# ASC 835-30: Interest — Imputation of Interest Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/835/30/) 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): 2026-09-10T01:49:32.218Z to 2026-09-10T01:50:15.507Z Record version: sha256:362550137fe84061d251370c9acd95daac36d8d05207b13f4877a6e098fe87e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30: Interest — Imputation of Interest ### Machine-generated study aids ```json { "summary": "ASC 835-30 governs when and how interest must be \"imputed\" on notes receivable and payable whose face amount does not reasonably represent the present value of the consideration exchanged — typically non-interest-bearing notes or notes with an unreasonable stated rate. In those cases the note and the related sales price/cost are recorded at the fair value of the property, goods, or service or at an amount approximating the fair value of the note (whichever is more clearly determinable), and any resulting discount or premium is amortized to interest income or expense using the interest method. Discount, premium, and debt issuance costs are presented as direct deductions from or additions to the face amount of the note, not as deferred charges or credits.", "key_points": [ "There is a general presumption that the stated interest rate in an arm's-length bargained exchange is fair and adequate, but that presumption is overcome if interest is not stated, the rate is unreasonable, or the face amount differs materially from the cash sales price or the note's fair value (835-30-05-2).", "When the presumption is overcome, the note, the sales price, and the cost of the property, goods, or service are recorded at the fair value of the property/goods/service or at an amount reasonably approximating the fair value of the note, whichever is more clearly determinable, with the difference from face amount treated as an element of interest over the note's life (835-30-25-10).", "Absent an established exchange price or evidence of the note's fair value, present value is determined by discounting all future payments at an imputed rate fixed at the date the note is issued, assumed, or acquired; later changes in prevailing rates are ignored (835-30-25-11).", "The imputed rate should approximate the rate an independent borrower and lender would negotiate (835-30-10-1) and in any event shall be the rate at which the debtor can obtain similar financing from other sources at the transaction date, considering credit standing, covenants, collateral, and terms (835-30-25-12).", "The discount or premium is amortized as interest expense or income over the life of the note so as to produce a constant rate of interest on the outstanding amount — the interest method; other methods are permitted only if results are not materially different (835-30-35-2 through 35-4; 835-30-55-2).", "Discount, premium, and debt issuance costs are not separable assets or liabilities and must be reported as a direct deduction from or addition to the face amount of the note, never as a deferred charge or credit; the note's description must include the effective interest rate and the face amount must be presented or disclosed (835-30-45-1A; 45-2; 50-1).", "Scope exclusions include normal-course trade payables due within about one year, deposits/progress payments, security deposits and retainages, financial institutions' customary lending and deposit activities, rates affected by governmental tax attributes or legal restrictions, parent-subsidiary transactions, and receivables/contract assets and liabilities under ASC 606 (835-30-15-3)." ], "categories": [ "Initial measurement", "Subsequent measurement", "Presentation", "Debt and equity" ], "audience_level": "intermediate", "student_note": "Exam questions almost always test the mechanics: discount a non-interest-bearing note at the imputed rate, record the asset/sale at that present value, and amortize the discount by the effective interest method. The most common errors are (1) re-imputing the rate when market rates later change (the rate is locked at inception) and (2) still showing discount or debt issuance costs as a separate deferred charge — since ASU 2015-03 both must be netted against the note's face amount.", "related_topics": [ "835-20", "606-10", "740-10", "310-20", "470-20", "820" ], "key_concepts": [ "imputed interest rate", "note discount and premium", "present value of consideration", "interest method", "effective interest rate", "non-interest-bearing note", "debt issuance costs", "established exchange price" ] } ``` Source downloaded (UTC): 2026-09-10T01:49:32.218Z to 2026-09-10T01:49:32.218Z Record version: sha256:7209a58e8945996cf95f58fd5bfd59c58fa8c6bc4c19953e29ead431e02b29fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/835/30/#00-status) SEC content: no ##### [835-30-00-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:32.218Z to 2026-09-10T01:49:32.218Z Record version: sha256:b80cfc029a3b563ec6181a5a4e699e1b5548064da0ebdbd8148341e900d45757 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
ContractSupersededAccounting Standards Update No. 2020-1010/29/2020
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
Contract AssetAddedAccounting Standards Update No. 2014-0905/28/2014
Contract LiabilityAddedAccounting Standards Update No. 2014-0905/28/2014
Customer(1st def.)SupersededAccounting Standards Update No. 2020-1010/29/2020
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
Fair Value (3rd def.)AddedAccounting Standards Update No. 2012-0410/01/2012
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Public Business EntityAddedAccounting Standards Update No. 2015-0304/07/2015
