# ASC 340-30-35: Other Assets and Deferred Costs — Insurance Contracts That Do Not Transfer Insurance Risk — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/340/30/#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): 2026-09-09T23:55:55.079Z to 2026-09-09T23:55:55.079Z Record version: sha256:737c9d6f4448ee54ac1f39fd1e32513e0083320fb5d2cdbda01f6f14a3081e62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/340/30/#35-subsequent-measurement) SEC content: no #### Insurance and Reinsurance Contracts that Transfer Only Significant Timing Risk and Insurance and Reinsurance Contracts that Transfer Neither Significant Timing nor Significant Underwriting Risk ##### [340-30-35-1](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:55.079Z to 2026-09-09T23:55:55.079Z Record version: sha256:0df4f760c9967370531a730966121dc9d1bdac6bcdcc9ce64a398ca59c11196b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For insurance and [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts that transfer only significant [timing risk](https://asc.understandingaccounting.org/glossary/t/#timing-risk "The risk arising from uncertainties about the timing of the receipt and payments of the net cash flows from premiums, commissions, claims, and claim settlement expenses paid under a contract.") or that transfer neither significant timing nor significant [underwriting risk](https://asc.understandingaccounting.org/glossary/u/#underwriting-risk "The risk arising from uncertainties about the ultimate amount of net cash flows from premiums, commissions, claims, and claim settlement expenses paid under a contract."), the amount of the deposit asset or liability shall be adjusted at subsequent reporting dates by calculating the effective yield on the deposit to reflect actual payments to date and expected future payments (as discussed in paragraph [340-30-35-3](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-3)), with a corresponding credit or charge to interest income or expense (see Examples 1 through 3 \[paragraphs [340-30-55-2 through 55-7\])](https://asc.understandingaccounting.org/asc/340/30/#340-30-55-2)). ##### [340-30-35-2](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:55.079Z to 2026-09-09T23:55:55.079Z Record version: sha256:1498695bf8001dca6dd3497c02d9e16ed9f2bec96c165f69356a446ca9eaf2ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This approach is consistent with the interest method described in Subtopics 310-20 and 835-30. ##### [340-30-35-3](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:55.079Z to 2026-09-09T23:55:55.079Z Record version: sha256:db765bf634db2a6c39180631fc7b8add6a8bb480eafbb9c45dc34102214ca1bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The calculation of the effective yield shall use the estimated amount and timing of cash flows. Consistent with paragraph [310-20-35-26](https://asc.understandingaccounting.org/asc/310/20/#310-20-35-26), if a change in the actual or estimated timing or amount of cash flows occurs, the effective yield shall be recalculated to reflect the revised actual or estimated cash flows. The deposit shall be adjusted to the amount that would have existed at the balance-sheet date had the new effective yield been applied since the inception of the insurance or reinsurance contract. ##### [340-30-35-4](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:55.079Z to 2026-09-09T23:55:55.079Z Record version: sha256:9007401af283d43e3c4b61165a5ab0be18c4b78fdf1c48e5afccc1755b2e0eb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Significant changes in the expected amounts of aggregate cash flows are expected to occur infrequently because of the nature of these kinds of contracts. Should a significant change occur in the total amount of actual or estimated cash flows, the entity shall determine whether the change indicates that the contract does include significant underwriting risk and therefore shall be converted to the accounting for contracts that transfer only significant underwriting risk (see paragraphs [340-30-35-5](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-5) and [340-30-45-3 through 45-5](https://asc.understandingaccounting.org/asc/340/30/#340-30-45-3) ). In addition, a contract that transfers only significant timing risk, which subsequently is determined also to transfer significant underwriting risk, cannot be accounted for under insurance or reinsurance accounting when the revised determination is made. #### Insurance and Reinsurance Contracts that Transfer Only Significant Underwriting Risk ##### [340-30-35-5](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:55.079Z to 2026-09-09T23:55:55.079Z Record version: sha256:94f9a2bdf309c3bc53db232b081d67dc78543db333efa24f36f3bed11e6639eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Until such time as a loss is incurred that will be reimbursed under an insurance or reinsurance contract that transfers only significant underwriting risk, the deposit shall be measured based on the unexpired portion of the coverage provided. Once a loss is incurred that will be reimbursed under such a contract, then the deposit shall be measured by the present value of the expected future cash flows arising from the contract plus the remaining unexpired portion of the coverage provided (see Example 4 \[paragraph [340-30-55-8](https://asc.understandingaccounting.org/asc/340/30/#340-30-55-8)\]). #### Insurance and Reinsurance Contracts that Transfer Only Significant Underwriting Risk—Discount Rate ##### [340-30-35-6](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:55.079Z to 2026-09-09T23:55:55.079Z Record version: sha256:9c71c7c06ba5380f85aba9715f919e96e795108b47dae10a81bed6cb505d4617 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the insured or [ceding entity](https://asc.understandingaccounting.org/glossary/c/#ceding-entity "The party that pays a reinsurance premium in a reinsurance transaction. The ceding entity receives the right to reimbursement from the assuming entity under the terms of the reinsurance contract."), the discount rate used to determine the deposit asset shall be the current rate on U.S. government obligations with similar cash-flow characteristics, adjusted for default risk. Consideration of the default risk, if any, shall be based on the assessment of the creditworthiness of the insurer. For the insurer or [assuming entity](https://asc.understandingaccounting.org/glossary/a/#assuming-entity "The party that receives a reinsurance premium in a reinsurance transaction. The assuming entity (or reinsurer) accepts an obligation to reimburse a ceding entity under the terms of the reinsurance contract."), the discount rate used to determine the deposit liability shall be the current rate on U.S. government obligations with similar cash-flow characteristics. These rates shall be established at the date of each loss incurred and used for the remaining life of the contract and shall not be changed. ##### [340-30-35-7](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:55.079Z to 2026-09-09T23:55:55.079Z Record version: sha256:2cf974a7f0578579e3230bea9188ae2cced274fa6ec08feededa04c9f4eccc1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If numerous losses occur, the use of average rates is permitted because establishing individual rates might require detailed record keeping and computations that could be burdensome and unnecessary to produce reasonable approximations of the results.