# ASC 835-30-35: Interest — Imputation of Interest — 35 Subsequent Measurement

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/835/30/#35-subsequent-measurement)

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## ASC 835-30-35: 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/835/30/#35-subsequent-measurement)

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##### [835-30-35-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-1)

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This Section provides guidance for the measurement of interest income or expense over the term of a note.

#### The Interest Method

##### [835-30-35-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-2)

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With respect to a note for which the imputation of interest is required, the difference between the present value and the face amount shall be treated as [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.") or [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.") and amortized as interest expense or income over the life of the note in such a way as to result in a constant rate of interest when applied to the amount outstanding at the beginning of any given period. This is 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.").

##### [835-30-35-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-3)

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The difference between the periodic interest cost so calculated using the interest method and the nominal interest on the outstanding amount of the debt is the amount of periodic amortization.

#### Other Methods of Amortization

##### [835-30-35-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-4)

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Other methods of amortization may be used if the results obtained are not materially different from those that would result from the interest method.

#### Eligibility for Interest Capitalization

##### [835-30-35-5](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-5)

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The amount chargeable to interest expense under the guidance in this Subtopic is eligible for inclusion in the amount of interest cost capitalized in accordance with Subtopic 835-20.