# ASC 326-20-35: Financial Instruments—Credit Losses — Measured at Amortized Cost — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/326/20/#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): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:dd625ee83fbd0c8ab5a1ed865d6ac6e3757579db1980f73b4a9df2bcd119d5fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 326-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/326/20/#35-subsequent-measurement) SEC content: no #### Reporting Changes in Expected Credit Losses ##### [326-20-35-1](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-1) Pending content: yes Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:c6127fe4eecb938db1afefae79041db213a6c0f36805ef68af888957b6f237a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At each reporting date, an entity shall record an allowance for credit losses on [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity.") (including [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")) within the scope of this Subtopic. An entity shall compare its current estimate of expected credit losses with the estimate of expected credit losses previously recorded. An entity shall report in net income (as a credit loss expense or a reversal of credit loss expense) the amount necessary to adjust the allowance for credit losses for management's current estimate of expected credit losses on financial asset(s). The method applied to initially measure expected credit losses for the assets included in paragraph [326-20-30-14](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-14) generally would be applied consistently over time and shall faithfully estimate expected credit losses for financial asset(s). Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)At each reporting date, an entity shall record an allowance for credit losses on [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity.") (including [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans.")) within the scope of this Subtopic. An entity shall compare its current estimate of expected credit losses with the estimate of expected credit losses previously recorded. An entity shall report in net income (as a credit loss expense or a reversal of credit loss expense) the amount necessary to adjust the allowance for credit losses for management's current estimate of expected credit losses on financial asset(s). Except for purchased seasoned loans that are subject to the guidance in paragraph [326-20-35-1B](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-1B), the method applied to initially measure expected credit losses for the assets included in paragraph [326-20-30-14](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-14) generally would be applied consistently over time and shall faithfully estimate expected credit losses for financial asset(s). ##### [326-20-35-1A](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-1A) Pending content: yes Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:9cd7c1eb484d911b94c28797cdc3772e7789735ad37fc6d6b30096aefea71a73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)If an entity estimates expected credit losses on purchased seasoned loans using a method other than a discounted cash flow method described in paragraph [326-20-30-4](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-4), the entity may elect to measure an allowance for credit losses on purchased seasoned loans using the [amortized cost basis](https://asc.understandingaccounting.org/glossary/a/#amortized-cost-basis "The amortized cost basis is the amount at which a financing receivable or investment is originated or acquired, adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, writeoffs, foreign exchange, and fair value hedge accounting adjustments.") and apply the guidance in paragraph [326-20-30-2](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-2) as of each balance sheet date after the acquisition date. An entity shall elect this option on an acquisition-by-acquisition basis in the period that the acquisition occurs and apply it to all purchased seasoned loans recognized in that acquisition. The effect of electing this option shall be recorded in net income as a credit loss expense. ##### [326-20-35-1B](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-1B) Pending content: yes Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:121c744ab04465bd852a12a81775bd10d416e7e80f60729da6d10db67bcecb78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)If an entity elects the option in paragraph [326-20-35-1A](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-1A), the initial amortized cost basis measured in accordance with paragraph [326-20-30-13](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-13) and effective interest rate measured in accordance with paragraph [310-10-35-53B](https://asc.understandingaccounting.org/asc/310/10/#310-10-35-53B) as of the acquisition date shall not be remeasured in connection with electing this option. In addition, expected credit losses shall be measured consistently for the remaining life of the purchased seasoned loans. ##### [326-20-35-2](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:de5482c015087d2378cf44a772f74c013f82bc4633fd972cae70ebc7c2878195 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall evaluate whether a financial asset in a pool continues to exhibit similar risk characteristics with other financial assets in the pool. For example, there may be changes in credit risk, borrower circumstances, recognition of writeoffs, or cash collections that have been fully applied to principal on the basis of nonaccrual practices that may require a reevaluation to determine if the asset has migrated to have similar risk characteristics with assets in another pool, or if the credit loss measurement of the asset should be performed individually because the asset no longer has similar risk characteristics. ##### [326-20-35-3](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:b9c108588f0db012c0009788897a4561109252bff28bb4257e56141938d74359 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall adjust at each reporting period