# ASC 720-974: Other Expenses — Real Estate—Real Estate Investment Trusts Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/720/974/) 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): 2026-09-10T01:13:54.098Z to 2026-09-10T01:14:12.248Z Record version: sha256:30e482915a757325fa3c411978668ba0b246dda0ae66f9dbc1947d490286c9e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-974: Other Expenses — Real Estate—Real Estate Investment Trusts ### Machine-generated study aids ```json { "summary": "This subtopic governs how a real estate investment trust (REIT) accounts for \"operating support\" received from its external adviser — arrangements designed to guarantee the REIT a certain return, such as buying loans or property above fair value, debt forgiveness, advisory fee reductions, compensating balances, or cash payments. The REIT must adjust any transferred assets or liabilities to fair value at the transaction date and recognize the support effectively obtained as income or as a reduction of advisory fees. The effect of these transactions must be reported separately in the income statement and fully disclosed as a related party relationship.", "key_points": [ "Adviser support methods that can produce a guaranteed return to the REIT include purchasing a loan or property above fair value, forgiving indebtedness, reducing advisory fees, providing compensating balances, and outright cash payments (720-974-25-1).", "Accounting for operating support requires adjusting assets or liabilities transferred between the REIT and its adviser to fair value as of the transaction date (720-974-25-2(a)).", "Alternatively (or additionally), the operating support effectively obtained is recognized as income or as a reduction of advisory fees (720-974-25-2(b)).", "The effect of operating support transactions must be reported separately in the income statement (720-974-45-1).", "A REIT receiving operating support must make full disclosure of the relationship between the parties and the nature and amount of the transactions (720-974-50-1).", "Scope follows the Overall REIT Subtopic, Section 974-10-15 (720-974-15-1)." ], "categories": [ "Recognition", "Presentation", "Disclosure", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The point is substance over form: an adviser cannot dress up a subsidy as an ordinary purchase or fee arrangement — the excess over fair value is income (or a fee reduction) that must be shown separately, not buried in operating results. A common misunderstanding is treating an above-fair-value asset purchase by the adviser as a normal sale rather than recognizing support income and writing the transferred asset to fair value.", "related_topics": [ "974-10", "974-720", "850", "820", "946" ], "key_concepts": [ "real estate investment trust", "operating support from adviser", "advisory fees", "fair value adjustment on transfer", "related party transactions", "separate income statement presentation", "debt forgiveness", "compensating balances" ] } ``` Source downloaded (UTC): 2026-09-10T01:13:54.098Z to 2026-09-10T01:13:54.098Z Record version: sha256:84f7955154de8539ff5883ccb0f5dfa2fe07d32b366b96bf26c41f34ac870ab0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-974-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/720/974/#00-status) SEC content: no ##### [720-974-00-1](https://asc.understandingaccounting.org/asc/720/974/#720-974-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:54.098Z to 2026-09-10T01:13:54.098Z Record version: sha256:8f839de8cb2b7e5a59455b047781c858563a9939743c0408653399617f89d68f 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
Real Estate Investment TrustAddedAccounting Standards Update No. 2014-0905/28/2014
974-720-05-1AddedAccounting Standards Update No. 2014-0905/28/2014
974-720-15-1AddedAccounting Standards Update No. 2014-0905/28/2014
974-720-25-1AddedAccounting Standards Update No. 2014-0905/28/2014
974-720-25-2AddedAccounting Standards Update No. 2014-0905/28/2014
974-720-45-1AddedAccounting Standards Update No. 2014-0905/28/2014
974-720-50-1AddedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T01:13:56.431Z to 2026-09-10T01:13:56.431Z Record version: sha256:b7a53a0cd91dde433125554fb878b14f940cfee174d49b539cee70fbeb7c3091 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-974-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/720/974/#05-overview-and-background) SEC content: no ##### [720-974-05-1](https://asc.understandingaccounting.org/asc/720/974/#720-974-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:56.431Z to 2026-09-10T01:13:56.431Z Record version: sha256:1c6d7b01b8053ff272a54063a5191388d2db7ec59ddfd95745e24efc3874fee7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses recognition, disclosure, and other presentation matters for [real estate investment trusts](https://asc.understandingaccounting.org/glossary/r/#real-estate-investment-trust "Real estate investment trusts generally are formed as trusts, associations, or corporations. They employ equity capital, coupled with substantial amounts of debt financing, in making real estate loans and investments. Real estate investment trusts must distribute substantially all of their taxable income to their shareholders annually in order to retain their favorable tax status (that is, dividends paid are treated as deductions in arriving at taxable income)."). Source