# ASC 325-40-15: Investments—Other — Beneficial Interests in Securitized Financial Assets — 15 Scope and Scope Exceptions Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/325/40/#15-scope-and-scope-exceptions) 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): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:e47dd3909fbc701038203d69548c11a4abfa68209bbe26dfa54e073956c208f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 325-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/325/40/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [325-40-15-1](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:f6d6545d5f2508f25518500713e8901d558e640a6b592767e439de5c00d214b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities. #### Instruments ##### [325-40-15-2](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:cb4a98600e989d05c8942e8ccb051c43896ae33c640bf368860f3412e2e48890 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to a transferor's interests in securitization transactions that are accounted for as sales under Topic 860 and purchased [beneficial interests](https://asc.understandingaccounting.org/glossary/b/#beneficial-interests "Rights to receive all or portions of specified cash inflows received by a trust or other entity, including, but not limited to, all of the following: Senior and subordinated shares of interest, principal, or other cash inflows to be passed-through or paid-through Premiums due to guarantors Commercial paper obligations Residual interests, whether in the form of debt or equity.") in securitized financial assets. ##### [325-40-15-3](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:8d33a9eb5fcaaa0b0759ac0e49d6116b87b40ac072b7d2be60dc88e2f11857c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to beneficial interests that have all of the following characteristics: 1. a Are either debt securities under Subtopic 320-10 or required to be accounted for like debt securities under that Subtopic pursuant to paragraph [860-20-35-2](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-2). 2. b Involve securitized financial assets that have contractual cash flows (for example, loans, receivables, debt securities, and guaranteed lease residuals, among other items). Thus, the guidance in this Subtopic does not apply to securitized financial assets that do not involve contractual cash flows (for example, common stock equity securities, among other items). See paragraph [320-10-35-38](https://asc.understandingaccounting.org/asc/320/10/#320-10-35-38) for guidance on beneficial interests involving securitized financial assets that do not involve contractual cash flows. 3. c Do not result in consolidation of the entity issuing the beneficial interest by the holder of the beneficial interests. 4. d [Subparagraph superseded by Accounting Standards Update No. 2016-13](https://asc.understandingaccounting.org/updates/asu-2016-13/). 5. e Are not beneficial interests in securitized financial assets that have both of the following characteristics: 1. 1 Are of high credit quality (for example, guaranteed by the U.S. government, its agencies, or other creditworthy guarantors, and loans or securities sufficiently collateralized to ensure that the possibility of credit loss is remote) 2. 2 Cannot contractually be prepaid or otherwise settled in such a way that the holder would not recover substantially all of its recorded investment. ##### [325-40-15-4](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:0eb515d51923fa4b814011aea67575382f51f33187991af5718589177bd61f07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on recognition of interest income on beneficial interests that have both of the characteristics described in (e) in the preceding paragraph, see Subtopic 320-10. For guidance on determining the allowance for credit losses on beneficial interests that have both of the characteristics described in (e) in the preceding paragraph (other than trading debt securities), see Topic 326 on measurement of credit losses. ##### [325-40-15-5](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:2370e314d24aef6a4211b1781e3047a2166694e7747ae17ba9a6e15ffa28d989 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A beneficial interest in securitized financial assets that is in equity form may meet the definition of a [debt security](https://asc.understandingaccounting.org/glossary/d/#debt-security "Any security representing a creditor relationship with an entity. The term debt security also includes all of the following: Preferred stock that by its terms either must be redeemed by the issuing entity or is redeemable at the option of the investor A collateralized mortgage obligation (or other instrument) that is issued in equity form but is required to be accounted for as a nonequity instrument regardless of how that instrument is classified (that is, whether equity or debt) in the issuer's statement of financial position U.S. Treasury securities U.S. government agency securities Municipal securities Corporate bonds Convertible debt Commercial paper All securitized debt instruments, such as collateralized mortgage obligations and real estate mortgage investment conduits Interest-only and principal-only strips. The term debt security excludes all of the following: Option contracts Financial futures contracts Forward contracts Lease contracts Receivables that do not meet the definition of security and, so, are not debt securities, for example: Trade accounts receivable arising from sales on credit by industrial or commercial entities Loans receivable arising from consumer, commercial, and real estate lending activities of financial institutions."). For example, some beneficial interests issued in the form of equity represent solely a right to receive a stream of future cash flows to be collected under preset terms and conditions (that is, a creditor relationship), while others, according to the terms of the special-purpose entity, must be redeemed by the issuing entity or must be redeemable at the option of the investor. Consequently, those beneficial interests would be within the scope of both this Subtopic and Topic 320 because they are required to be accounted for as debt securities under that Topic. ##### [325-40-15-6](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:65a1df9542d62fb129b413f9c67f3fb27bba83d2e954a0d3a7a02d0b1437aa43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Beneficial interests issued in the form of equity that do not meet the criteria in the preceding paragraph shall be accounted for under the applicable provisions of Subtopic 323-10, the applicable consolidation guidance (see, for example, Subtopic 810-10), or Subtopic 321-10. ##### [325-40-15-7](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:b6e5702a2a2996ba8e9631615385573d998a6f7fc217cd1afdb3c6507fb2f00f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For income recognition purposes, beneficial interests classified as trading are included in the scope of this Subtopic because it is practice for certain industries (such as banks and investment companies) to report interest income as a separate item in their income statements, even though the investments are accounted for at fair value. ##### [325-40-15-8](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:7ef1a6d0605754ab910ded2c6b1befd25a3b2132a3e14802182167cabebdec25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Included in the scope of this Subtopic are the host contract portion of a hybrid beneficial interest that requires separate accounting for an embedded derivative under paragraphs [815-15-25-1](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-1); [815-15-25-11 through 25-14](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-11) ; and [815-15-25-26 through 25-29](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-26) when the host contract otherwise meets the scope of this Subtopic. The issue of when and how a hybrid contract is to be separated into its component parts is an implementation issue of Topic 815 and, therefore, not within the scope of this Subtopic. ##### [325-40-15-9](https://asc.understandingaccounting.org/asc/325/40/#325-40-15-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:44:33.248Z to 2026-09-09T23:44:33.248Z Record version: sha256:633c6c362bb02f84ce0778bcb62c24f925b268f1b7ab65b8f252c5e9f67bc051 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to hybrid beneficial interests measured at fair value pursuant to paragraphs [815-15-25-4 through 25-6](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-4) for which the transferor does not report interest income as a separate item in its income statements.