dabb566a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses the amortization of deferred origination costs of credit cards with fees, without fees, or when the fees have been waived for a limited period of time. ##### [310-20-35-5](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:b89d43887b0bb1d3e333606051065ad0c734c3757c7cd8ef79df264f9d76aac3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fees deferred in accordance with paragraph [310-20-25-15](https://asc.understandingaccounting.org/asc/310/20/#310-20-25-15) shall be recognized on a straight-line basis over the period the fee entitles the cardholder to use the card. This accounting shall also apply to other similar card arrangements that involve an extension of credit by the card issuer. ##### [310-20-35-6](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:d81dad1c39bc091ffc918bc1623b86203c4ef369f551337a35c37619396822e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In connection with the issuance of a credit card that is not a [private label credit card](https://asc.understandingaccounting.org/glossary/p/#private-label-credit-cards "Private label credit cards are those credit cards that are issued by, or on behalf of, a merchandising entity for the purchase of goods or services that are sold at that entity's place(s) of business."), an issuer may incur certain credit card origination costs that qualify as direct loan origination costs pursuant to this Topic. Paragraph [310-20-25-16](https://asc.understandingaccounting.org/asc/310/20/#310-20-25-16) explains that only the costs of origination that qualify as direct loan origination costs under the definition of that term are eligible for deferral. That definition explains that all other costs shall be charged to expense as incurred. That definition explains that, therefore, costs eligible for deferral would likely exceed fees only when a credit card is first issued. ##### [310-20-35-7](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:31a421424f578242ac414b3598a1cf0121d226f15d68030357eb0102ff3e7c54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The net amount of credit card origination costs netted against the related credit card fee, if any, and recognized in accordance with paragraph [310-20-25-17](https://asc.understandingaccounting.org/asc/310/20/#310-20-25-17) shall be amortized on a straight-line basis over the privilege period. That paragraph states that significance for this purpose shall be evaluated based on the amount of the fee relative to the related costs and provides related guidance. ##### [310-20-35-8](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:213cd75c8922ef3c78f996d24e63af64e671fb8630c350ca5fad14e3a9cc572b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any net amount deferred in accordance with paragraph [310-20-25-18](https://asc.understandingaccounting.org/asc/310/20/#310-20-25-18) shall be amortized on a straight-line basis over the privilege period. #### Loan Refinancing or Restructuring ##### [310-20-35-9](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:591685273a903bfe1b0b2922b3e16794729e9cbfdfde4527090a3d8af94c6c64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the terms of the new loan resulting from a loan refinancing or restructuring are at least as favorable to the lender as the terms for comparable loans to other customers with similar collection risks who are not refinancing or restructuring a loan with the lender, the refinanced loan shall be accounted for as a new loan. This condition would be met if the new loan's effective yield is at least equal to the effective yield for such loans and modifications of the original debt instrument are more than minor. Any unamortized net fees or costs and any prepayment penalties from the original loan shall be recognized in interest income when the new loan is granted. The effective yield comparison considers the level of nominal interest rate, commitment and origination fees, and direct loan origination costs and would also consider comparison of other factors where appropriate, such as compensating balance arrangements. ##### [310-20-35-10](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:b92049e7bb269e0324891a0bdfa05e8ae1a8dd26e39349f09bee146c8b6f2ec7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the refinancing or restructuring does not meet the condition set forth in paragraph [310-20-35-9](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-9) or if only minor modifications are made to the original loan contract, the unamortized net fees or costs from the original loan and any prepayment penalties shall be carried forward as a part of the net investment in the new loan. In this case, the investment in the new loan shall consist of the remaining [net investment in the original loan](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-an-original-loan "The net investment in an original loan includes the unpaid loan principal, any remaining unamortized net fees or costs, any remaining unamortized purchase premium or discount, and any accrued interest receivable."), any additional funds advanced to the borrower, any fees received, and direct loan origination costs associated with the refinancing or restructuring. ##### [310-20-35-11](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:4fe8acf6caeb498bc99a7f552e663eb83df1ed6143c87b2ca57707b84dd56ed2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A modification of a debt instrument shall be considered more than minor under paragraph [310-20-35-10](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-10) if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. If the difference between the present value of the cash flows under the terms of the new debt instrument and the present value of the remaining cash flows under the terms of the original debt instrument is less than 10 percent, a creditor shall evaluate whether the modification is more than minor based on the specific facts and circumstances (and other relevant considerations) surrounding