downloaded (UTC): 2026-09-10T01:13:58.077Z to 2026-09-10T01:13:58.077Z Record version: sha256:47f8942f852bced0ea72a221e52e9329e89276343f7c02d1074ba69d6ae5782a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-974-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/720/974/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [720-974-15-1](https://asc.understandingaccounting.org/asc/720/974/#720-974-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:58.077Z to 2026-09-10T01:13:58.077Z Record version: sha256:1c8c62ab5e03cc1a0efb6f2270686ea72d8c50c67fdc18fec80002a38a53230b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 974-10-15. Source downloaded (UTC): 2026-09-10T01:14:03.031Z to 2026-09-10T01:14:03.031Z Record version: sha256:8ac1cc4bb6da0efd3b0251934fed1875bf4b7b9961467132c3345cda1511975a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-974-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/720/974/#25-recognition) SEC content: no #### Operating Support of the Real Estate Investment Trust by the Adviser ##### [720-974-25-1](https://asc.understandingaccounting.org/asc/720/974/#720-974-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:03.031Z to 2026-09-10T01:14:03.031Z Record version: sha256:a86bd06f92b34d69b9dd4b53a1981c898ef4e440279a12b03e92c85f3ace2006 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Various methods are employed by advisers to ensure a certain return to the [real estate investment trust](https://asc.understandingaccounting.org/glossary/r/#real-estate-investment-trust "Real estate investment trusts generally are formed as trusts, associations, or corporations. They employ equity capital, coupled with substantial amounts of debt financing, in making real estate loans and investments. Real estate investment trusts must distribute substantially all of their taxable income to their shareholders annually in order to retain their favorable tax status (that is, dividends paid are treated as deductions in arriving at taxable income).") for certain periods. Some of these methods are: 1. a Purchasing a loan or a property at an amount in excess of fair value 2. b Forgiving indebtedness 3. c Reducing advisory fees 4. d Providing required compensating balances 5. e Making outright cash payments. ##### [720-974-25-2](https://asc.understandingaccounting.org/asc/720/974/#720-974-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:03.031Z to 2026-09-10T01:14:03.031Z Record version: sha256:b50f126a56bfb58776d5eeef32c5638283691be56e93a7b6954236e9b5455ee3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting by a real estate investment trust for operating support from its adviser would include either of the following: 1. a Adjustment of any assets (or liabilities) which will be transferred between the entities to fair value as of the date of the transaction 2. b Recognition, as income or as a reduction of advisory fees, of the operating support effectively obtained. Source downloaded (UTC): 2026-09-10T01:14:05.868Z to 2026-09-10T01:14:05.868Z Record version: sha256:de66f6a0507eafb8972d85d72f3919fabf8f67eee7db1a1c9af7579c774c9a21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-974-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/720/974/#45-other-presentation-matters) SEC content: no #### Operating Support of the Real Estate Investment Trust by the Adviser ##### [720-974-45-1](https://asc.understandingaccounting.org/asc/720/974/#720-974-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:05.868Z to 2026-09-10T01:14:05.868Z Record version: sha256:673ca05d19ceba0fc3b21d8414433a3b94d32ef8c90f892da645b4d530f36a43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effect of the operating support transactions described in paragraphs [974-720-25-2](https://asc.understandingaccounting.org/asc/720/974/#720-974-25-2) and [974-720-50-1](https://asc.understandingaccounting.org/asc/720/974/#720-974-50-1) shall be reported separately in the income statement. Source downloaded (UTC): 2026-09-10T01:14:08.726Z to 2026-09-10T01:14:08.726Z Record version: sha256:1b19e524c3e759e8a9ec5ef8879e36a817107ff3bfd4b74205cc534f78e640ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-974-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/720/974/#50-disclosure) SEC content: no #### Operating Support of the Real Estate Investment Trust by the Adviser ##### [720-974-50-1](https://asc.understandingaccounting.org/asc/720/974/#720-974-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:08.726Z to 2026-09-10T01:14:08.726Z Record version: sha256:3884f98323011b09ee5ba16904ddc5a738982a53ec2903caa0b004a102959558 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [real estate investment trust](https://asc.understandingaccounting.org/glossary/r/#real-estate-investment-trust "Real estate investment trusts generally are formed as trusts, associations, or corporations. They employ equity capital, coupled with substantial amounts of debt financing, in making real estate loans and investments. Real estate investment trusts must distribute substantially all of their taxable income to their shareholders annually in order to retain their favorable tax status (that is, dividends paid are treated as deductions in arriving at taxable income).") with operating support from its adviser shall make full disclosure of the relationship between the parties and the nature and amount of the transactions.