# ASC 470-30: Debt — Participating Mortgage Loans Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/470/30/) 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): 2026-09-10T00:31:54.980Z to 2026-09-10T00:32:26.321Z Record version: sha256:ac788dd9918b7ed3648a15848c4f4178ccc7654f97b8dcff643b6b0abe628f4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30: Debt — Participating Mortgage Loans ### Machine-generated study aids ```json { "summary": "ASC 470-30 governs how a *borrower* accounts for a participating mortgage loan — a mortgage in which the lender is entitled to share in appreciation in the fair value of the mortgaged real estate project, in its results of operations, or both. If the lender participates in fair value appreciation, the borrower recognizes a participation liability at the fair value of the participation feature at loan inception with an offsetting debt discount, remeasures the liability to current fair value each reporting period (adjusting the discount), and amortizes the discount to interest expense using the interest method. Participations in results of operations are charged to interest expense in the period incurred with a credit to the participation liability.", "key_points": [ "A participation liability with a corresponding debit to a debt discount account is recognized when the lender is entitled to participate in appreciation in the market value of the mortgaged real estate project (470-30-25-1).", "The participation feature is measured at fair value (per Subtopic 820-10) at inception of the loan (470-30-30-1).", "Interest expense has three components: stated interest, amounts for the lender's participation in results of operations, and amortization of the debt discount related to participation in fair value appreciation (470-30-35-2); the discount is amortized by the interest method using the effective interest rate (470-30-35-1).", "At the end of each reporting period the participation liability is adjusted to the current fair value of the participation feature, with the offsetting debit or credit to the debt discount account (470-30-35-4A), and the revised discount is amortized prospectively at the effective interest rate (470-30-35-5).", "Amounts due for participation in results of operations are charged to interest expense in the corresponding reporting period with a credit to the participation liability (470-30-35-4); stated interest is charged to income as incurred, based on the index/rate as it changes, and is subject to Subtopic 835-20 capitalization rules, with capitalized amounts not adjusted for reversals of appreciation (470-30-35-3).", "Early extinguishment produces a gain or loss equal to the difference between the recorded amount of the debt (including unamortized discount and the participation liability) and the amount exchanged, reported as required by 470-50-40-2 (470-30-40-1; 470-30-45-2).", "Borrowers must disclose the aggregate amount of participating mortgage obligations at the balance sheet date, separately showing aggregate participation liabilities and related debt discounts, plus the terms of the lender's participations (470-30-50-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Disclosure", "Fair value" ], "audience_level": "intermediate", "student_note": "Exam traps: this Subtopic applies only to borrowers (not lenders) and excludes participating leases, lender-option equity-convertible debt, and participations arising from troubled debt restructurings. Remember the participation liability is remeasured to fair value every period through the debt discount (not through earnings directly) — earnings are affected only via prospective amortization of the revised discount.", "related_topics": [ "470-50", "835-20", "820-10", "470-60", "310-10" ], "key_concepts": [ "participating mortgage loan", "participation liability", "debt discount", "interest method", "effective interest rate", "fair value appreciation participation", "participation in results of operations", "debt extinguishment gain or loss" ] } ``` Source downloaded (UTC): 2026-09-10T00:31:54.980Z to 2026-09-10T00:31:54.980Z Record version: sha256:6950b34e7ac470917a93eb3b7847f41cb3bdc0b9b9fd7d7b9e1795e272c5b585 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/30/#00-status) SEC content: no ##### [470-30-00-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:54.980Z to 2026-09-10T00:31:54.980Z Record version: sha256:d32300b0128fcc6a13d4c9b20784453fc0c2d67e91b0b9499a7114857a43ed90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
DebtSupersededAccounting Standards Update No. 2016-1912/14/2016
470-30-05-1AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-05-4AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-05-6AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-05-7AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-05-9AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-15-3AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-25-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-25-1AmendedAccounting Standards Update No. 2015-1006/12/2015
470-30-30-1AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-35-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-35-2AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-35-4AmendedAccounting Standards Update No. 2015-1006/12/2015
470-30-35-4AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-35-4AAddedAccounting Standards Update No. 2015-1006/12/2015
470-30-40-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-45-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-45-3SupersededAccounting Standards Update No. 2015-0101/09/2015
470-30-50-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-50-1AmendedAccounting Standards Update No. 2012-0410/01/2012
Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:b8f96a20df8a7b79f4b4144225a5b7a6925e9f34d82564deccf9237b3f2e5404 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/30/#05-overview-and-background) SEC content: no ##### [470-30-05-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:62d24965808b260b4c09738253e5e50c01d9fa919f6d1bd953c0466aaf49d756 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic establishes the borrower's accounting for a participating mortgage loan if the lender is entitled to participate in any of the following: 1. a Appreciation in 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 mortgaged real estate project 2. b The results of operations of the mortgaged real estate project. ##### [470-30-05-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:8ed4210f659f8ad2b872a136e624207eb6557640cf77573ba992333647d720c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The desire for instruments in which the return to the lenders was tied more closely to the performance of the property led to the introduction of participating mortgage loans. ##### [470-30-05-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:59133c3612685e732c5c976050afd84163e85cd8471ecc17ef5935fbd0619e2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Participating mortgage loans and nonparticipating mortgage loans share all of the following characteristics: 1. a Debtor-creditor relationships between those who provide initial cash outlays and hold the mortgages, and those who are obligated to make subsequent payments to the mortgage holders 2. b Real estate collateral 3. c Periodic fixed-rate or floating-rate interest payments 4. d Fixed maturity dates for stated principal amounts. ##### [470-30-05-4](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:0e361b63c2913a66395bfca77a0d4fc8182956bd3d026e1b05ee5d5a48db6549 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, unlike a nonparticipating mortgage loan arrangement, in a participating mortgage loan, the lender participates in appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project, or in both. ##### [470-30-05-5](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:20f4d9cfe93040e0679e62675fb8cc421705f17a556d726e873e4a1d39216528 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The terms and economics of participating mortgage loan agreements vary by agreement. The terms and economics of one agreement may create a circumstance in which any participation payment is remote. In another agreement, the terms and economics may transfer many of the risks and rewards of property ownership. ##### [470-30-05-6](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:bd75fcb3986a9ee3be904364e0a279b9a08abc670b90268bbe2e2512e3d039df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lender may be entitled to participate in appreciation in the fair value of a project at any one of the following times: 1. a Upon the sale of the project 2. b At a deemed sale date 3. c At the maturity or refinancing of the loan. ##### [470-30-05-7](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:e3ffb6e4cf176ef46f621dc02a64fbe9eb067be00a57a11d9f03d347769fb87a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In agreements in which lenders participate in results of operations, the definition of the results of operations may vary among agreements. Examples of these definitions include, but are not limited to, the following: 1. a Revenue 2. b Income 3. c Cash flows before or after debt service. ##### [470-30-05-8](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:a8fdf1eb2d107857032bab45900a349627810b00040b5f445f7fd1316847fb2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The participation terms of a participating mortgage loan agreement usually are negotiated concurrently with the other terms of the underlying mortgage loan. A borrower agrees to participation rights generally because of market conditions, or in exchange for concessions granted by the lender on some other term(s) of the loan, such as a lower interest rate or a higher loan-to-value ratio. ##### [470-30-05-9](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:012224be308d74f32acdb45ae545af2d179485932928cf95990fdbb3b1a38515 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The lender's participation reduces the borrower's potential realization of operating results or gain on the sale of the real estate. However, the participation also may reduce any of the following: 1. a The contract interest the borrower is required to pay 2. b The risk that the borrower will be unable to pay interest at the stated or floating rate in the loan agreement and, consequently, the risk that the borrower will default on the loan and need to sell the property 3. c The amount of capital the borrower has at risk, because the loan-to-value ratio normally is higher. Further, the obligation to pay the lender a share of the property appreciation does not increase the current exposure of the borrower to loss in its investment, because the participation payments are made only if the fair value of the property appreciates. Source downloaded (UTC): 2026-09-10T00:32:01.971Z to 2026-09-10T00:32:01.971Z Record version: sha256:b83df8c006fc6f82de38bf1ff71256814e411d5767c15844b76a42d7d8f7c029 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/30/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-30-15-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:01.971Z to 2026-09-10T00:32:01.971Z Record version: sha256:9acd2f576cc5c93150b3e7f42b2753883b65707dc8d5518e44d34f94abca5dc3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to the following entities: 1. a All borrowers in participating mortgage loan arrangements. ##### [470-30-15-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:01.971Z to 2026-09-10T00:32:01.971Z Record version: sha256:83fc35285e4f6212d518236b63c97e40c3fbec8b8f7b0a862134c8635ac955a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following entities: 1. a Creditors in participating mortgage loan arrangements. #### Transactions ##### [470-30-15-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:01.971Z to 2026-09-10T00:32:01.971Z Record version: sha256:d2939a84c91ef16c7152924c4740cbac95ef1927cbf66adb2ee5b307fef8887c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Participating leases 2. b Debt convertible at the option of the lender into equity ownership of the property 3. c Participating loans resulting from troubled debt restructurings. Source downloaded (UTC): 2026-09-10T00:32:09.032Z to 