the modification. The guidance in Topic 470 shall be used to calculate the present value of the cash flows for purposes of applying the 10 percent test. ##### [310-20-35-12](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:7d716ad74f5e46462cb6b1d2f049aea581324198ea6ec89e6ba315ee7d32bd2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2022-02](https://asc.understandingaccounting.org/updates/asu-2022-02/). ##### [310-20-35-12A](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-12A) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:446efae56be6a4a21749592cb11139542f1701ff2bcd7b6d0a877fac3228c63d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A loan refinancing or restructuring may involve substituting debt of another business entity, individual, or government entity for that of the debtor or adding another debtor (for example, as a joint debtor). Government entities include, but are not limited to, states, counties, townships, municipalities, school districts, authorities, and commissions. That kind of restructuring should be accounted for according to its substance. For example, a restructuring in which, after the restructuring, the substitute or additional debtor controls, is controlled by (as defined in paragraphs [810-10-15-8 through 15-8A](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8)), or is under common control with the original debtor is an example of one that shall be accounted for by the creditor as a loan refinancing or restructuring as prescribed in paragraphs [310-20-35-9 through 35-11](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-9) . Similarly, a restructuring in which the substitute or additional debtor and original debtor are related after the restructuring by an agency, trust, or other relationship that in substance earmarks certain of the original debtor's funds or funds flows for the creditor although payments to the creditor may be made by the substitute or additional debtor should be accounted for by the creditor as a loan refinancing or restructuring as prescribed in paragraphs [310-20-35-9 through 35-11](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-9) . In contrast, a restructuring in which the substitute or additional debtor and the original debtor do not have any of the relationships described above after the restructuring shall be accounted for by the creditor according to the provisions of paragraphs [310-20-40-2 through 40-5](https://asc.understandingaccounting.org/asc/310/20/#310-20-40-2) . ##### [310-20-35-12B](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-12B) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:c1faf7171bbf3dc2c33fabd2a7225a985f6f3d1ccba86be0fd6c18824ae293b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a partial satisfaction of a receivable (see paragraph [310-20-35-12C](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-12C)), the fair value of the assets received shall be used in all cases to avoid the need to allocate the fair value of the receivable between the part satisfied and the part still outstanding. ##### [310-20-35-12C](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-12C) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:b7d2c58780767731e7329fb1b6fee53eb81e83036338dcfe2808af94b884be20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A loan refinancing or restructuring may involve receipt of assets (including an equity interest in the debtor) in partial satisfaction of a receivable and a modification of terms of the remaining receivable. Even if the stated terms of the remaining receivable, for example, the stated interest rate and the maturity date or dates, are not changed in connection with the receipt of assets (including an equity interest in the debtor), the restructuring shall be accounted for as prescribed by this paragraph. A creditor shall account for a loan refinancing or restructuring involving a partial satisfaction and modification of terms as prescribed in paragraphs [310-20-35-9 through 35-11](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-9) except that, first, the assets received shall be accounted for as prescribed in paragraphs [310-20-40-2 through 40-4](https://asc.understandingaccounting.org/asc/310/20/#310-20-40-2) and the [amortized cost basis](https://asc.understandingaccounting.org/glossary/a/#amortized-cost-basis "The amortized cost basis is the amount at which a financing receivable or investment is originated or acquired, adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, writeoffs, foreign exchange, and fair value hedge accounting adjustments.") shall be reduced by the fair value less cost to sell of the assets received. If cash is received in a partial satisfaction of a receivable, the amortized cost basis shall be reduced by the amount of cash received. ##### [310-20-35-12D](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-12D) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:47f1d0177f7fce0cda24edbf7bc6270a3b8196ec15ef15c458c99dfa4bc59b9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 do not allow the lender to look-back to credit losses measured and recorded under Topic 326 for purposes of measuring the cumulative loss previously recognized in determining the gain to be recognized on the increase in fair value less cost to sell of a foreclosed property under paragraph [360-10-35-40](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-40). ##### [310-20-35-13](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:eb861874e6ae58f463bbc4339b04fb41dc37606cb69cb4db0709c0d32b513d76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The borrower and lender may enter into an agreement whereby the borrower increases his mortgage payments for a specified period, at the conclusion of which the lender forgives a portion of the remaining principal on the loan. The borrower may terminate the arrangement at any time but receives no principal reduction if he makes less than 12 consecutive increased payments. The guidance in paragraph [310-20-35-11](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-11) shall first be used to determine whether the modification is considered more than minor under paragraph [310-20-35-10](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-10). If not, and assuming it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the borrower will continue to make the increased payments for the specified period, the expense relating to the partial forgiveness shall be accrued over the period of increased payments. ##### [310-20-35-14](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:b5fd7ce5ccf0cc276a81c5512a504680b0bf57a85be4b95648afdf0ef39f91a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of a decline in general interest rates, a lender may reduce the interest rate on an existing loan and collect a loan fee. Because the interest rate modification does not require another loan closing, the borrower is not charged many of the standard closing costs. The effective yield on the new loan shall be compared with the effective yield of comparable loans to the lender's other new customers to determine whether the yield on the new loan is at least as favorable as the effective yield for such loans. If so, the guidance in paragraph [310-20-35-11](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-11) shall be used to determine whether the modification is considered more than minor under paragraph [310-20-35-10](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-10). If not, the unamortized net fees and costs from the original loan and any prepayment penalties shall be carried forward as part of the net investment in the new loan. However, if the interest rate modification is provided for in the original loan contract, the change in the interest rate shall be accounted for in accordance with paragraph [310-20-35-18](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-18) and not considered a refinancing for purposes of paragraphs [310-20-35-9 through 35-10](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-9) . #### Purchase of a Loan or Group of Loans ##### [310-20-35-15](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:67161fda7d2593a338e69da41a1179a6bf28f9de9ca911e4c7cd605971ee1b4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [310-20-30-5](https://asc.understandingaccounting.org/asc/310/20/#310-20-30-5) explains that the initial investment in a purchased loan or group of loans shall include the amount paid to the seller plus any fees paid or less any fees received. Paragraph [310-20-25-22](https://asc.understandingaccounting.org/asc/310/20/#310-20-25-22) explains that the initial investment frequently differs from the related loan's principal amount at the date of purchase. This difference shall be recognized as an adjustment of yield over the life of the loan. ##### [310-20-35-16](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:a7b429d4ab91cd22a643ed4201b9eeddceeefa66f334c482c6fd7a8ac446326b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [310-20-30-5](https://asc.understandingaccounting.org/asc/310/20/#310-20-30-5) explains that, in applying the provisions of this Subtopic to loans purchased as a group, the purchaser may allocate the initial investment to the individual loans or may account for the initial investment in the aggregate. The cash flows provided by the underlying loan contracts shall be used to apply the interest method, except as set forth in paragraph [310-20-35-26](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-26). If prepayments are not anticipated pursuant to that paragraph and prepayments occur or a portion of the purchased loans is sold, a proportionate amount of the related deferred fees and purchase premium or discount shall be recognized in income so that the [effective interest rate](https://asc.understandingaccounting.org/glossary/e/#effective-interest-rate "The rate of return implicit in the financial asset, that is, the contractual interest rate adjusted for any net deferred fees or costs, premium, or discount existing at the origination or acquisition of the financial asset. For purchased financial assets with credit deterioration, however, to decouple interest income from credit loss recognition, the premium or discount at acquisition excludes the discount embedded in the purchase price that is attributable to the acquirer's assessment of credit losses at the date of acquisition.") on the remaining portion of loans continues unchanged. #### Interest Method and Other Amortization Matters ##### [310-20-35-17](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:5f19afcc773026e366444651a8e4731d2a602e2798f980828be3dee4621d18a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Deferred net fees or costs shall not be amortized during periods in which interest income on a loan is not being recognized because of concerns about the realization of loan principal or interest. ##### [310-20-35-18](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:99a42064285dde189ff659ca66e09da72d831ce5de39ef88f5750a052fc689b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Net fees or costs that are required to be recognized as yield adjustments over the life of the related loan(s) shall be recognized by the interest method except as set forth in paragraphs [310-20-35-21 through 35-24](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-21) . The objective of the interest method is to arrive at periodic interest income (including recognition of fees and costs) at a constant effective yield on the net investment in the receivable (that is, the principal amount of the receivable adjusted by unamortized fees or costs and purchase premium or discount). The difference between the periodic interest income so determined and the stated interest on the outstanding principal amount of the receivable is the amount of periodic amortization. See paragraphs [835-30-35-2 through 35-5](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-2) for guidance concerning the interest method. Under the provisions