# ASC 325-940: Investments—Other — Financial Services—Brokers and Dealers

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/325/940/)

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.

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## ASC 325-940: Investments—Other — Financial Services—Brokers and Dealers

### Machine-generated study aids

```json
{
  "summary": "This subtopic tells broker-dealers in securities how to account for equity investments or financing they provide to another entity as part of a financial-restructuring transaction, including investments made through a \"bridge entity\" formed to pool funds from several sources. Such investments (and related receivables and debt and equity securities) are measured initially at fair value (325-940-30-1) and subsequently at fair value (325-940-35-1). Consolidation of majority-owned investees is addressed by the broker-dealer consolidation guidance in 940-810-45-1.",
  "key_points": [
    "The subtopic applies to broker-dealers in securities that make equity investments in, or provide financing to, another entity in connection with financial-restructuring transactions (325-940-05-1).",
    "Investments may be direct or made through a 'bridge entity' organized to accumulate funds from several sources sufficient to make the investment (325-940-05-1).",
    "Scope follows the broker-dealer Overall Subtopic (940-10-15), and receivables and investments in debt and equity securities that are part of a financial-restructuring transaction fall under this guidance (325-940-15-1; 325-940-15-2).",
    "Initial measurement of such equity or financing investments is at fair value (325-940-30-1).",
    "Subsequent measurement of such investments is also at fair value—no cost or amortized-cost model applies (325-940-35-1).",
    "For majority-owned investee entities, consolidation guidance is found at 940-810-45-1 (325-940-45-1)."
  ],
  "categories": [
    "Initial measurement",
    "Subsequent measurement",
    "Fair value",
    "Industry-specific"
  ],
  "audience_level": "intermediate",
  "student_note": "The takeaway is simple but easy to miss: broker-dealer bridge investments in restructurings are carried at fair value both at inception and thereafter, unlike ordinary equity-method or cost-basis investments. A common misunderstanding is assuming a bridge loan is a receivable carried at amortized cost—here, if it is part of the financial-restructuring transaction, fair value governs, and majority ownership can still trigger consolidation under 940-810.",
  "related_topics": [
    "940-10",
    "940-325",
    "940-810",
    "820",
    "321",
    "323"
  ],
  "key_concepts": [
    "broker-dealers in securities",
    "financial-restructuring transaction",
    "bridge entity",
    "fair value measurement",
    "equity investment",
    "bridge financing",
    "majority-owned investee",
    "debt and equity securities"
  ]
}
```

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## ASC 325-940-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/325/940/#05-overview-and-background)

SEC content: no

##### [325-940-05-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-05-1)

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This Subtopic addresses financial-restructuring transactions by brokers and dealers in securities (broker-dealers). Specifically, a broker-dealer may make investments in the form of equity or provide financing to another entity in connection with financial-restructuring transactions. These investments may take many forms, including a direct investment or an investment in an entity (sometimes referred to as a bridge entity) that is established for the purpose of accumulating funds from several sources sufficient to make the investment.

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## ASC 325-940-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/325/940/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [325-940-15-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-15-1)

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This Subtopic follows the same Scope and Scope exceptions as outlined in the Overall Subtopic (see Section 940-10-15) with specific qualifications noted below.

#### Other Considerations

##### [325-940-15-2](https://asc.understandingaccounting.org/asc/325/940/#325-940-15-2)

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Receivables and investments in debt and equity securities that are part of a financial-restructuring transaction (as described in paragraphs [940-325-05-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-05-1), [940-325-30-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-30-1) and [940-325-35-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-35-1)) are subject to the related guidance in this Subtopic.

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## ASC 325-940-30: 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/325/940/#30-initial-measurement)

SEC content: no

#### Financial-Restructuring Transactions

##### [325-940-30-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-30-1)

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Investments in the form of equity or financing provided to another entity in connection with financial-restructuring transactions shall be measured initially 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.").

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## ASC 325-940-35: 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/325/940/#35-subsequent-measurement)

SEC content: no

#### Financial-Restructuring Transactions

##### [325-940-35-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-35-1)

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Investments in the form of equity or financing provided to another entity in connection with financial-restructuring transactions shall be measured 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.").

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## ASC 325-940-45: 45 Other Presentation Matters

[Read section](https://asc.understandingaccounting.org/asc/325/940/#45-other-presentation-matters)

SEC content: no

##### [325-940-45-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-45-1)

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For guidance on consolidation of majority-owned investee entities, see paragraph [940-810-45-1](https://asc.understandingaccounting.org/asc/810/940/#810-940-45-1).

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## ASC 325-940-S00: SEC 00 Status

[Read section](https://asc.understandingaccounting.org/asc/325/940/#sec-00-status)

SEC content: yes

##### [325-940-S00-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-S00-1)

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The following table identifies the changes made to this Subtopic.

<table class="asc-table" id="SL6569703-165799"><tbody><tr><td class="entry"><strong class="ph b">Paragraph</strong></td><td class="entry"><strong class="ph b">Action</strong></td><td class="entry"><strong class="ph b">Accounting Standards Update</strong></td><td class="entry"><strong class="ph b">Date</strong></td></tr><tr><td class="entry"></td><td class="entry"></td><td class="entry"></td><td class="entry"></td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/325/940/#325-940-S35-1" class="xref">940-325-S35-1</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-10/" class="xref">Accounting Standards Update No. 2009-10</a></td><td class="entry">09/18/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/325/940/#325-940-S99-1" class="xref">940-325-S99-1</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-10/" class="xref">Accounting Standards Update No. 2009-10</a></td><td class="entry">09/18/2009</td></tr></tbody></table>

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## ASC 325-940-S35: SEC 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/325/940/#sec-35-subsequent-measurement)

SEC content: yes

#### Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management

##### [325-940-S35-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-S35-1)

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See paragraph [940-325-S99-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-S99-1), SEC Observer Comment: Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management, for SEC Staff views on accounting for nonderivative energy trading contracts for brokers and dealers.

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## ASC 325-940-S99: SEC 99 SEC Materials

[Read section](https://asc.understandingaccounting.org/asc/325/940/#sec-99-sec-materials)

SEC content: yes

#### SEC Staff Guidance

##### [325-940-S99-1](https://asc.understandingaccounting.org/asc/325/940/#325-940-S99-1)

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The guidance prohibiting mark-to-market accounting for nonderivative energy trading contracts (see paragraph [932-330-35-1](https://asc.understandingaccounting.org/asc/330/932/#330-932-35-1)) is equally applicable to brokers and dealers, as the Guide for brokers and dealers in securities does not afford brokers and dealers special treatment in that regard.