{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/310/944/#35-subsequent-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"310","topic_title":"Receivables","subtopic":"310-944","subtopic_title":"Financial Services—Insurance","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Mortgage Loans","paragraphs":[{"citation":"310-944-35-1","para":"35-1","html":"Mortgage loans recognized under paragraph 944-310-25-1 shall be measured subsequently at outstanding principal balances if acquired at par value, or at amortized cost if purchased at a discount or premium, with an allowance for estimated uncollectible amounts, if any. Paragraph 944-310-45-3 states that amortization and other related charges or credits shall be charged or credited to investment income. Paragraph 944-310-45-4 states that changes in the allowance for credit losses relating to mortgage loans shall be included in income as prescribed in Subtopic 326-20 on financial instruments measured at amortized cost. Because the valuation of reinsurance recoverables depends on the terms of the reinsurance contract and on estimates used in measuring the liabilities relating to the reinsured contracts, this Subtopic does not stipulate a specific valuation method. An entity shall measure contingent losses relating to disputed amounts in accordance with Subtopic 450-20 on loss contingencies. However, the ceding entity shall measure expected credit losses relating to reinsurance recoverables in accordance with Subtopic 326-20 on financial instruments measured at amortized cost. If an expected period is used as the period of the financial guarantee insurance contract to measure the unearned premium revenue, an insurance entity shall adjust the prepayment assumptions when those assumptions change. The adjustment to the unearned premium revenue shall equal the adjustment to the premium receivable with no effect on earnings at the time of the adjustment. The discount rate shall be updated to a current risk-free rate only when prepayment assumptions change. Example 1 (see paragraph 944-310-55-1) illustrates the accounting when prepayment assumptions change. An insurance entity shall measure expected credit losses relating to the premium receivable in accordance with Subtopic 326-20 on financial instruments measured at amortized cost with a corresponding adjustment to earnings. The insurance entity shall consider as part of its assessment of recognition and measurement of the claim liability (see the Financial Guarantee Insurance Contracts Subsections in Subtopic 944-40) whether the premiums expected to be collected (the premium receivable) are fully collectible. Paragraph 944-605-35-16 states that in instances where a contract period is used as the period of the financial guarantee insurance contract to measure the unearned premium revenue, an insurance entity shall adjust the unearned premium revenue to reflect early principal payments as they occur. That paragraph states also that the adjustment to the unearned premium revenue shall equal the adjustment to the premium receivable.