of this Subtopic, the interest method shall be applied as follows when the stated interest rate is not constant throughout the term of the loan: 1. a If the loan's stated interest rate increases during the term of the loan (so that interest accrued under the interest method in early periods would exceed interest at the stated rate), interest income shall not be recognized to the extent that the net investment in the loan would increase to an amount greater than the amount at which the borrower could settle the obligation. Prepayment penalties shall be considered in determining the amount at which the borrower could settle the obligation only to the extent that such penalties are imposed throughout the loan term. (See Section 310-20-55.) Accordingly, a limit is imposed on the amount of periodic amortization that can be recognized. However, that limitation does not apply to the capitalization of costs incurred (such as direct loan origination costs and purchase premiums) that cause the investment in the loan to be in excess of the amount at which the borrower could settle the obligation. The capitalization of costs incurred is different from increasing the net investment in a loan through accrual of interest income that is only contingently receivable. 2. b If the loan's stated interest rate decreases during the term of the loan, the stated periodic interest received early in the term of the loan would exceed the periodic interest income that is calculated under the interest method. In that circumstance, the excess shall be deferred and recognized in those future periods when the constant effective yield under the interest method exceeds the stated interest rate. (See Section 310-20-55.) 3. c If the loan's stated interest rate varies based on future changes in an independent factor, such as an index or rate (for example, the prime rate, the London Interbank Offered Rate \[LIBOR\], or the U.S. Treasury bill weekly average rate), the calculation of the constant effective yield necessary to recognize fees and costs shall be based either on the factor (the index or rate) that is in effect at the inception of the loan or on the factor as it changes over the life of the loan. (See Section 310-20-55.) A variable rate loan whose initial rate differs from the rate its base factor would produce is also subject to the provisions of (a) and (b). ##### [310-20-35-19](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:e1d96f5f777cb071ec460489d9f2333793a1d67525e732687c5325501fb8deaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The preceding paragraph provides that when a loan's stated interest rate varies based on future changes in an independent factor, the lender shall calculate a constant effective yield by using the independent factor in effect at the inception of the loan or the factor as it changes over the life of the loan. In applying the guidance in (c) in the preceding paragraph, the lender may not change from one alternative to the other during the life of the loan. The lender must select one of the two alternatives and apply the method consistently throughout the life of the loan. ##### [310-20-35-20](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:8d48691d63dc55604ece7ee4f2e48e5d27547b1991a2ac770b9ce4dff8a90d76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a period in which the independent factor on a variable rate loan changes, the constant effective yield is recalculated not from the inception of the loan but from the time of the change. See Example 9 (paragraph [310-20-55-43](https://asc.understandingaccounting.org/asc/310/20/#310-20-55-43)) for an illustration. ##### [310-20-35-21](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:9f396aef1ea73e94c9efa154fa73ae984533fa470215ebeae5060b4a56c32dba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain loan agreements provide no scheduled payment terms (demand loans); others provide the borrower with the option to make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and then reborrow under the same contract (revolving lines of credit). ##### [310-20-35-22](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:3776001c0f2905a0dd3c462e7a60c39ce2f8bc7ddb5d5f60f7964c1eee533a71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a loan that is payable at the lender's demand, any net fees or costs may be recognized as an adjustment of yield on a straight-line basis over a period that is consistent with any of the following: 1. a The understanding between the borrower and lender 2. b If no understanding exists, the lender's estimate of the period of time over which the loan will remain outstanding; any unamortized amount shall be recognized when the loan is paid in full. Such estimates should be monitored regularly and revised as appropriate. If, contrary to expectation, a loan remains outstanding beyond the anticipated payment date, no adjustment is required. ##### [310-20-35-23](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-23) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:dca9db4b8b704ca38a99241eec814b3368945fbbb0fd93ec72909e8472e649d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For revolving lines of credit (or similar loan arrangements), the net fees or costs shall be recognized in income on a straight-line basis over the period the revolving line of credit is active, assuming that borrowings are outstanding for the maximum term provided in the loan contract. If the borrower pays all borrowings and cannot reborrow under the contract, any unamortized net fees or costs shall be recognized in income upon payment. The interest method shall be applied to recognize net unamortized fees or costs when the loan agreement provides a schedule for payment and no additional borrowings are provided for under the agreement. ##### [310-20-35-24](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-24) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:1861135aafa478cc71e2afda2e97e819349f6f1af8ae2faabe84d9643ad980dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, if