835-30-05-2AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-15-3AmendedAccounting Standards Update No. 2020-1010/29/2020
835-30-15-3AmendedAccounting Standards Update No. 2014-0905/28/2014
835-30-15-4AmendedAccounting Standards Update No. 2020-0608/05/2020
835-30-25-2AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-25-5AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-25-10AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-25-11AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-45-1AmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-45-1AAmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-45-2AmendedAccounting Standards Update No. 2020-1010/29/2020
835-30-45-3AmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-45-4AmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-50-1AddedAccounting Standards Update No. 2020-1010/29/2020
835-30-55-8AmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-65-1AddedAccounting Standards Update No. 2015-0304/07/2015
Source downloaded (UTC): 2026-09-10T01:49:36.267Z to 2026-09-10T01:49:36.267Z Record version: sha256:57ecb4168925e75381a5cb31ea05c2bfb459c9aac89dd696f8e8c51e4ddd02e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/30/#05-overview-and-background) SEC content: no ##### [835-30-05-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:36.267Z to 2026-09-10T01:49:36.267Z Record version: sha256:bc5c6c0b435d328817023d08d26e3415a77ffbf0da8f3fd927e58da42cc8b663 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the imputation of interest. ##### [835-30-05-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:36.267Z to 2026-09-10T01:49:36.267Z Record version: sha256:4141e1901e2a24b60cbf70104c2a092cac73195f0d3bed9f08855d24c452db62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Business transactions often involve the exchange of cash or property, goods, or service for a note or similar instrument. When a note is exchanged for property, goods, or service in a bargained transaction entered into at arm's length, there should be a general presumption that the rate of interest stipulated by the parties to the transaction represents fair and adequate compensation to the supplier for the use of the related funds. That presumption, however, must not permit the form of the transaction to prevail over its economic substance and thus would not apply if interest is not stated, the stated interest rate is unreasonable, or the stated face amount of the note is materially different from the current cash sales price for the same or similar items or from the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the note at the date of the transaction. The use of an interest rate that varies from prevailing interest rates warrants evaluation of whether the face amount and the stated interest rate of a note or obligation provide reliable evidence for properly recording the exchange and subsequent related interest. ##### [835-30-05-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:36.267Z to 2026-09-10T01:49:36.267Z Record version: sha256:9b6d8af238533299db42db8127ba2fcd81183821d19174582267be6ac12a505b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for the appropriate accounting when the face amount of a note does not reasonably represent the present value of the consideration given or received in the exchange. This circumstance may arise if the note is non-interest-bearing or has a stated interest rate that is different from the rate of interest appropriate for the debt at the date of the transaction. Unless the note is recorded at its present value in this circumstance, the sales price and profit to a seller in the year of the transaction and the purchase price and cost to the buyer are misstated, and interest income and interest expense in subsequent periods are also misstated. Source downloaded (UTC): 2026-09-10T01:49:39.975Z to 2026-09-10T01:49:39.975Z Record version: sha256:1ef9c337c56a1eb6aaf81155ff1bf9eb3cd3a707f1d54e59d3a3a401ec6bfd88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/835/30/#10-objectives) SEC content: no ##### [835-30-10-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:39.975Z to 2026-09-10T01:49:39.975Z Record version: sha256:da7b74f748e996e0537718c769823185aff2b49149f401078cd99030e7923d96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the guidance in this Subtopic is to approximate the rate for a note that would have resulted if an independent borrower and an independent lender had negotiated a similar transaction under comparable terms and conditions with the option to pay the cash price upon purchase or to give a note for the amount of the purchase that bears the prevailing rate of interest to maturity. Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:7084b4f1158e2bced7a839cd06dd69b7f3bca64724312bb5b0f1f2f3e30d0d12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/30/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [835-30-15-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:76ac68c3a2ad0602aaa95effb1532e07cd16534b652a8c00e26c55c60f333133 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:7e311901085854b51b18c8549423932561f022b3cda14581b53f5515e0277a8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:2211fe64635a42063e5ed0aa9bd772ed05396cf31573a103649115f69b40ec37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:0d552d69f433db5f399b341f409e7b137fe74d4809cd6bc6cd9eee5726093bba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:e19cf93a2d8b6353f5d4552f96950bcf1da9a82863a15225a8468bae38499f3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/835/30/#25-recognition) SEC