# ASC 470-10-35: Debt — Overall — 35 Subsequent Measurement

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/470/10/#35-subsequent-measurement)

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## ASC 470-10-35: 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/470/10/#35-subsequent-measurement)

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#### Increasing Rate Debt

##### [470-10-35-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-1)

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A debt instrument may have a maturity date that can be extended at the option of the borrower at each maturity date until final maturity. In such cases, the interest rate on the note increases a specified amount each time the note is renewed. For guidance on accounting for interest, see Subtopic 835-30.

##### [470-10-35-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-2)

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The borrower's periodic interest cost shall be determined using the interest method based on the estimated outstanding term of the debt. In estimating the term of the debt, the borrower shall consider its plans, ability, and intent to service the debt. Debt issue costs shall be amortized over the same period used in the interest cost determination. The term-extending provisions of the debt instrument should be analyzed to determine whether those provisions constitute an embedded derivative that warrants separate accounting as a derivative under Subtopic 815-10.

#### Sale of Future Revenues or Various Other Measures of Income

##### [470-10-35-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-3)

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Amounts recorded as debt shall be amortized under the interest method (see Subtopic 835-30) and amounts recorded as deferred income shall be amortized under the [units-of-revenue method](https://asc.understandingaccounting.org/glossary/u/#units-of-revenue-method "A method of amortizing deferred revenue that arises under certain sales of future revenues. Under this method, amortization for a period is calculated by computing a ratio of the proceeds received from the investor to the total payments expected to be made to the investor over the term of the agreement, and then applying that ratio to the period's cash payment.").

#### Indexed Debt

##### [470-10-35-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-4)

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As the applicable index value increases such that an issuer would be required to pay an investor a contingent payment at maturity, the issuer shall recognize a liability for the amount that the contingent payment exceeds the amount, if any, originally attributed to the contingent payment feature. The liability for the contingent payment feature shall be based on the applicable index value at the balance sheet date and shall not anticipate any future changes in the index value. When no proceeds are allocated originally to the contingent payment, the additional liability resulting from the fluctuating index value shall be accounted for as an adjustment of the carrying amount of the debt obligation.