the loan agreement provides the borrower with the option to convert a one-year revolving line of credit to a five-year term loan, during the term of the revolving line of credit the lender would recognize the net fees or costs as income on a straight-line basis using the combined life of the revolving line of credit and term loan. If the borrower elects to convert the line of credit to a term loan, the lender would recognize the unamortized net fees or costs as an adjustment of yield using the interest method. If the revolving line of credit expires and borrowings are extinguished, the unamortized net fees or costs would be recognized in income upon payment. ##### [310-20-35-25](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-25) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:5fe56ae0432e7c6983010c0378b7a5dc3ab6752b4685a2f31b8b632019bbcd96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the borrower continues to have a contractual right to borrow under the revolving line of credit, net fees and costs associated with revolving lines of credit shall be amortized over the term of the revolver even if the revolver is unused for a period of time. #### Estimating Principal Prepayments ##### [310-20-35-26](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-26) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:abe17e0ceb4a2bb8db41cdb08bd474a1e5c16f53dcf30a999d5298713cebf096 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as stated in the following sentence, the calculation of the constant effective yield necessary to apply the interest method shall use the payment terms required by the loan contract, and prepayments of principal shall not be anticipated to shorten the loan term. If the entity holds a large number of similar loans for which prepayments are probable and the timing and amount of prepayments can be reasonably estimated, the entity may consider estimates of future principal prepayments in the calculation of the constant effective yield necessary to apply the interest method. If the entity anticipates prepayments in applying the interest method and a difference arises between the prepayments anticipated and actual prepayments received, the entity shall recalculate the effective yield to reflect actual payments to date and anticipated future payments. The net investment in the loans shall be adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the loans. The investment in the loans shall be adjusted to the new balance with a corresponding charge or credit to interest income. ##### [310-20-35-27](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-27) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:c45dfaecd51f71e42603b142aa56a088209fb4ac66c1bb5e19207ba631dddc11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Loans grouped together shall have sufficiently similar characteristics that prepayment experience of the loans can be expected to be similar in a variety of interest rate environments. Loans that are grouped together for purposes of applying the preceding paragraph shall have sufficiently similar levels of net fees or costs so that, in the event that an individual loan is sold, recalculation of that loan's carrying amount will be practicable. ##### [310-20-35-28](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-28) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:fc427f0b52f9ba16df0c7e69117326b37c4b9319e2b0fb7cbc3fa2b14e420d75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For loans that do qualify under paragraph [310-20-35-26](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-26), a lender may use either method for different loans and select the most appropriate method for a group of loans based on the characteristics of those loans. (For example, homogeneous mortgage loans might be aggregated while construction loans are accounted for separately.) However, once a lender has selected the appropriate method of accounting for a loan or a group of loans, a lender must continue to use the method throughout the life of the loan or group of loans. ##### [310-20-35-29](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-29) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:fce22e2becb327bad84e337970eeb8e3e7e327392e68ce8f7c93687a28a8e906 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If loan-by-loan accounting is used, net fees and costs shall be amortized over the contract life and adjusted based on actual prepayments. ##### [310-20-35-30](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-30) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:0fcbc59cbb238f070eb1a1387040b1b948332bf88c47857801654d8b875d5d27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are a number of characteristics to be considered in determining whether the lender holds a large number of similar loans for purposes of estimating prepayments in accordance with paragraph [310-20-35-26](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-26). The objective is to evaluate all characteristics that would affect the ability of the lender to estimate the behavior of a group of loans. The following are examples of some characteristics that shall be considered when aggregating loans: 1. a Loan type 2. b Loan size 3. c Nature and location of collateral 4. d Coupon interest rate 5. e Maturity 6. f Period of origination 7. g Prepayment history of the loans (if seasoned) 8. h Level of net fees or costs 9. i Prepayment penalties 10. j Interest rate type (fixed or variable) 11. k Expected prepayment performance in varying interest rate scenarios. ##### [310-20-35-31](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-31) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:ea941dcd8fd2e5d2116350359502e652fc48acf2598373b1e82e7dca85e10699 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a lender meets the requirements of paragraph [310-20-35-26](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-26) for considering principal prepayments in calculating constant effective