content: no ##### [835-30-25-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:33985eb50a8da6264eb0bae18eab933ed3c9e4487778a0ead8c19915da5fd75b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides guidance on the imputation of interest. #### Imputation of Interest ##### [835-30-25-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:aace124c4978a7df668fd5d0ca8a6ff06cac549691fbdc5aaa0bec9c2ef8c8a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If determinable, the established exchange price (which, presumably, is the same as the price for a cash sale) of property, goods, or service acquired or sold in consideration for a note may be used to establish the present value of the note. When notes are traded in an open market, the market rate of interest and quoted prices of the notes provide the evidence of the present value. These methods are preferable means of establishing the present value of the note. ##### [835-30-25-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:68f72dc6ca581ea8eed67054df72ea26f915f970d7ec2038b23b3b5b356d1251 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an established exchange price is not determinable and if the note has no ready market, the problem of determining present value is more difficult. To estimate the present value of a note under such circumstances, an applicable interest rate is approximated that may differ from the stated or coupon rate. This process of approximation is called imputation, and the resulting rate is called an [imputed interest rate](https://asc.understandingaccounting.org/glossary/i/#imputed-interest-rate "The interest rate that results from a process of approximation (or imputation) required when the present value of a note must be estimated because an established exchange price is not determinable and the note has no ready market."). Nonrecognition of an apparently small difference between the stated rate of interest and the applicable current rate may have a material effect on the financial statements if the face amount of the note is large and its term is relatively long. ##### [835-30-25-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:7d98728f3969cf3f839f0fe1ac0d9cdf26e7febe04c46567afc39f1b9ad6ee4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a note is received or issued solely for cash and no other right or privilege is exchanged, it is presumed to have a present value at issuance measured by the cash proceeds exchanged. If cash and some other rights or privileges are exchanged for a note, the value of the rights or privileges shall be given accounting recognition as described in paragraph [835-30-25-6](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-6). ##### [835-30-25-5](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:380148685350de21f54405f26abf319e36952d4dc29fc98f15ad2b8ef2be55a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The total amount of interest during the entire period of a cash loan is generally measured by the difference between the actual amount of cash received by the borrower and the total amount agreed to be repaid to the lender. The difference between the face amount and the proceeds upon issuance is shown as either [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."). For example, if a bond is issued at a discount or premium, such discount or premium is recognized in accounting for the original issue. The coupon or stated interest rate is not regarded as the effective yield or market rate. Moreover, if a long-term non-interest-bearing note or bond is issued, its net proceeds are less than face amount and an effective interest rate is based on its [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") upon issuance. ##### [835-30-25-6](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:5ec6ff8f5934714215ba29b1983b82033444af95ae6c0e3a44544a77481e370c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A note issued solely for cash equal to its face amount is presumed to earn the stated rate of interest. However, in some cases the parties may also exchange unstated (or stated) rights or privileges, which are given accounting recognition by establishing a note discount or premium account. In such instances, the effective interest rate differs from the stated rate. For example, an entity may lend a supplier cash that is to be repaid five years hence with no stated interest. Such a non-interest-bearing loan may be partial consideration under a purchase contract for supplier products at lower than the prevailing market prices. In this circumstance, the difference between the present value of the receivable and the cash loaned to the supplier is appropriately regarded as an addition to the cost of products purchased during the contract term. The note discount shall be amortized as interest income over the five-year life of the note, as required by Section 835-30-35. ##### [835-30-25-7](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:4acabcef425e7156bee93032dd3c592d227057e75cf7faa0c99434067f704444 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A note exchanged for property, goods, or service represents the following two elements, which may or may not be stipulated in the note: 1. a The principal amount, equivalent to the bargained exchange price of the property, goods, or service as established between the supplier and the purchaser 2. b An interest factor to compensate the supplier over the life of the note for the use of funds that would have been received in a cash transaction at the time of the