# ASC 470-970-25: Debt — Real Estate—General — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/470/970/#25-recognition)

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## ASC 470-970-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/470/970/#25-recognition)

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#### Liability for Tax Increment Financing Entity Debt

##### [470-970-25-1](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-1)

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If the special assessment or the assessment to be levied by the tax increment financing entity on each individual property owner is a fixed or determinable amount for a fixed or determinable period, there is a presumption that an obligation shall be recognized by the property owner. Further, with respect to tax increment financing entities, factors such as the following indicate that an entity may be contingently liable for tax increment financing entity debt, and recognition of an obligation shall be evaluated under Topic 450:

1.  a
    
    The entity must satisfy any shortfall in annual debt service obligations.
    
2.  b
    
    There is a pledge of entity assets.
    
3.  c
    
    The entity provides a letter of credit in support of some or all of the tax increment financing entity debt or provides other credit enhancements.

##### [470-970-25-2](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-2)

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If the entity is constructing facilities for its own use or operation, the presence of any of the factors in the preceding paragraph creates a presumption that the tax increment financing entity debt must be recognized as an obligation of the entity.

##### [470-970-25-3](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-3)

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An entity's agreement to either make up shortfalls in the annual debt service requirements or guarantee the tax increment financing entity's debt, as described in Example 1, Cases C through D (see paragraphs

[970-470-55-9 through 55-14](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-9)

), may be guarantees under the characteristics found in paragraph [460-10-15-4](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4) and subject to the initial recognition, initial measurement, and disclosure requirements of Topic 460.

##### [470-970-25-4](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-4)

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See Section 970-470-55 for examples of accounting for special assessments and tax increment financing entities.

##### [470-970-25-5](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-5)

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See Section 974-720-25 for adjustment of assets (or liabilities) transferred between a real estate investment trust and its adviser.