# ASC 323-970-35: Investments—Equity Method and Joint Ventures — Real Estate—General — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/323/970/#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): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:a110aa2b5e36825b24458110950360a6b8f58438a5e8c189a54482a8951d88d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 323-970-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/323/970/#35-subsequent-measurement) SEC content: no #### Applying the Equity Method ##### [323-970-35-1](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:a6e4ba2f9102289b25cb1e6870b45bc69966b0578deb251a94bd17db5644d0cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Section applies to investments accounted for by the equity method. ##### [323-970-35-2](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:0f77b51fc385f0358dea7755d33226673558e2b3b535f43d750608182548629d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Investors shall record their share of the real estate venture's losses, determined in conformity with generally accepted accounting principles (GAAP), without regard to unrealized increases in the estimated fair value of the venture's assets. ##### [323-970-35-3](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:19d011c2194a437c3e084637ed11ddefb0354b3d7e5790959ff2fc8a2be0a994 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investor that is liable for the obligations of the venture or is otherwise committed to provide additional financial support to the venture shall record its equity in [real estate venture](https://asc.understandingaccounting.org/glossary/r/#real-estate-venture "Any of the following: a joint venture, a general partnership, a limited partnership, and an undivided interest.") losses in excess of its investment, including loans and advances. ##### [323-970-35-4](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:da414a4f1893a780ccd74c08d275072c7ee6df8a29e7840b46fab6120fd9740c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are examples of such circumstances: 1. a The investor has a legal obligation as a guarantor or general partner. 2. b The investor has indicated a commitment, based on considerations such as business reputation, intra-entity relationships, or credit standing, to provide additional financial support. Such a commitment might be indicated by previous support provided by the investor or statements by the investor to other investors or third parties of the investor's intention to provide support. ##### [323-970-35-5](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:c4aa6464a6eca0e68d24eef707c58f88234ea448826c0c92d3fed66b05435fe1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investor, though not liable or otherwise committed to provide additional financial support, shall provide for losses in excess of investment when the imminent return to profitable operations by the venture appears to be assured. For example, a material nonrecurring loss of an isolated nature, or start-up losses, may reduce an investment below zero though the underlying profitable pattern of an investee is unimpaired. ##### [323-970-35-6](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:d195916cc4c30bec4805b412fc975909728755548abc8ac9a8197b9ad5adf0b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investor in a real estate venture shall report its recorded share of losses in excess of its investment, including loans and advances, as a liability in its financial statements. ##### [323-970-35-7](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:f90dd488a4579f84993c8e624e008e144f4e17ad0bf95c830045bc7dc978bbdc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an investor does not recognize venture losses in excess of its investment, loans, and advances and the venture subsequently reports net income, the investor shall resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period in which equity accounting was suspended. ##### [323-970-35-8](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:e47e1da5229316b0debb5aacdbd519b83f698f47665b391b57b8f812ffb0fb8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is probable that one or more investors cannot bear their share of losses, the remaining investors shall record their proportionate shares of venture losses otherwise allocable to investors considered unable to bear their share of losses. This does not apply for real property jointly owned and operated as undivided interests in assets if the claims or liens of investors' creditors are limited to investors' respective interests in such property. ##### [323-970-35-9](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:9175a845712645cdb45acb51ec52fca9dbfdbe98099d8932c1ef50eb56929f0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When the venture subsequently reports income, those remaining investors shall record their proportionate share of the venture's net income otherwise allocable to investors considered unable to bear their share of losses until such income equals the excess losses they previously recorded. An investor who is deemed by other investors to be unable to bear its share of losses shall continue to record its contractual share of losses unless it is relieved from the obligation to make payment by agreement or operation of law. ##### [323-970-35-10](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:f718b3c2639cd8022845bf27d362dd314c54264f089d29cd175661be773486bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting by an investor for losses otherwise allocable to other investors shall be governed by the provisions of Subtopic 450-20 relating to loss contingencies. Accordingly, the investor shall record a proportionate share of the losses otherwise allocable to other investors if it is probable that they will not bear their share. In this connection, each investor shall look primarily to the fair value of the other investors' interests in the venture and the extent to which the venture's debt is nonrecourse in evaluating their ability and willingness to bear their allocable share of losses. An investor may not be able to apply the general rule to an investment in an [undivided interest](https://asc.understandingaccounting.org/glossary/u/#undivided-interest "An ownership arrangement in which two or more parties jointly own property, and title is held individually to the extent of each party's interest.") because the extent to which the interests of other investors are encumbered by liens may not be known. However, there may be satisfactory alternative evidence of an ability and willingness of other investors to bear their allocable share of losses. Such evidence might be, for example, that those investors previously made loans or contributions to support cash deficits, possess satisfactory financial standing (as may be evidenced by satisfactory credit ratings), or have provided adequately collateralized guarantees. ##### [323-970-35-11](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:d69b59daa5b7d3c8479189c4f3742e55b235b94101af13877896d72fdc75178a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 