exchange. ##### [835-30-25-8](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:85dafaeb0cc3d4d563e29c94e628dc4104a9adcb606a04b1f32ac21b4862ee12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Notes exchanged for property, goods, or services are valued and accounted for at the present value of the consideration exchanged between the contracting parties at the date of the transaction in a manner similar to that followed for a cash transaction. ##### [835-30-25-9](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:3f6dbf240204de3db2cd689ee40abaf9554ff78a4ecb6a405512cf3a641b359d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The difference between the face amount and the present value upon issuance is shown as either discount or premium. ##### [835-30-25-10](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:70668a58461db5711844ce6547d06235bfe75803c79a35a0e144d9ef42c4acca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In circumstances where interest is not stated, the stated amount is unreasonable, or the stated face amount of the note is materially different from the current cash sales price for the same or similar items or from the fair value of the note at the date of the transaction, the note, the sales price, and the cost of the property, goods, or service exchanged for the note shall be recorded at the fair value of the property, goods, or service or at an amount that reasonably approximates the fair value of the note, whichever is the more clearly determinable. That amount may or may not be the same as its face amount, and any resulting discount or premium shall be accounted for as an element of interest over the life of the note. ##### [835-30-25-11](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:cf2e9247dbd36964336e967c0b3c716abf122fff1a107ad43cf946cc03f26b60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the absence of established exchange prices for the related property, goods, or service or evidence of the fair value of the note (as described in paragraph [835-30-25-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-2)), the present value of a note that stipulates either no interest or a rate of interest that is clearly unreasonable shall be determined by discounting all future payments on the notes using an imputed rate of interest. This determination shall be made at the time the note is issued, assumed, or acquired; any subsequent changes in prevailing interest rates shall be ignored. #### Determining an Appropriate Interest Rate ##### [835-30-25-12](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:ade33242548390d2b03f9847f64cd5b9ced43293750f5319938299eccf3df04a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [835-30-10-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-10-1) identifies the objective of the guidance in this Subtopic for approximating an interest rate. The variety of transactions encountered precludes any specific interest rate from being applicable in all circumstances. However, this paragraph provides the following general guidelines: 1. a The choice of a rate may be affected by the credit standing of the issuer, restrictive covenants, the collateral, payment and other terms pertaining to the debt, and, if appropriate, the tax consequences to the buyer and seller. 2. b The prevailing rates for similar instruments of issuers with similar credit ratings will normally help determine the appropriate interest rate for determining the present value of a specific note at its date of issuance. 3. c In any event, the rate used for valuation purposes shall be the rate at which the debtor can obtain financing of a similar nature from other sources at the date of the transaction. ##### [835-30-25-13](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:3a52126c180d1fd170845292d80887d0e7859a868bd12702e37d8398e27a9abc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The selection of a rate may be affected by many considerations. For instance, where applicable, the choice of a rate may be influenced by the following: 1. a An approximation of the prevailing market rates for the source of credit that would provide a market for sale or assignment of the note 2. b The prime or higher rate for notes that are discounted with banks, giving due weight to the credit standing of the maker 3. c Published market rates for similar-quality bonds 4. d Current rates for debentures with substantially identical terms and risks that are traded in open markets 5. e The current rate charged by investors for first or second mortgage loans on similar property. Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:cf96de06abb11384ec5683edc5152872640600308165593911fdbfb23e0c719f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/30/#35-subsequent-measurement) SEC content: no ##### [835-30-35-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:2268ee184fe0d86ea8c8031202b7ca6ffaf074a8f6b3b1c57cdd6d9e06abb618 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:a5416811fbbb4f2083dc6ae0bb01a1002daea5391c372de52f0205af71c7efbf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:9f70d8edfb8899e9161c74639a72d994e7f934972194fd83ad9cfcaec1cafcca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:c1d7b0700c462f878e9147cc5f400f151680125266fe013fc25237daea655c3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:25baf65491a54a8be75799a64afd1a89acf913c5174159adc68628272b369613 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:e2fa3c2bd5e2586cd2f95abee341bc58de39c9ae0058eec68c4a9d983b15c3f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/835/30/#45-other-presentation-matters) SEC