2026-09-10T00:32:09.032Z Record version: sha256:28853a10184bb708aacac826d448fa89a62d76ea21df2a932f42c50360aecfd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/30/#25-recognition) SEC content: no ##### [470-30-25-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:09.032Z to 2026-09-10T00:32:09.032Z Record version: sha256:6ec939cce2345761f570082e0e7ff581990940656c8106cd205605bd260946d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a lender is entitled to participate in the appreciation of the market value of a mortgaged real estate project, the borrower shall recognize a participation liability with a corresponding debit to a debt discount account. Source downloaded (UTC): 2026-09-10T00:32:11.186Z to 2026-09-10T00:32:11.186Z Record version: sha256:fbabfe973e7209a541409cc7cb95dc2d6369a672bb6c03f081ecb322c9e1e414 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/470/30/#30-initial-measurement) SEC content: no ##### [470-30-30-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:11.186Z to 2026-09-10T00:32:11.186Z Record version: sha256:160d4f4ff7ea9a51fd3606b47111bd1ef32b05951ab103f4983648ddadf78efc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the lender is entitled to participate in appreciation in 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 mortgaged real estate project, the borrower shall determine the fair value (see Subtopic 820-10) of the participation feature at the inception of the loan (see paragraph [470-30-25-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-25-1) for guidance on how to recognize the participation feature). Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:514377c2f7127340d3a4d5a43c59fb4a264d134bdc7d6fc2c7302f37db747d8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/470/30/#35-subsequent-measurement) SEC content: no ##### [470-30-35-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:0117dbfda6423977fcf57dcc2306d1a64b4cc9bb71757e75b563cc9078fff522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt discount shall be amortized by the interest method, using the effective interest rate. ##### [470-30-35-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:ff2aa5e29a4b76bb14632113d8131a0fc0fa7304e23d4c809c060695bdaa51d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest expense on participating mortgage loans consists of the following three components: 1. a Amounts designated in the mortgage agreement as interest 2. b Amounts related to the lender's participation in results of operations 3. c Amortization of debt discount related to the lender's participation in 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.") appreciation of the mortgaged real estate project. ##### [470-30-35-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:41af7f73a787d611a5d5a94ab58a30ba80151b1d4c4296976be58deb45739b5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts designated in the mortgage agreement as interest shall be charged to income in the period in which the interest is incurred. If the loan's stated interest rate varies based on 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 rate), the calculation of the interest shall be based on the factor (the index or the rate) as it changes over the life of the loan. Interest recognized pursuant to this guidance is subject to the requirements of Subtopic 835-20. Once capitalized, amounts shall not be adjusted for the effects of reversals of appreciation. ##### [470-30-35-4](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:c264ec8382159bb498c4c173177659ea17e34c317d067bf5b34fe7bd16865d74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts due to a lender pursuant to the lender's participation in the real estate project's results of operations (as defined in the participating mortgage loan agreement) shall be charged to interest expense in the borrower's corresponding financial reporting period, with a corresponding credit to the participation liability. 1. a [Subparagraph superseded by Accounting Standards Update No. 2015-10](https://asc.understandingaccounting.org/updates/asu-2015-10/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2015-10](https://asc.understandingaccounting.org/updates/asu-2015-10/). ##### [470-30-35-4A](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-4A) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:e18842d6af04d0a0cd8fd92b40e2167052182e48bb82cd81d3299c9272c9440c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a lender is entitled to participate in the appreciation of the market value of a mortgaged real estate project, both of the following are required at the end of each reporting period: 1. a The balance of the participation liability shall be adjusted to equal the current fair value of the participation feature. 2. b The corresponding debit or credit shall be recorded in the related debt-discount account. ##### [470-30-35-5](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:02a84b3578c1776b399c0ce1bd9e3e8188dc02e479539e01159ba4d2bfe7a388 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The revised debt discount shall be amortized prospectively, using the effective interest rate. Source downloaded (UTC): 2026-09-10T00:32:14.766Z to 2026-09-10T00:32:14.766Z Record version: sha256:e27040948363532772f3e801638fb486dc5c5e77f6827486f64a616354ee630a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/470/30/#40-derecognition) SEC content: no ##### [470-30-40-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:14.766Z to 2026-09-10T00:32:14.766Z Record version: sha256:a726b049a4d9a6f90113d193f38b607784e40a4a225380ddc2aac9038b1c8095 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the participating mortgage loan is extinguished before its due date, the difference between the recorded amount of the debt (including the unamortized debt discount and the participation liability) and the amount exchanged to extinguish the debt is a debt extinguishment gain or loss. Source downloaded (UTC): 2026-09-10T00:32:18.105Z to 2026-09-10T00:32:18.105Z Record version: sha256:e1438d1763070af7b6c15768203f0cee688dbcf545a43e5333be8f88bf8f211d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/30/#45-other-presentation-matters) SEC