yield, several factors shall be considered in estimating those principal prepayments. The lender shall consider historical prepayment data in making its estimate of future prepayments. Also, the lender shall consider external information, including existing and forecasted interest rates and economic conditions and published mortality and prepayment tables for similar loans. If periodic changes in estimates occur or actual prepayments are different from estimated prepayments, an adjustment will be necessary. ##### [310-20-35-32](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-32) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:48cbaa48b633cd9efffe6fd2c2276f5dc41ff054f287c65b3e0e326b7e263fe4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a lender aggregates loans for purposes of estimating prepayments and subsequently sells some of the loans, generally, the loans that are aggregated have lost their individual distinction. A pro rata calculation of net fees and costs based on the ratio of the outstanding principal balances of the loans sold would be appropriate in the gain or loss calculation. If the lender has sufficiently detailed accounting records for the aggregated loans, specific identification may be used in the gain or loss calculation. ##### [310-20-35-33](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-33) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:926f4544a2faf535437b447dee6dabc399f752635087c958d8874eff8eaba23d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For each reporting period, to the extent that the amortized cost basis of an individual callable [debt security](https://asc.understandingaccounting.org/glossary/d/#debt-security "Any security representing a creditor relationship with an entity. The term debt security also includes all of the following: Preferred stock that by its terms either must be redeemed by the issuing entity or is redeemable at the option of the investor A collateralized mortgage obligation (or other instrument) that is issued in equity form but is required to be accounted for as a nonequity instrument regardless of how that instrument is classified (that is, whether equity or debt) in the issuer's statement of financial position U.S. Treasury securities U.S. government agency securities Municipal securities Corporate bonds Convertible debt Commercial paper All securitized debt instruments, such as collateralized mortgage obligations and real estate mortgage investment conduits Interest-only and principal-only strips. The term debt security excludes all of the following: Option contracts Financial futures contracts Forward contracts Lease contracts Receivables that do not meet the definition of security and, so, are not debt securities, for example: Trade accounts receivable arising from sales on credit by industrial or commercial entities Loans receivable arising from consumer, commercial, and real estate lending activities of financial institutions.") exceeds the amount repayable by the issuer at the next call date, the excess (that is, the premium) shall be amortized to the next call date, unless the guidance in paragraph [310-20-35-26](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-26) is applied to consider estimated prepayments. For purposes of this guidance, the next call date is the first date when a call option at a specified price becomes exercisable. Once that date has passed, the next call date is when the next call option at a specified price becomes exercisable, if applicable. If there is no remaining premium or if there are no further call dates, the entity shall reset the effective yield using the payment terms of the debt security. Securities within the scope of this paragraph are those that have explicit, noncontingent call options that are callable at fixed prices and on preset dates at prices less than the amortized cost basis of the security. Whether a security is subject to this paragraph may change depending on the amortized cost basis of the security and the terms of the next call option. #### Lending Transactions Unrelated to the Origination of Loans ##### [310-20-35-34](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-34) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:d63af1aeca40bf66af4aabd1e36757567033fa36be89138fdaff01a9d29ed82e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lender may receive fees for lending transactions unrelated to the origination of loans. For example, a borrower may pay a fee to the lender for extending the contractual maturity of an existing loan, for converting an adjustable-rate mortgage to a fixed-rate loan, or for the assumption of an existing loan by a new borrower. The fees shall be recognized over the remaining life of the loan as an adjustment of yield. In each situation, the lender has made some form of concession to the initial or underlying borrower by altering the original terms of the initial underwriting; thus, any fees received shall be recognized as an adjustment of yield over the remaining life of the loan. #### Blended-Rate Loans ##### [310-20-35-35](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-35) Pending content: no Source downloaded (UTC): 2026-09-09T23:26:00.817Z to 2026-09-09T23:26:00.817Z Record version: sha256:9de0c65a959b64f11b955da7326f8a2f57dd6af8b07dd085316b0dd8a50e54a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A blended-rate loan yields an interest rate between the existing loan rate and the market rate. The resulting loan is subject to the same underwriting standards as all other new loans. This arrangement is considered a refinancing but it does not meet the yield criteria prescribed in paragraph [310-20-35-9](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-9). Thus, the unamortized net fees and costs on the existing loan as well as the net fees and costs relating to the refinancing shall carry over to the new loan because the blended rate is below the market rate of loans with similar collection risks made to the lender's other customers.