content: no ##### [835-30-45-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:c2859d1390f89474710ddc540774cc5df5251a1ae9a10be7c1fdfe67293b31d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Section does not apply to the amortization of premium and discount of assets and liabilities that are reported at fair value and the debt issuance costs of liabilities that are reported at fair value. ##### [835-30-45-1A](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:04806a836063a17a87c143bc61ec397eb11a5de8c92e3a1d73980d799413e14a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [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.") resulting from the determination of present value in cash or noncash transactions is not an asset or liability separable from the note that gives rise to it. Therefore, the discount or premium shall be reported in the balance sheet as a direct deduction from or addition to the face amount of the note. Similarly, debt issuance costs related to a note shall be reported in the balance sheet as a direct deduction from the face amount of that note. The discount, premium, or debt issuance costs shall not be classified as a deferred charge or deferred credit. ##### [835-30-45-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:79fd525a2c4b09a59e20e82d3965b27db216050bc6b6b8c9868cca87dd435cf5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [835-30-45-1A](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1A) provides requirements for the balance sheet presentation for the discount or premium and debt issuance costs of a note. The description of the note shall include the effective interest rate. The face amount of the note also shall be presented in the financial statements or disclosed in the notes to financial statements. (See paragraph [835-30-50-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-50-1).) ##### [835-30-45-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:ef1f3a2d9f2250b88556a828c18ece0b8454689356aa4f2e962131c53be7e0cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amortization of discount or premium shall be reported as interest expense in the case of liabilities or as interest income in the case of assets. Amortization of debt issuance costs also shall be reported as interest expense. ##### [835-30-45-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:a07ba5e78e59cfaa327994eb54fe470a441f0e5343b5bd38003377c91029c649 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 2 (paragraph [835-30-55-8](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-8)) for illustrations of balance sheet presentation of a discount and debt issuance costs on a note. Source downloaded (UTC): 2026-09-10T01:49:55.627Z to 2026-09-10T01:49:55.627Z Record version: sha256:e291d0da545f5eae9bc68e255cec20eec7f453905d2c81383e1e189dcc99c1fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/835/30/#50-disclosure) SEC content: no ##### [835-30-50-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:55.627Z to 2026-09-10T01:49:55.627Z Record version: sha256:5fed8e59cc6f661b5192898ed034d3116d19bac426735586b1a659b58a9ff79e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [835-30-45-1A](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1A) provides requirements for the balance sheet presentation for the discount or premium and debt issuance costs of a note. The description of the note shall include the effective interest rate. The face amount of the note also shall be presented in the financial statements or disclosed in the notes to financial statements. (See paragraph [835-30-45-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-2).) Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:72cb202ad064a54cefb9a8384fc833ffb328c82ac9051c6d501e800e197d4eef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/835/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [835-30-55-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:c71c0e93e786a85d2dcb558aec25a41a3d6fed8d37ccd5057296541e47df85c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the following paragraphs is not subject to the scope limitation in paragraph [835-30-15-3(b)](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-3). ##### [835-30-55-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:ba8bce015f46ff567a556826ffc7d972c7f5bc4c10146854ca5fcf67be6f48a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Generally accepted accounting principles (GAAP) require use 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."). There is no basis for using an alternative to the interest method except if the results of alternative methods do not differ materially from those obtained by using the interest method. Therefore, methods other than the interest method, such as the rule of 78s, sum of the years' digits, and straight-line methods shall not be used if their results materially differ from the interest method. ##### [835-30-55-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:34772db067ab8a33f235a43c6ae01ac7ac7fe3b5e47a45f884e9eb33e9f44d4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The interest method produces periodic interest income at a constant effective yield on a loan; therefore, in a lending arrangement in which interest collected in earlier periods will be greater than that computed using the interest method, the excess interest collected shall be deferred and recognized as interest income in later periods so as to produce a constant yield. For example, the interest method would be applied in this way to loans for which interest is collected by the sum of