# ASC 310-944-30: Receivables — Financial Services—Insurance — 30 Initial Measurement

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/310/944/#30-initial-measurement)

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## ASC 310-944-30: 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/310/944/#30-initial-measurement)

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#### Mortgage Loans

##### [310-944-30-1](https://asc.understandingaccounting.org/asc/310/944/#310-944-30-1)

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Mortgage loans recognized under paragraph [944-310-25-1](https://asc.understandingaccounting.org/asc/310/944/#310-944-25-1) shall be measured initially at outstanding principal balances if acquired at par value, or at cost if purchased at a discount or premium.

### Financial Guarantee Insurance Contracts

#### Receivable for Future Premiums

##### [310-944-30-2](https://asc.understandingaccounting.org/asc/310/944/#310-944-30-2)

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An insurance entity shall determine the present value of the premiums due or expected to be collected using a discount rate that reflects the risk-free rate at the inception of the contract. The risk-free rate shall be based on the contract period of the insurance contract unless the insurance entity is permitted to consider prepayments pursuant to the following paragraph. The discount amount shall be accreted on the premium receivable through earnings over that same period. Example 1 (see paragraph [944-310-55-1](https://asc.understandingaccounting.org/asc/310/944/#310-944-55-1)) illustrates application of this guidance including the method of accretion.

##### [310-944-30-3](https://asc.understandingaccounting.org/asc/310/944/#310-944-30-3)

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The period of a financial guarantee insurance contract is the expected period of risk that generally equates to the contract period. However, in some instances, the expected period of risk is significantly shorter than the full contract period due to expected prepayments. The expected period may be used only if a homogenous pool of assets underlying the insured financial obligation is contractually prepayable. In those instances, prepayment assumptions may be used to determine an expected period if those prepayments are probable and the timing and amount of prepayments can be reasonably estimated. The election to use prepayment assumptions to determine an expected period is an accounting policy decision (that is, it is not a contract-by-contract election).