# ASC 320-946-35: Investments—Debt Securities — Financial Services—Investment Companies — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/320/946/#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): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:899fc92c0014997d55e3584f2d6b1268cfa34a21a65a2aeb49254dd2e8c9aa1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 320-946-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/320/946/#35-subsequent-measurement) SEC content: no ##### [320-946-35-1](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:93845e8e10f838d7def6a36c978e1dddecfb6d01dc73833791c6b6b0f8a86a73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company shall measure investments in debt and equity securities subsequently at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."). #### Methods of Valuing Investments ##### [320-946-35-2](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:78d9d0dca37c6812686b63a455a65e1d78c61445f26dceff0bd42208d1c3751f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Valuing market-traded securities—that is, securities listed and traded on one or more securities exchanges, or unlisted securities traded regularly in over-the-counter markets (for example, U.S. Treasury bonds, notes and bills or stocks traded in the National Market System of the National Association of Securities Dealers Automated Quotations \[NASDAQ\] Stock Market)—ordinarily is not difficult, because quotations of completed transactions are published daily, or price quotations are readily obtainable from financial reporting services or individual broker-dealers. ##### [320-946-35-3](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:41e285ffa584f7b7561bff455d11e87767898d49e6bad11d32ab6376ae0a14c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A security traded in an active market on the valuation date shall be valued at the last quoted sales price. ##### [320-946-35-4](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:a637a7e983215a451a62b1af374ef7782c73ac78345cfdf8723a9e0e7da1ce9a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general, the discussion of valuation of securities in this Subtopic also applies to foreign securities. Portfolio securities that are traded primarily on foreign securities exchanges shall be valued at the functional currency (usually the U.S. dollar equivalent) values for such securities on their exchanges. #### Dividends ##### [320-946-35-5](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:66770f39c3118258553a1e02f8ee6be41f2992b6536a294d08d017f628b42594 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Dividends on investment securities shall be recorded on the ex-dividend date. Distributions that represent [returns of capital](https://asc.understandingaccounting.org/glossary/r/#return-of-capital "Distributions by investment companies in excess of tax-basis earnings and profits.") shall be credited to investment cost rather than to investment income. ##### [320-946-35-6](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:89045adb54f00ad80d4dd121ffadb6a8f14f91e1114ff28278e190b09319fbae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Stock splits and stock dividends in shares of the same class as the shares owned are not income to the investment company. However, dividends for which the recipient has the choice to receive cash or stock are usually recognized as investment income in the amount of the cash option, because in such cases cash is usually the best evidence of fair value of the stock. ##### [320-946-35-7](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:b8653577cb1c0dcdcd70c90973be4d082fefc9017d9771dfd6af39268151e4eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other noncash dividends shall be recognized as investment income at the fair value of the property received. ##### [320-946-35-8](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:8a9baad2b9d61f9a8cdee646b5eed338bd84255809d556da36a1c2eac7750089 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Stock rights (that is, subscription rights) received shall be allocated a prorated portion of the cost basis of the related investment; however, allocation is not required if the fair value of the rights is 15 percent or less of the fair value of the investment company's holdings. ##### [320-946-35-9](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:4a848e1191699b13682143c64a7f720fc855be204cfbdd0761c9c3dd361e48f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash dividends declared on stocks for which the securities portfolio reflects a short position as of the record date shall be recognized as an expense on the ex-dividend date. #### High-Yield Debt Securities ##### [320-946-35-10](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:8d492a9f13c19695b2be462df212293242d11eafafce8d52c07ae38551dc13f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment company shall use the [interest method](https://asc.understandingaccounting.org/glossary/i/#interest-method "The method used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period.") (see paragraph [835-30-35-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-2)) to determine interest income on [payment-in-kind bonds](https://asc.understandingaccounting.org/glossary/p/#payment-in-kind-bonds "Bonds in which the issuer has the option at each interest payment date of making interest payments in cash or in additional debt securities. Those additional debt securities are referred to as baby or bunny bonds. Baby bonds generally have the same terms, including maturity dates and interest rates, as the original bonds (parent payment-in-kind bonds). Interest on baby bonds may also be paid in cash or in additional like-kind debt securities at the option of the issuer."). ##### [320-946-35-11](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:35049c1f458e5dde0f0fc0ed667bce040e1029cf23de1bf207fb5b36d5f37b2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To