the years' digits method. #### Illustrations ##### [835-30-55-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:a0f95e4ed7c2c3d456418a313eba998fd71b200206ae19497fa139e9b8171c1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [835-30-05-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-2), [835-30-25-3 through 25-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-3) , and [835-30-25-10 through 25-11](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-10) that the coupon or stated rate of interest and the face amount of a note or bond may not be the appropriate bases for valuation. The presumption that market values provide the evidence for valuation must be overcome before using coupon or stated rates and face or maturity amounts as the bases for accounting. ##### [835-30-55-5](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:48d24853320edb35d64a7f9b9ce06ba041c898215ccdf43d1a39a669029b94ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Upon issuance of a note or bond, the issuer customarily records as a liability the face or principal amount of the obligation. Ordinarily, the recorded liability also represents the amount that is to be repaid upon maturity of the obligation. The value recorded in the liability account, however, may be different from the proceeds received or the present value of the obligation at issuance if the market rate of interest differs from the coupon rate of interest. For example, consider the issuance of a $1,000, 20-year bond that bears interest at 10% annually. If we assume that 10% is an appropriate market rate of interest for such a bond, the proceeds at issuance will be $1,000. The bond payable would be recorded at $1,000, which represents the amount repayable at maturity and also the present value at issuance, which is equal to the proceeds. However, under similar circumstances, if the prevailing market rate were more (less) than 10%, a 20-year 10% bond with a face amount of $1,000 would usually have a value at issuance and provide cash proceeds of less (more) than $1,000. The significant point is that, upon issuance, a bond is valued at the present value of the future coupon interest payments plus the present value of the future principal payments (face amount). These two sets of future cash payments are discounted at the prevailing market rate of interest (for an equivalent security) at the date of issuance of the debt. As the 8% and 12% columns show, [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.") or [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.") arises when the prevailing market rate of interest differs from the coupon rate. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-82698238-A6C1-4FC9-B0D3-370198D1E2BA-low.gif) Assume prevailing market rate of 10% 8% 12% "1. Present value of annual interest payments of $100 (the coupon rate of 10% of $1,000) for 20 years" $851 $982 $747 "2. Present value of payment of the face amount of $1,000 at the end of Year 20" 149 215 104 Present value and proceeds at date of issuance " $1,000 " " $1,197 " $851 ##### [835-30-55-6](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:16c388f568dbf4f8ec3b11e728c05227d367d7a7178e59b9334d6f8170b97c88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the case of a $1,000 non-interest-bearing 20-year note, where the prevailing market rate for comparable credit risks is 10%, the following valuation should be made. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AD0B7E2B-E536-4DE8-9E5C-B8B1485373E5-low.gif) 1\. Present value of no annual interest payments $- "2. Present value of payment of the face amount of $1,000 at the end of Year 20" 149 Present value and proceeds at date of issuance $149 ##### [835-30-55-7](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:4c5a051a1391d9847ca98e1b82e79fbb8a02abcb0cdbd4d3b35b4cc36c808b0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Comparison of the two tables shows the significant impact of interest. ##### [835-30-55-8](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:66467164ac39f1e2982a763252fdf7a268a7ecfb7efd1cdb22af95112e5f71f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example is an illustration of the guidance in paragraphs [835-30-45-1 through 45-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1) related to the balance sheet presentation of notes that are discounted. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-FAC497EC-C732-4090-812F-C44F78344B2D-low.gif) December 31 20X2 20X1 Presentation 1—Discount presented in caption NOTE RECEIVABLE FROM SALE OF PROPERTY: " $1,000,000 face amount, noninterest bearing, due December 31, 20X9 (less unamortized discount based on imputed interest rate of 8%—20X2, $320,000; 20X1, $370,000)" " $680,000 " " $630,000 " Presentation 2—Discount presented separately NOTE RECEIVABLE FROM SALE OF PROPERTY: "Noninterest bearing note due December 31, 20X9" " $1,000,000 " " $1,000,000 " Less unamortized discount based on imputed interest rate of 8% " 320,000 " " 370,000 " Note receivable less unamortized discount " $680,000 " " $630,000 " Presentation 3—Several notes involved LONG-TERM DEBT (Note 1): Principal amount " $24,200,000 " " $24,200,000 " Less unamortized discount and debt issuance costs " 2,680,000 " " 2,792,000 " Long-term debt less unamortized discount and debt issuance costs " $21,520,000 " " $21,408,000 " Note 1—Long-Term Debt "Long-term debt at December 31, 20X2, consisted of the following:" Principal Unamortized Discount and Debt Issuance Costs "6% subordinated debentures, due 20X9 (discount is based on imputed interest rate