its estimate of expected credit losses on off-balance-sheet credit exposures. An entity shall report in net income (as credit loss expense or a reversal of credit loss expense) the amount necessary to adjust the liability for credit losses for management's current estimate of expected credit losses on off-balance-sheet credit exposures at each reporting date. #### Financial Assets Secured by Collateral ##### [326-20-35-4](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:138f1753749113aee8822c227beca917bc0f01d24335e728b184d518c6730898 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regardless of the initial measurement method, an entity shall measure expected credit losses based on the [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.") of the collateral at the reporting date when the entity determines that foreclosure is probable. The entity shall adjust the fair value of the collateral for the estimated costs to sell if it intends to sell rather than operate the collateral. When an entity determines that foreclosure is probable, the entity shall remeasure the [financial asset](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity.") at the fair value of the collateral at the reporting date (less costs to sell, if applicable) so that the reporting of a credit loss is not delayed until actual foreclosure. An entity also shall consider any credit enhancements that meet the criteria in paragraph [326-20-30-12](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-12) that are applicable to the financial asset when recording the allowance for credit losses. An allowance for credit losses that is added to the [amortized cost basis](https://asc.understandingaccounting.org/glossary/a/#amortized-cost-basis "The amortized cost basis is the amount at which a financing receivable or investment is originated or acquired, adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, writeoffs, foreign exchange, and fair value hedge accounting adjustments.") of the financial asset(s) shall not exceed amounts previously written off. ##### [326-20-35-5](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:e8c1a91f225fb0850c4d2e2d2d307a2295f86067cdc3b38d1fb140d83984437d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may use, as a practical expedient, the fair value of the collateral at the reporting date when recording the net carrying amount of the asset and determining the allowance for credit losses for a financial asset for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the entity's assessment as of the reporting date (collateral-dependent financial asset). If an entity uses the practical expedient on a collateral-dependent financial asset and repayment or satisfaction of the asset depends on the sale of the collateral, the fair value of the collateral shall be adjusted for estimated costs to sell. However, the entity shall not incorporate in the net carrying amount of the financial asset the estimated costs to sell the collateral if repayment or satisfaction of the financial asset depends only on the operation, rather than on the sale, of the collateral. When the fair value (less costs to sell, if applicable) of the collateral at the reporting date exceeds the amortized cost basis of the financial asset, an entity shall adjust the allowance for credit losses to present the net amount expected to be collected on the financial asset equal to the fair value (less costs to sell, if applicable) of the collateral as long as the allowance that is added to the amortized cost basis of the financial asset(s) does not exceed amounts previously written off. If the fair value of the collateral is less than the amortized cost basis of the financial asset for which the practical expedient has been elected, an entity shall recognize an allowance for credit losses on the collateral-dependent financial asset, which is measured as the difference between the fair value of the collateral, less costs to sell (if applicable), at the reporting date and the amortized cost basis of the financial asset. An entity also shall consider any credit enhancements that meet the criteria in paragraph [326-20-30-12](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-12) that are applicable to the financial asset when recording the allowance for credit losses. ##### [326-20-35-6](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:22fbdaeeb7bf2f9a421058ca85a563c8ff8c43efb298595c13cf29bcf406e0d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For certain [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity."), the borrower may be contractually required to continually adjust the amount of the collateral securing the financial asset(s) as a result of [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.") changes in the collateral. In those situations, if an entity reasonably expects the borrower to continue to replenish the collateral to meet the requirements of the contract, an entity may use, as a practical expedient, a method that compares the [amortized cost basis](https://asc.understandingaccounting.org/glossary/a/#amortized-cost-basis "The amortized cost basis is the amount at which a financing receivable or investment is originated or acquired, adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, writeoffs, foreign exchange, and fair value hedge accounting adjustments.") with the fair value of collateral at the reporting date to measure the estimate of expected credit losses. An entity may determine that the expectation of nonpayment of the amortized cost basis is zero if the fair value of the collateral is equal to or exceeds the amortized cost basis of the financial asset and the entity reasonably expects the borrower to continue to replenish the collateral as necessary to meet the requirements of the contract. If the fair value of the collateral at the reporting date is less than the amortized cost basis of the financial asset and the entity reasonably expects the borrower to continue to replenish the collateral as necessary to meet the requirements of the contract, the entity shall estimate expected credit losses for the unsecured amount of the amortized cost basis. The