323-10-35 for additional guidance regarding accounting by equity method investor for investee losses when the investor has both loans and equity interest. ##### [323-970-35-12](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:efc050c8de2bc3bfd499324e5ba0544e7381b7b9755e1fd883ab9ae7bca51a8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A loss in value of an investment other than a temporary decline shall be recognized. Such a loss in value may be indicated, for example, by a decision by other investors to cease providing support or reduce their financial commitment to the venture. ##### [323-970-35-13](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:3ac47078f554449a77ef0faf15da05ea474ede547a83c35471494202d6ccde4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a transaction with a real estate venture confirms that there has been a loss in the value of the asset sold that is other than temporary and that has not been recognized previously, the loss shall be recognized on the books of the transferor. ##### [323-970-35-14](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:083728146db6c9323fd55c8ed5ffcae62dc5605ed907ae88e39289b3a224f7b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Intra-entity profit shall be eliminated by the investor in relation to the investor's [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") in the investee, unless one of the exceptions in paragraph [323-10-35-7](https://asc.understandingaccounting.org/asc/323/10/#323-10-35-7) applies. An investor that controls the investee and enters into a transaction with the investee shall eliminate all of the interentity profit on assets remaining within the group. (See Subsection 323-30-35 for accounting guidance concerning partnership ownership interest.) ##### [323-970-35-15](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:5eb64962d6f3fbfe865e837d7d0eeddd3c5a13810917eced808c8a23496aa603 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A sale of property in which the seller holds or acquires a noncontrolling interest in the buyer shall be evaluated in accordance with the guidance in paragraphs [360-10-40-3A through 40-3B](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-3A) . No profit shall be recognized if the seller controls the buyer. ##### [323-970-35-16](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:ae1bed15b583315f6041773ab7cfa3bd0b53c357c9ec4bcefd9268d351ad1796 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Venture agreements may designate different allocations among the investors for any of the following: 1. a Profits and losses 2. b Specified costs and expenses 3. c Distributions of cash from operations 4. d Distributions of cash proceeds from liquidation. ##### [323-970-35-17](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:1dc5cd5fd6383a3d6704ca5a6ca3ce8c4f32bc5f213a4798c08a83732428faea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Such agreements may also provide for changes in the allocations at specified times or on the occurrence of specified events. Accounting by the investors for their equity in the venture's earnings under such agreements requires careful consideration of substance over form and consideration of underlying values as discussed in paragraph [970-323-35-10](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-10). To determine the investor's share of venture net income or loss, such agreements or arrangements shall be analyzed to determine how an increase or decrease in net assets of the venture (determined in conformity with GAAP) will affect cash payments to the investor over the life of the venture and on its liquidation. Specified profit and loss allocation ratios shall not be used to determine an investor's equity in venture earnings if the allocation of cash distributions and liquidating distributions are determined on some other basis. For example, if a venture agreement between two investors purports to allocate all depreciation expense to one investor and to allocate all other revenues and expenses equally, but further provides that irrespective of such allocations, distributions to the investors will be made simultaneously and divided equally between them, there is no substance to the purported allocation of depreciation expense. ##### [323-970-35-18](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:ac2394d8d3660ae056b896a49fb5e8c07a9a5ff167c87164dddac126a524cab8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section [323-30-25](https://asc.understandingaccounting.org/asc/323/30/#25-recognition) for guidance concerning partnership profit recognition. #### Accounting for Other Transactions with a Real Estate Venture ##### [323-970-35-19](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:60d23f52820760ded5870662e0f8cfbd0b154763dbafa3e7bfb5eadb6b670248 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See the [Acquisition, Development, and Construction Subsection](https://asc.understandingaccounting.org/asc/310/10/#35-subsequent-measurement) of Section 310-10-35 for additional guidance concerning subsequent measurement of [acquisition, development, and construction arrangements](https://asc.understandingaccounting.org/glossary/a/#acquisition-development-and-construction-arrangements "Acquisition, development, or construction arrangements, in which a lender, usually a financial institution, participates in expected residual profit from the sale or refinancing of property.") that are required to be accounted for as real estate joint ventures under that guidance. ##### [323-970-35-20](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:d1908a6666be20458e4a49d16f8ea941e3e6339dc0e66408e52d693951b1df83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the real estate industry, the accounts of a venture may reflect accounting practices, such as those used to prepare tax basis data for investors, that vary from GAAP. If the financial statements of the investor are to be prepared in conformity with GAAP, such variances that are material shall be eliminated in applying the equity method. ##### [323-970-35-21](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:5571dc2a35d304ff2004513c2d00b8ca758438d26b5bf05fc8cd2a24e01756a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 323-30-35 regarding income tax to be provided on profits accrued by investor-partners and tax liabilities applicable to partnership interests. ##### [323-970-35-22](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:42:55.650Z to 2026-09-09T23:42:55.650Z Record version: sha256:a24cf738e844a82c93901c8c3cdf53ee80150ca2f332c04e1492db3b2191ca4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest on loans and advances that are in substance capital contributions (for example, if all the investors are required to make loans and advances proportionate to their equity interests) shall be accounted for as distributions rather than as interest income by the investors.