of 7%)" " $20,000,000 " " $2,150,000 " "6 1/2% bank loan, due 20X7" " 3,000,000 " " 120,000 " "Noninterest bearing note issued in connection with acquisition of property, due 20X9 (discount is based on imputed interest rate of 8%) " " 1,200,000 " " 410,000 " Total " $24,200,000 " " $2,680,000 " Source downloaded (UTC): 2026-09-10T01:50:00.269Z to 2026-09-10T01:50:00.269Z Record version: sha256:276587da354a01518144ea98cbca6d95a9b2c429243aa642cd57c2ab76f59793 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/835/30/#60-relationships) SEC content: no #### Income Taxes ##### [835-30-60-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:00.269Z to 2026-09-10T01:50:00.269Z Record version: sha256:b1f9710414684e0b4448e0281d539812c5ee86865e41acd761d50e87030c3f01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on accounting for differences between the recognition for financial accounting purposes and income tax purposes 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.") 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.") resulting from determination of the present value of a note, see Topic 740. Source downloaded (UTC): 2026-09-10T01:50:01.944Z to 2026-09-10T01:50:01.944Z Record version: sha256:e6c135ae0aad3abf6125f1c4b5455e41227f407176891822fb39dcd5d23e7522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/835/30/#65-transition-and-open-effective-date-information) SEC content: no ##### [835-30-65-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:01.944Z to 2026-09-10T01:50:01.944Z Record version: sha256:951a531a8afa9f5711212ef21f557b68930856e45deaefb1401da06aa3451f7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 10/26/2017 after the end of the transition period stated in Accounting Standards Update No. 2015-03, _Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs_. Source downloaded (UTC): 2026-09-10T01:50:08.039Z to 2026-09-10T01:50:08.039Z Record version: sha256:9e1fedde0bd63e804d778fd43790c7ae7b7014022f63b0530bf7be1caa9a83d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/835/30/#sec-00-status) SEC content: yes ##### [835-30-S00-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:08.039Z to 2026-09-10T01:50:08.039Z Record version: sha256:5e6b622ae34c32537b147d4d4f07f303bf202f1e7af08eab63767ca4bbcd113b 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
Line-of-Credit ArrangementAddedAccounting Standards Update No. 2015-1508/18/2015
835-30-S35-1AddedAccounting Standards Update No. 2015-1508/18/2015
835-30-S45-1AddedAccounting Standards Update No. 2015-1508/18/2015
Source downloaded (UTC): 2026-09-10T01:50:11.615Z to 2026-09-10T01:50:11.615Z Record version: sha256:4468bacf085b6e1d3f496522da324475ef4c2f7cfefef17abc63bc0e51074085 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-S35: SEC 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/30/#sec-35-subsequent-measurement) SEC content: yes #### SEC Staff Guidance ##### [835-30-S35-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-S35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:11.615Z to 2026-09-10T01:50:11.615Z Record version: sha256:2f769471d4c787534cdb43c6e824d7cf75a53c32ccf5d80824311ce3b34f162f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [835-30-S45-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-S45-1), SEC Staff Announcement: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, for SEC Staff views on the presentation and subsequent measurement of debt issuance costs related to [line-of-credit arrangements](https://asc.understandingaccounting.org/glossary/l/#line-of-credit-arrangement "A line-of-credit or revolving-debt arrangement is an agreement that provides the borrower with the option to make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and to then reborrow under the same contract. Line-of-credit and revolving-debt arrangements may include both amounts drawn by the debtor (a debt instrument) and a commitment by the creditor to make additional amounts available to the debtor under predefined terms (a loan commitment)."). Source downloaded (UTC): 2026-09-10T01:50:15.507Z to 2026-09-10T01:50:15.507Z Record version: sha256:459627147b4af3e2a58a4a111e5a81cc76daff9574dc9def5002e4e35e03fc08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/835/30/#sec-45-other-presentation-matters) SEC content: yes #### SEC Staff Guidance ##### [835-30-S45-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:15.507Z to 2026-09-10T01:50:15.507Z Record version: sha256:abcf0be7b573f912564ef4288090528b9fa503d4a859ed57dd1c8c0cceedf802 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On April 7, 2015, the FASB issued Accounting Standards Update 2015-03, _Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs_, which requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. The guidance in Update 2015-03 (see paragraph [835-30-45-1A](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1A)) does not address presentation or subsequent measurement of debt issuance costs related to [line-of-credit arrangements](https://asc.understandingaccounting.org/glossary/l/#line-of-credit-arrangement "A line-of-credit or revolving-debt arrangement is an agreement that provides the borrower with the option to make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and to then reborrow under the same contract. Line-of-credit and revolving-debt arrangements may include both amounts drawn by the debtor (a debt instrument) and a commitment by the creditor to make additional amounts available to the debtor under predefined terms (a loan commitment)."). - Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.