content: no ##### [470-30-45-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:18.105Z to 2026-09-10T00:32:18.105Z Record version: sha256:5f9779b7537fb631f07171d31f0fc7cf5b699cc3a43aa290e6cf5c50fafa4867 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amortization of the debt discount relating to the participation liability shall be included in interest expense. ##### [470-30-45-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:18.105Z to 2026-09-10T00:32:18.105Z Record version: sha256:254d0359469e5af72af99ce1c96fcbca0b756b4fa6ab79207522246f12a0639d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the participating mortgage loan is extinguished before its due date, the debt extinguishment gain or loss shall be reported as required by paragraph [470-50-40-2](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-2). ##### [470-30-45-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:18.105Z to 2026-09-10T00:32:18.105Z Record version: sha256:9f02251dfe276cfcfad13e440c901f21998f3d22cb697a5e44282aade4e3a55d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). Source downloaded (UTC): 2026-09-10T00:32:19.774Z to 2026-09-10T00:32:19.774Z Record version: sha256:f916b685bd5e9d638ed67e36fef18f688aa9585a7d7e80cb16545a73528bfc6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/30/#50-disclosure) SEC content: no ##### [470-30-50-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:19.774Z to 2026-09-10T00:32:19.774Z Record version: sha256:0dc16a3e09c3aa20045775a60e4f9e432dba82033db4e8be7eb92f8a408f2736 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The borrower's financial statements shall disclose both of the following: 1. a The aggregate amount of participating mortgage obligations at the balance sheet date, with separate disclosure of the aggregate participation liabilities and related debt discounts 2. b Terms of the participations by the lender in either the appreciation in 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 mortgaged real estate project or the results of operations of the mortgaged real estate project, or both. Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:d8e7b5eeff85ad524271a70560f4d1c95e9e2e17af231f34e9bd9bd6dfb57447 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [470-30-55-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:6333593e876d6a621d863098878f72989f59e3cf5a8d5cc51ec7574687f81193 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in this Subtopic. ##### [470-30-55-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:cc046e36092c7bb6c65ad7fde4bda6aa29564bd296f342ee9c3078268e81cc17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that on January 1, 19X1, Borrower Co. purchased a property for $10 million. On that date, Borrower paid $1 million cash and entered into a participating mortgage loan agreement with Lender Co. in the amount of $9 million. ##### [470-30-55-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:d9a6f9505ec13a95e41557f7bb532621bffe66052c7e1fc6722f6d821c3c626d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The loan agreement has the following terms: 1. a 15 year term 2. b Interest-only periodic payments, principal to be repaid at end of term 3. c 5% stated interest rate 4. d 20% participation in appreciation in the value of the property above $10 million, payable at maturity (or earlier if the asset is sold or the loan is refinanced). ##### [470-30-55-4](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:a0f2595a048569f392e6d3b3a2fdf2e689f4d25b26554414d9622fcac5cd51bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assumptions related to 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 participation feature are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-8FCBAA19-0630-4D2D-BEDB-B1366D73BFA1-low.gif) Date Fair Value Estimated Payment Years in Future 1/1/X1 " $25,055 " " $300,000 " 15 12/31/X1 " 40,063 " " 320,000 " 14 12/31/X2 " 54,122 " " 333,000 " 13 ##### [470-30-55-5](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:189e317b3d5d058bae84fdef915bef28a51c2233e9f51ed7bc3f60f3926d2514 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the preceding assumptions, Borrower Co. should make the following journal entries for this participating mortgage loan. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-219B13AD-8F51-46A5-9EB7-EB14409AAA9A-low.gif) "a. On January 1, 19X1, the following journal entries should be recorded:" Cash " $9,000,000 " Loan discount " 25,055 " Mortgage loan payable " $9,000,000 " Participation liability " 25,055 " To record participating debt and estimate of participation liability (based on fair value of participation feature). Property " $10,000,000 " Cash " 10,000,000 " To record purchase of property. "b. By the end of 19X1, entries to record interest expense and amortization of discount throughout the year would have taken the following form:" Interest expense " $451,159 " Interest payable " 450,000 " Loan discount " 1,159 " To record interest expense and amortization of debt discount using the interest method and an effective rate of 5.03 percent (rounded). Loan discount " $15,008 " Participation liability " 15,008 " To adjust balance of participation liability to fair value at end of period. The adjustment is calculated as follows: Fair value at 12/31/X1 " $40,063 " Fair value at 1/1/X1 " 25,055 " Adjustment " $15,008 " "Note: For purposes of this illustration, the fair value of the participation feature at 12/31/X1 is based on a revised estimate of the equity participation that would be payable in fourteen years of $320,000." "c. At the end of 19X2, entries to record interest expense and amortization of discount throughout the year would have taken the following form:" Interest expense " $451,979 " Interest payable " 450,000 " Loan discount " 1,979 " "To record interest expense and amortization of debt discount, using the interest method and an effective rate of 5.04 percent (rounded)." Loan discount " $14,059 " Participation liability " 14,059 " "To adjust recorded participation liability of $40,063 to fair value at 12/31/X2 of $54,122."