# ASC 326-30-35: Financial Instruments—Credit Losses — Available-for-Sale Debt Securities — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/326/30/#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): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:93dbcca7268f067b7d835820dbeb7f3f79e57df6b2427b0a1b5dcf72d696f84a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 326-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/326/30/#35-subsequent-measurement) SEC content: no #### Impairment of Individual Available-for-Sale Securities ##### [326-30-35-1](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:e3728297512234a01c29653af11eeba71d682f8b47e384da9b9ed826f9d9d502 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment is impaired if 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 investment is less than its [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."). ##### [326-30-35-1A](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-1A) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:22e8bab9acb2c3d3e8154b98c115856a329c291a681f66dfd9253e9f98fd279d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall not consider a basis adjustment related to an existing portfolio layer method hedge designated in accordance with paragraph [815-20-25-12A](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-12A) when measuring impairment of the individual investments or individual beneficial interest included in a closed portfolio hedged using the portfolio layer method. ##### [326-30-35-2](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:fed680689407207e794727710ed25f0d98f5a003defa1f5f349fe2c5c76f30be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For individual [debt securities](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.") classified as [available-for-sale securities](https://asc.understandingaccounting.org/glossary/a/#available-for-sale-securities "Investments not classified as either trading securities or as held-to-maturity securities."), an entity shall determine whether a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. An entity shall record impairment relating to credit losses through an allowance for credit losses. However, the allowance shall be limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes. An entity shall consider the guidance in paragraphs [326-30-35-6](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-6) and [326-30-55-1 through 55-4](https://asc.understandingaccounting.org/asc/326/30/#326-30-55-1) when determining whether a credit loss exists. ##### [326-30-35-3](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:57d1d24841bd098b4abf7ffc41632847cb923213823e429de9c20fe9b3ab64eb 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 that reflects the amount of the impairment related to credit losses, limited by the amount that fair value is less than the amortized cost basis. Changes in the allowance shall be recorded in the period of the change as credit loss expense (or reversal of credit loss expense). ##### [326-30-35-4](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:a57da4ea2e59aadef57c9520aaeb7fdde4e3208bcdccc8ea11c4331ff5741647 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Impairment shall be assessed at the individual security level (referred to as an investment). The impairment assessment of the individual securities or individual beneficial interest in a closed portfolio hedged using the portfolio layer method shall not consider the basis adjustment related to an existing portfolio layer method hedge. Individual security level means the level and method of aggregation used by the reporting entity to measure realized and unrealized gains and losses on its debt securities. (For example, debt securities bearing the same Committee on Uniform Security Identification Procedures \[CUSIP\] number that were purchased in separate trade lots may be aggregated by a reporting entity on an average cost basis if that corresponds to the basis used to measure realized and unrealized gains and losses for the debt securities.) Providing a general allowance for an unidentified impairment in a portfolio of debt securities is not appropriate. ##### [326-30-35-5](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:08d3134fe0f621b24e1dc3afcd297c58c5170a75accf49a5de507a6db53c2986 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall not combine separate contracts (a debt security and a guarantee or other credit enhancement) for purposes of determining whether a debt security is impaired or can contractually be prepaid or otherwise settled in such a way that the entity would not recover substantially all of its cost. ##### [326-30-35-6](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:32a87152fba0ada84958264d1c1f4bfe225bf6aaf2d0dbcf5e3906878aee0e60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In assessing whether a credit loss exists, an entity shall compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis of the security, a credit loss exists and an allowance for credit losses shall be recorded for the credit loss, limited by the amount that 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.") is less than amortized cost basis. Credit losses on an impaired security shall continue to be measured using the present value of expected future cash flows. ##### [326-30-35-7](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:51cdcb6436700cef8cbc0d8b00b402dbd0bc30a4a881280c2b4079fab9b09648 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In determining whether a credit loss exists, an entity shall consider the factors in paragraphs [326-30-55-1 through 55-4](https://asc.understandingaccounting.org/asc/326/30/#326-30-55-1) and use its best estimate of the present value of cash flows expected to be collected from the [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."). One