the extent that interest income to be received in the form of [baby bonds](https://asc.understandingaccounting.org/glossary/b/#baby-bonds "See Payment-in-Kind Bonds.") is not expected to be realized, a reserve against income shall be established. Specifically, the investment company shall determine periodically that the total amount of interest income recorded as receivable, plus the initial cost of the underlying payment-in-kind bond, does not exceed the fair value of those assets. ##### [320-946-35-12](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:8d101f06347789e23b1165c383e28562e1439a585607beb6c7f601db86ffaef8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Income on [step bonds](https://asc.understandingaccounting.org/glossary/s/#step-bonds "Bonds that involve a combination of deferred-interest payment dates and increasing interest payment amounts over the bond lives and, thus, bear some similarity to zero-coupon bonds and to traditional debentures.") should be recognized using the interest method (see paragraph [835-30-35-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-2)). ##### [320-946-35-13](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:307ffcff16e04366c8435bfb9a0dbb688232bb99d82eb22937ca0db13efb81f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To the extent that interest income is not expected to be realized, a reserve against income shall be established. Specifically, the sum of the acquisition amount of the bond and the discount to be amortized shall not exceed the undiscounted future cash collections that are both reasonably estimable and probable. #### Expenditures in Support of Defaulted Debt Securities ##### [320-946-35-14](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:7878476d058cee6e3bebb84c769841215d769fe8759b7a6792d176febf3c5296 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All [capital infusions](https://asc.understandingaccounting.org/glossary/c/#capital-infusions "Expenditures made directly to the issuer to ensure that operations are completed, thereby allowing the issuer to generate cash flows to service the debt. Such expenditures are usually nonrecurring. In certain cases, bondholders may receive additional promissory notes, or the original bond instrument may be amended to provide for repayment of the capital infusions.") shall be recorded as additions to the cost bases of related securities. ##### [320-946-35-15](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:0bfd93b1456179d069f70f3da667fec9c1d66e25508e14c96c761bb1d6a24715 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Workout expenditures](https://asc.understandingaccounting.org/glossary/w/#workout-expenditures "Professional fees (legal, accounting, appraisal) paid to entities unaffiliated with the investment company's advisor or sponsor in connection with any of the following: Capital infusions Restructurings or plans of reorganization Ongoing efforts to protect or enhance an investment The pursuit of other claims or legal actions.") that are incurred as part of negotiations of the terms and requirements of capital infusions, or that are expected to result in the restructuring of or a plan of reorganization for an investment shall be recorded as realized losses. ##### [320-946-35-16](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:14702d3387b5d0064fb1d1eab340d0a25c8865f736ef1c77d7bd2ad9448b339c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Ongoing expenditures to protect or enhance an investment, or expenditures incurred to pursue other claims or legal actions, shall be treated as operating expenses. #### Interest Receivable Purchased on Defaulted Debt Securities ##### [320-946-35-17](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:5cc604f354609c5e33f70b7e594d0da29a9fc7ee4de80b366655a6bdb4fedf48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of interest receivable on defaulted debt securities written off that was recognized as interest income shall be treated as a reduction of interest income. ##### [320-946-35-18](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:35b906f5f34be006bbc3043f2bb167f7cd0b8b7c2eb08d8c7f078f8ccfbb94c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Writeoffs of purchased interest should be reported as both of the following: 1. a Increases to the cost basis of the security 2. b Unrealized losses until the security is sold. ##### [320-946-35-19](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:86b0405de46dcaf4a4cbcb468627184cfdac03722c06c4ab4662fb6298d6fe3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Those reserves shall be recorded when they become probable and estimable in accordance with the guidance in Subtopic 450-20. #### Premiums and Discounts ##### [320-946-35-20](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:641b59af24c99c4c62a2ac6e88995a83e082248d7dcc13c9b92ee4ebd4fa9935 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premiums and discounts shall be amortized using the interest method. The amortization of premiums on purchased callable debt securities that have explicit, noncontingent call features that are callable at fixed prices on preset dates shall be consistent with the guidance in paragraph [310-20-35-33](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-33). #### Proceeds from Litigation Awards ##### [320-946-35-21](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:36:47.298Z to 2026-09-09T23:36:47.298Z Record version: sha256:915ea0143068399d63fd2ef63a821c584f670a91e9ce2d60e3fcf90bfea95a09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Proceeds from litigation relating to an investment security shall be accounted for as follows: 1. a If the investment company holds the securities, the proceeds are accounted for as a reduction of cost. 2. b If the investment company no longer holds the securities, the proceeds are accounted for as realized gains on security transactions.