# ASC 470-970-55: Debt — Real Estate—General — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/470/970/#55-implementation-guidance-and-illustrations) 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): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:ce4e752d36371bc226177939700f95b723445c51864c6dd18cd12eeb0f3d3d25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-970-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/970/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [470-970-55-1](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:311693cd78228c84fcb756a4a2007de2db022cded9ad91d6d570d231ceba826f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [970-470-25-4](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-4). The following Cases illustrate the use of municipal bonds and tax increment financing entities for financing the construction of development project infrastructure assets with differing entity obligation impact: 1. a Municipal bonds, entity obligation for special assessment amount (Case A) 2. b Tax increment financing entity, entity obligation for tax increment financing entity debt (Case B) 3. c Tax increment financing entity, assessment to individual property owners not fixed or determinable, no entity obligation (Case C) 4. d Tax increment financing entity, assessment to individual property owners is not fixed or determinable, no entity obligation (Case D). ##### [470-970-55-2](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:e3ee6b1e28067d17e8d2f87217370f758a7b8602797986edb1a383f09a3bb6d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A, B, C, and D share all of the following assumptions: 1. a The entity owns 100 percent of the land under development. 2. b $10 million of bonds are issued for construction of the development infrastructure. 3. c The interest rate on the bonds is 6 percent and the term is 20 years. 4. d The annual debt service requirement is $500,000 principal repayment plus interest accrued during the year. 5. e The project is expected to take 10 years to complete, and no significant sales of property are expected until the third year. All of the property under development is intended for sale. 6. f The property under development is subject to lien if there is a default on the assessment. ##### [470-970-55-3](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:57a275fc6027b75b80d3ad4fcd70b4b5893e5eeb4d81058581b7b3d9743f3c34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A municipality issues bonds to finance construction of the infrastructure assets. The municipality levies a special assessment on the property that is equal to the face amount of the bonds. The special assessment bears interest at the same rate as the bonds. In this Case, if there are 100 equal-sized parcels in the development, each parcel will be assessed $5,000 per year plus accrued interest for 20 years. The assessment remains with the property. Accordingly, upon sale or partial sale of the development, the entity must pay the remaining assessment on the property sold or the purchaser must assume the obligation. ##### [470-970-55-4](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:b1ebe9bbb5ddeab1d384a6718e4943da05e5adf247a806a9785c3dbd76c4b944 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity must recognize an obligation for the special assessment because the amount is fixed for a fixed period of time. Subsequent property owners that assume the obligation must recognize the obligation related to the parcels purchased. ##### [470-970-55-5](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:f211e3eb016ee8a016832d58a456b15f633f0cb107355f4a2071847a902053c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A tax increment financing entity is formed to issue bonds. On completion of construction of the infrastructure assets, title to such assets (including any land upon which the infrastructure is constructed) passes from the tax increment financing entity to the municipality. The entity does not guarantee the tax increment financing entity debt. ##### [470-970-55-6](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:5d443f6e65a8ed2a9e0a93cdca236f2e9909cef03fbaa0b7cc5c1b981c5de11b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Property owners will be subject to a tax on an equal basis determined by the number of lots in the district. The tax will be levied annually, based on the tax increment financing entity's debt service requirement for that year. Accordingly, if there are 100 parcels in the development, $5,000 plus interest accrued for the year is expected to be levied on each parcel annually for the 20 years the debt is outstanding. Additional assessments may be levied by the tax increment financing entity for maintenance or other services. These assessments are in addition to normal property tax assessments. ##### [470-970-55-7](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:8e1927525a6ed95340c4812f12d6e1b5889098d2ceead8c444af0c9642ee63e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Upon sale of a portion of the property, either the entity must repay a pro rata portion of the tax increment financing entity debt or the purchaser must assume the obligation. ##### [470-970-55-8](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:15d4154c23e63ae8375bc046c54fb6145d5e8845cd34741899b52a1e154dfe99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity must recognize an obligation for the tax increment financing entity debt because the assessment in this example is a determinable amount for a determinable period of time. ##### [470-970-55-9](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:bac2b9f98ded4edd5178f256875ef6158fc02b8a11e298d71385bddd6f33c8fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A tax increment financing entity is formed to issue bonds. On completion of construction of the infrastructure assets, title to such assets (including any land upon which the infrastructure is constructed) passes from the tax increment financing entity to the municipality. The entity does not guarantee the tax increment financing entity debt. ##### [470-970-55-10](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:29ede38f8c8ffbbaf52e0f02948b38fc1504dec360c2a6909f6a9208ca630f9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rates for annual assessments are determined prior to issuance of the debt and are limited to a maximum annual tax rate based on anticipated debt service requirements. The rate levied is dependent on the land use category of each parcel of property in the district. Developed property is taxed at the maximum rate, unless a lesser amount is needed to meet current year debt service and maintenance obligations. If the amount levied for developed property is not sufficient, undeveloped property is subject to tax up to the maximum rate. If the maximum rate applied to both developed and undeveloped property is insufficient, additional taxes may be assessed only if approved by eligible voters. ##### [470-970-55-11](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:ff304c01615c7d28aef3709e916ccd46672e0f4210f4ffa7e900d48218f85c77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the assessment on each individual property owner is dependent on the rate of development and, therefore, is not fixed or determinable, an obligation is not required to be recognized. However, if the entity must satisfy any shortfall in annual debt service requirements, recognition of an obligation must be evaluated pursuant to Subtopic 450-20. ##### [470-970-55-12](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:4834da1790bf41ca7683f5c213535f95a4137aad4fbd358c8b773c2a6da675f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A tax increment financing entity is formed to issue bonds. On completion of construction of the infrastructure assets, title to such assets (including any land upon which the infrastructure is constructed) passes from the tax increment financing entity to the municipality. The entity does not guarantee the tax increment financing entity debt. ##### [470-970-55-13](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:62f0c5096b2821dc901fd26db3a71424983d5809f72761096923337b8e7007f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt service requirements of the tax increment financing entity will be met by normal property tax assessments. The increased value of the developed property is expected to generate sufficient taxes to meet the debt service and other obligations. If such assessments are not sufficient, the municipality must satisfy the shortfall. ##### [470-970-55-14](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:1772eae33f0040831d8744b18f34c4da7eeaa6fa76ab35b04928fd70ea5526f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment on each individual property is not determinable because it is based on the current tax rate and the assessed value of the property. Accordingly, the entity is not required to recognize an obligation. The assessments will be treated as property taxes. If, however, the entity had guaranteed the tax increment financing entity debt or must satisfy any shortfall in annual debt service requirements, the recognition of an obligation would be evaluated pursuant to Subtopic 450-20.