way of estimating that amount would be to consider the methodology described in paragraphs [326-30-35-8 through 35-10](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-8) . Briefly, the entity would discount the expected cash flows at the [effective interest rate](https://asc.understandingaccounting.org/glossary/e/#effective-interest-rate "The rate of return implicit in the financial asset, that is, the contractual interest rate adjusted for any net deferred fees or costs, premium, or discount existing at the origination or acquisition of the financial asset. For purchased financial assets with credit deterioration, however, to decouple interest income from credit loss recognition, the premium or discount at acquisition excludes the discount embedded in the purchase price that is attributable to the acquirer's assessment of credit losses at the date of acquisition.") implicit in the security at the date of acquisition. ##### [326-30-35-7A](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-7A) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:877fdddfb24f47f972ab7be0dae655fd95cba6de1fe33c8db0f6353a6eb6d40a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As an accounting policy election for each major security type of debt securities classified as available-for-sale securities, an entity may adjust the effective interest rate used to discount expected cash flows to consider the timing (and changes in the timing) of expected cash flows resulting from expected prepayments. ##### [326-30-35-8](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:503133715e4fd97e7d4a110622a6e08168fdf342356780d59019a83df583da6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The estimates of expected future cash flows shall be the entity's best estimate based on past events, current conditions, and on reasonable and supportable forecasts. Available evidence shall be considered in developing the estimate of expected future cash flows. The weight given to the information used in the assessment shall be commensurate with the extent to which the evidence can be verified objectively. If an entity estimates a range for either the amount or timing of possible cash flows, the likelihood of the possible outcomes shall be considered in determining the best estimate of expected future cash flows. ##### [326-30-35-9](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:797c3794998dfd9c96dfd866eb24e624dc536f7cde664a36a827552e4fd6a8ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Available information would include existing environmental factors, for example, existing industry, geographical, economic, and political factors that are relevant to the collectibility of that debt security. ##### [326-30-35-10](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:b749e8003238b96e755fee91a1f354032d3578520df32ceeff3a6940df460636 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity intends to sell the debt security (that is, it has decided to sell the security), or more likely than not will be required to sell the security before recovery of its amortized cost basis, any allowance for credit losses shall be written off and the amortized cost basis shall be written down to the debt security's fair value at the reporting date with any incremental impairment reported in earnings. If an entity does not intend to sell the debt security, the entity shall consider available evidence to assess whether it more likely than not will be required to sell the security before the recovery of its amortized cost basis (for example, whether its cash or working capital requirements or contractual or regulatory obligations indicate that the security will be required to be sold before the forecasted recovery occurs). In assessing whether the entity more likely than not will be required to sell the security before recovery of its amortized cost basis, the entity shall consider the factors in paragraphs [326-30-55-1 through 55-2](https://asc.understandingaccounting.org/asc/326/30/#326-30-55-1) . ##### [326-30-35-11](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:b13e439662d5da3809de403f4f5154cc1e6e9938605ce91291085d096e557134 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the security's contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, for example, the prime rate, the London Interbank Offered Rate (LIBOR), or the U.S. Treasury bill weekly average, that security's effective interest rate (used to discount expected cash flows as described in paragraph [326-30-35-7](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-7)) may be calculated based on the factor as it changes over the life of the security or is projected to change over the life of the security, or may be fixed at the rate in effect at the date an entity determines that the security has a credit loss as determined in accordance with paragraphs [326-30-35-1 through 35-2](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-1) . The entity's choice shall be applied consistently for all securities whose contractual interest rate varies based on subsequent changes in an independent factor. An entity is not required to project changes in the factor for purposes of estimating expected future cash flows. If the entity projects changes in the factor for the purposes of estimating expected future cash flows, it shall use the same projections in determining the effective interest rate used to discount those cash flows. In addition, if the entity projects changes in the factor for the purposes of estimating expected future cash flows, it shall adjust the effective interest rate used to discount expected cash flows to consider the timing (and changes in the timing) of expected cash flows resulting from expected prepayments in accordance with paragraph [326-30-35-7A](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-7A). Subtopic 