# ASC 323-740-35: Investments—Equity Method and Joint Ventures — Income Taxes—Proportional Amortization Method — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/323/740/#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): 2026-09-09T23:41:22.838Z to 2026-09-09T23:41:22.838Z Record version: sha256:400f40279df216cfc5d1b680b8d6270713ef79f5eb6a244c91d661b0a1c642ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 323-740-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/323/740/#35-subsequent-measurement) SEC content: no ### Proportional Amortization Method ##### [323-740-35-1](https://asc.understandingaccounting.org/asc/323/740/#323-740-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:41:22.838Z to 2026-09-09T23:41:22.838Z Record version: sha256:4b5e1e90b2570172c60ef115aafb6f045d30dea378d4d9c3aedb931d8c3638a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses the methodology for measuring an investment that is accounted for using the proportional amortization method. ##### [323-740-35-2](https://asc.understandingaccounting.org/asc/323/740/#323-740-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:41:22.838Z to 2026-09-09T23:41:22.838Z Record version: sha256:a397150800bbd0648b628047375d5927172ef214b9703656d78d1284c23434cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the proportional amortization method, the investor amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits allocated to the investor. The amortization amount shall be calculated as follows: 1. a The initial investment balance less any expected residual value of the investment, multiplied by 2. b The percentage of actual income tax credits and other income tax benefits allocated to the investor in the current period divided by the total estimated income tax credits and other income tax benefits expected to be received by the investor over the life of the investment. ##### [323-740-35-3](https://asc.understandingaccounting.org/asc/323/740/#323-740-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:41:22.838Z to 2026-09-09T23:41:22.838Z Record version: sha256:f45021038f349d06ba37a54ccebf50b0e98c4e5a0e8c1e8d94b5da7ff5ffd5d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [323-740-55-2](https://asc.understandingaccounting.org/asc/323/740/#323-740-55-2)) illustrates the application of the proportional amortization method to a limited liability investment that generates income tax credits and other income tax benefits from a tax credit program. Example 2 (see paragraph [323-740-55-11](https://asc.understandingaccounting.org/asc/323/740/#323-740-55-11)) illustrates the application of the proportional amortization method to a limited partnership investment that generates income tax credits, other income tax benefits, and non-income-tax-related benefits from a tax credit program. ##### [323-740-35-4](https://asc.understandingaccounting.org/asc/323/740/#323-740-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:41:22.838Z to 2026-09-09T23:41:22.838Z Record version: sha256:5aeb97b693ab4232d82b9766f06a85af7046c9338e562f2cddb8424031d47c5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a practical expedient, an investor is permitted to amortize the initial cost of the investment in proportion to only the income tax credits allocated to the investor if the investor reasonably expects that doing so would produce a measurement that is substantially similar to the measurement that would result from applying the requirement in paragraph [323-740-35-2](https://asc.understandingaccounting.org/asc/323/740/#323-740-35-2). ##### [323-740-35-5](https://asc.understandingaccounting.org/asc/323/740/#323-740-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:41:22.838Z to 2026-09-09T23:41:22.838Z Record version: sha256:10e9e1ffa180e2418ef53c48317a510c3332d048a0590e738ffec8c5ab9af7ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any expected residual value of the investment shall be excluded from the proportional amortization calculation. Non-income-tax-related benefits received from operations of the limited liability entity shall be included in pre-tax earnings when realized or realizable. Gains or losses on the sale of the investment, if any, shall be included in pre-tax earnings at the time of sale. ##### [323-740-35-6](https://asc.understandingaccounting.org/asc/323/740/#323-740-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:41:22.838Z to 2026-09-09T23:41:22.838Z Record version: sha256:65c3583b2f3c41fd1a88b201e15e1c2b5da616f2bfb03e6d5a9fe8519c7965f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment shall be tested for impairment when events or changes in circumstances indicate that it is more likely than not that the carrying amount of the investment will not be realized. An impairment loss shall be measured as the amount by which the carrying amount of an investment exceeds its fair value. A previously recognized impairment loss shall not be reversed.