# ASC 835-30-15: Interest — Imputation of Interest — 15 Scope and Scope Exceptions

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/835/30/#15-scope-and-scope-exceptions)

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## ASC 835-30-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/835/30/#15-scope-and-scope-exceptions)

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#### Entities

##### [835-30-15-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-1)

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The guidance in this Subtopic applies to all entities. Specific guidance applies to finance companies, including finance company subsidiaries, and other entities that engage in transactions that involve lending to or financing the activities of others. For such entities, transactions in which captive finance companies offer favorable financing to increase sales of related entities are included in the scope of this Subtopic.

#### Instruments

##### [835-30-15-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-2)

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The guidance in this Subtopic applies to receivables and payables that represent contractual rights to receive money or contractual obligations to pay money on fixed or determinable dates, whether or not there is any stated provision for interest, with certain exceptions noted below. Such receivables and payables are collectively referred to in this Subtopic as notes. Some examples are the following:

1.  a
    
    Secured and unsecured notes
    
2.  b
    
    Debentures
    
3.  c
    
    Bonds
    
4.  d
    
    Mortgage notes
    
5.  e
    
    Equipment obligations
    
6.  f
    
    Some accounts receivable and payable.

##### [835-30-15-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-3)

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With the exception of guidance in paragraphs

[835-30-45-1A through 45-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1A)

addressing the presentation of [discount](https://asc.understandingaccounting.org/glossary/d/#discount "The difference between the net proceeds, after expense, received upon issuance of debt and the amount repayable at its maturity. See Premium.") and [premium](https://asc.understandingaccounting.org/glossary/p/#premium "The excess of the net proceeds, after expense, received upon issuance of debt over the amount repayable at its maturity. See Discount.") in the financial statements, which is applicable in all circumstances, and the guidance in paragraphs

[835-30-55-2 through 55-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-2)

regarding the application of the [interest method](https://asc.understandingaccounting.org/glossary/i/#interest-method "The method used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period."), the guidance in this Subtopic does not apply to the following:

1.  a
    
    Payables arising from transactions with suppliers in the normal course of business that are due in customary trade terms not exceeding approximately one year
    
2.  b
    
    Amounts that do not require repayment in the future, but rather will be applied to the purchase price of the property, goods, or service involved; for example, deposits or progress payments on construction contracts, advance payments for acquisition of resources and raw materials, advances to encourage exploration in the extractive industries (see paragraph [932-835-25-2](https://asc.understandingaccounting.org/asc/835/932/#835-932-25-2))
    
3.  c
    
    Amounts intended to provide security for one party to an agreement (for example, security deposits, retainages on contracts)
    
4.  d
    
    The customary cash lending activities and demand or savings deposit activities of financial institutions whose primary business is lending money
    
5.  e
    
    Transactions where interest rates are affected by the tax attributes or legal restrictions prescribed by a governmental agency (for example, industrial revenue bonds, tax exempt obligations, government guaranteed obligations, income tax settlements)
    
6.  f
    
    Transactions between parent and subsidiary entities and between subsidiaries of a common parent
    
7.  g
    
    The application of the present value measurement (valuation) technique to estimates of contractual or other obligations assumed in connection with sales of property, goods, or service, for example, a warranty for product performance
    
8.  h
    
    Receivables, [contract assets](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance)."), and [contract liabilities](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.") in contracts with customers, see paragraphs
    
    [606-10-32-15 through 32-20](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-15)
    
    for guidance on identifying a significant financing component in a contract with a customer.

#### Other Considerations

##### [835-30-15-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-4)

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This Subtopic does not modify the following accounting guidance addressed in other Topics:

1.  a
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).
    
2.  b
    
    The guidance that deferred income taxes should not be accounted for on a discounted (present value) basis in Subtopic 740-10.