310-20 on receivables—nonrefundable fees and other costs provides guidance on the calculation of interest income for variable rate instruments. #### Accounting for Debt Securities after a Credit Impairment ##### [326-30-35-12](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:2e499003db0ea5dfd8a9a991c5d9583755f9f699e07f2fc5947637a449572aa5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall reassess the credit losses each reporting period when there is an allowance for credit losses. An entity shall record subsequent changes in the allowance for credit losses on available-for-sale debt securities with a corresponding adjustment recorded in the credit loss expense on [available-for-sale](https://asc.understandingaccounting.org/glossary/a/#available-for-sale-securities "Investments not classified as either trading securities or as held-to-maturity securities.")[debt securities](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."). An entity shall not reverse a previously recorded allowance for credit losses to an amount below zero. ##### [326-30-35-13](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:7d46ed8583deebca6e77bc634de2d45117b20380cee4bdfe097dad9785d585f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall recognize writeoffs of available-for-sale debt securities in accordance with paragraph [326-20-35-8](https://asc.understandingaccounting.org/asc/326/20/#326-20-35-8). ##### [326-30-35-13A](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-13A) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:5e3881699ebda276da044f7ed6969311dc1173c7420317b12e855c46f7977ea0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If for the purposes of identifying and measuring an impairment the applicable accrued interest is excluded from both 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.") and 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 available-for-sale debt security, an entity may make an accounting policy election, at 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 shall be considered separately from the accounting policy election in paragraph [326-30-30-1B](https://asc.understandingaccounting.org/asc/326/30/#326-30-30-1B). An entity that elects this accounting policy shall meet the disclosure requirements in paragraph [326-30-50-3D](https://asc.understandingaccounting.org/asc/326/30/#326-30-50-3D). An entity may not analogize this guidance to components of amortized cost basis other than accrued interest. #### Accounting after a Write-Down Resulting from an Intent to Sell or a More-Likely-Than-Not Requirement to Sell ##### [326-30-35-14](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:b943b258a4b0a1f064ae6e79636dc597e5cf946385d1be826a447a49759b6f95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Once an individual [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.") has been written down in accordance with paragraph [326-30-35-10](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-10), the previous [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.") less writeoffs, including non-credit-related impairment reported in earnings, shall become the new amortized cost basis of the investment. That new amortized cost basis shall not be adjusted for subsequent recoveries in [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."). ##### [326-30-35-15](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:6e099457bb967f2efbf268b904a5e8ffdae76f033308f5e736aa05cbd2903620 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For debt securities for which impairments were reported in earnings as a writeoff because of an intent to sell or a more-likely-than-not requirement to sell, the difference between the new amortized cost basis and the cash flows expected to be collected shall be accreted in accordance with existing applicable guidance as interest income. An entity shall continue to estimate the present value of cash flows expected to be collected over the life of the debt security. For debt securities accounted for in accordance with Subtopic 325-40, an entity should look to that Subtopic to account for changes in cash flows expected to be collected. For all other debt securities, if upon subsequent evaluation, there is a significant increase in the cash flows expected to be collected or if actual cash flows are significantly greater than cash flows previously expected, those changes shall be accounted for as a prospective adjustment to the yield. Subsequent increases in the fair value of available-for-sale securities after the write-down shall be included in other comprehensive income. (This Section does not address when a holder of a debt security would place a debt security on nonaccrual status or how to subsequently report income on a nonaccrual debt security.) #### Purchased Financial Assets with Credit Deterioration ##### [326-30-35-16](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:175978f897774d806b53b28b26f9c9f8ab6d8b79dc56a58aa8fa25b919acfd79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall measure changes in the allowance for credit losses on a [purchased financial asset 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.") in accordance with paragraph [326-30-35-6](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-6). The entity shall report changes in the allowance for credit losses in net income as credit loss expense (or reversal of credit loss expense) in each reporting period. ##### [326-30-35-17](https://asc.understandingaccounting.org/asc/326/30/#326-30-35-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:14.904Z to 2026-09-09T23:50:14.904Z Record version: sha256:681cf01c8218a10921830e18cb41c00fdd97d8980bbf9e487d9a602985857053 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not address how an entity 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.