allowance for credit losses on the financial asset is limited to the difference between the fair value of the collateral at the reporting date and the amortized cost basis of the financial asset. #### Loans Subsequently Identified for Sale ##### [326-20-35-7](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:43f5cb9af4b4eb79711dcd5b13a4d2985c51706598e76f72dd92615a9137515a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Once a decision has been made to sell [loans](https://asc.understandingaccounting.org/glossary/l/#loan "A contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in the creditor's statement of financial position. Examples include but are not limited to accounts receivable (with terms exceeding one year) and notes receivable.") not currently classified as held for sale, those loans shall be transferred into the held-for-sale classification. See paragraph [310-10-35-48A](https://asc.understandingaccounting.org/asc/310/10/#310-10-35-48A) for guidance on transfers of nonmortgage loans between classifications and see Topic 948 for guidance on transfers of mortgage loans between classifications. The application of the writeoff guidance in paragraph [326-20-35-8](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-8) may result in a portion of the amortized cost basis being written off before the loan has been transferred to the held-for-sale classification. #### Writeoffs of Financial Assets ##### [326-20-35-8](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:0a716446a94493db7872f6a03ed6bafc2128df300ddf6c32852b6f7842539f16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Writeoffs of [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity."), which may be full or partial writeoffs, shall be deducted from the allowance. The writeoffs shall be recorded in the period in which the financial asset(s) are deemed uncollectible. ##### [326-20-35-8A](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-8A) Pending content: yes Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:a9a8dc103a7759b4025b34b44a99a6c3848079f95d06921498071c01ca5e2649 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may make an accounting policy election, at the class of financing receivable or the major security-type level, to write off accrued interest receivables by reversing interest income or recognizing credit loss expense or a combination of both. This accounting policy election should be considered separately from the accounting policy election in paragraph [326-20-30-5A](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-5A). An entity may not analogize this guidance to components of amortized cost basis other than accrued interest. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)An entity may make an accounting policy election, at the [class of financing receivable](https://asc.understandingaccounting.org/glossary/c/#class-of-financing-receivable "A group of financing receivables determined on the basis of both of the following:Risk characteristics of the financing receivableAn entity's method for monitoring and assessing credit risk.See paragraphs 326-20-55-11326-20-55-12326-20-55-13326-20-55-14 and 326-20-50-3.") or the major security-type level, to write off accrued interest receivables by reversing interest income or recognizing credit loss expense or a combination of both. This accounting policy election should be considered separately from the accounting policy election in paragraph [326-20-30-5A](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-5A). An entity may not analogize this guidance to components of amortized cost basis other than accrued interest. ##### [326-20-35-9](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:494767c127e9a324cc11fafae4ecccd7d7c548e6fff2cd318946b909b9f73ef0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2019-04](https://asc.understandingaccounting.org/updates/asu-2019-04/). #### Interest Income on Purchased Financial Assets with Credit Deterioration ##### [326-20-35-10](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-10) Pending content: yes Source downloaded (UTC): 2026-09-09T23:49:29.609Z to 2026-09-09T23:49:29.609Z Record version: sha256:8c2fbd2d0d39b323fddf7b21ea4aa1deaad3ca0472d919b8b4db3627a89f92a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not address how a creditor shall recognize interest income. See paragraphs [310-10-35-53A through 35-53C](https://asc.understandingaccounting.org/asc/310/10/#310-10-35-53A) for guidance on recognition of interest income on [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis."). See paragraph [326-20-45-3](https://asc.understandingaccounting.org/asc/326/20/#326-20-45-3) for presentation guidance. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)
Editor's Note: The content of paragraph 326-20-35-10 will change upon transition, together with a change in the heading noted below.
> Interest Income on Purchased Financial Assets with Credit Deterioration and Purchased Seasoned Loans
This Subtopic does not address how a creditor shall recognize interest income. See paragraphs [310-10-35-53A through 35-53B](https://asc.understandingaccounting.org/asc/310/10/#310-10-35-53A) for guidance on recognition of interest income on [purchased financial assets with credit deterioration](https://asc.understandingaccounting.org/glossary/p/#purchased-financial-assets-with-credit-deterioration "Acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. See paragraph 326-20-55-5 for more information on the meaning of similar risk characteristics for assets measured on an amortized cost basis.")and [purchased seasoned loans](https://asc.understandingaccounting.org/glossary/p/#purchased-seasoned-loans "(P) December 16, 2026; (N) December 16, 2026 326-10-65-7 Paragraphs 326-20-30-16326-20-30-17326-20-30-18 define the term purchased seasoned loans."). See paragraph [310-10-35-53C](https://asc.understandingaccounting.org/asc/310/10/#310-10-35-53C) for additional guidance on recognition of interest income on purchased financial assets with credit deterioration. See paragraph [326-20-45-3](https://asc.understandingaccounting.org/asc/326/20/#326-20-45-3) for presentation guidance.