{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/835/970/","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","number":"835-970","topic":"835","title":"Real Estate—General","area":"Broad Transactions","paragraphs":4,"summary":"This Subtopic governs when an investor-lender may recognize interest income on loans or advances made to a real estate venture (e.g., a joint venture in which the investor holds an equity interest). The core rule is that interest income must be deferred where collectibility is doubtful or other investors may not bear their share of losses; it is recognized in full only where the venture has expensed the interest (or the investor adjusts its equity pickup as if it had); otherwise a portion is deferred in proportion to the investor's interest in the venture's profits and losses (835-970-35-1).","concepts":["interest income deferral","investor-lender","real estate venture","loans and advances","in substance capital contribution","equity method","collectibility","interest capitalization"],"categories":["Recognition","Subsequent measurement","Industry-specific","Financial instruments"],"level":"intermediate","topic_title":"Interest","sections":[{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-970-05-1","para":"05-1","html":"
This Subtopic provides guidance concerning the recognition of interest income on investor loans or advances to real estate ventures.
","snippet":"This Subtopic provides guidance concerning the recognition of interest income on investor loans or advances to real estate ventures.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1df5aaefb178101b8090b4a9a60061f05146699eba392ca236d699a021fdc4da","downloaded_from":"2026-09-10T01:51:09.700Z","last_downloaded_at":"2026-09-10T01:51:09.700Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478332","source_sha256":"6d135236c5e14eb752bf1bf7f2cc0f004a59039785fdef117b8a361d17aff203"}},{"citation":"835-970-05-2","para":"05-2","html":"
See also Subtopic 835-20.
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 970-10-15.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 970-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4a42de1c33d96b741021d6d846d3e5afc58e572e83fc46faea1721d38f5c3de0","downloaded_from":"2026-09-10T01:51:11.695Z","last_downloaded_at":"2026-09-10T01:51:11.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478921","source_sha256":"a090c87d58b691858525d4ad17da4f87efe328c2236f037b7e1720616393fac4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:84a0cc93fb11719ddf11b5a0f022349078314648609527e9caf7685e50178b3a","downloaded_from":"2026-09-10T01:51:11.695Z","last_downloaded_at":"2026-09-10T01:51:11.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478921","source_sha256":"a090c87d58b691858525d4ad17da4f87efe328c2236f037b7e1720616393fac4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f71d95aafd80c88e0b299268d3e97963c0432dfb81cbf9343b224ee0df253ecb","downloaded_from":"2026-09-10T01:51:11.695Z","last_downloaded_at":"2026-09-10T01:51:11.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478921","source_sha256":"a090c87d58b691858525d4ad17da4f87efe328c2236f037b7e1720616393fac4"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Income from Loans or Advances to a Venture","paragraphs":[{"citation":"835-970-35-1","para":"35-1","html":"
An investor-lender that does not capitalize interest on its own real estate construction and development projects (see Subtopic 835-20) shall account for interest on loans and advances that are not in substance capital contributions in accordance with the following recommendations:
  1. a
    All interest income on the investor's loans or advances to the venture shall be deferred if either of the following conditions is present:
    1. 1
      Collectibility of the principal or interest is in doubt. This condition may exist if adequate collateral and other terms normally required by an independent lender are not present.
    2. 2
      There is a reasonable expectation that the other investors will not bear their shares of losses, resulting in uncertainty as to the lender's share of the venture's related interest expense.
  2. b
    If neither of the conditions in (a) is present and either the venture has recorded interest as an expense or the venture has capitalized the interest but in order to conform to the investor's accounting policies, the investor has recorded its equity in the income or loss of the venture as if the venture had charged the interest to expense, the entire interest income accrued on loans or advances to a venture shall be recorded as earned.
  3. c
    If the conditions in (a) or (b) are not present, a portion of interest income from loans and advances to a venture shall be deferred based on the investor's percentage interest in the profits and losses of the venture. However, an evaluation similar to that discussed in paragraphs
    970-323-35-8 through 35-10
    for recording the investor's share of losses should be made to avoid recording as interest income amounts that may ultimately be borne as losses by the investor making the loan.
See paragraph 970-323-35-22 regarding situations where certain amounts of interest are accounted for as distributions rather than as interest income.
","snippet":"An investor-lender that does not capitalize interest on its own real estate construction and development projects (see Subtopic 835-20) shall account for interest on loans and advances that are not in substance capital c…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:00df75a0b0eccbf7c279cfbaf0de40d9a9ae976b3022fe4499d6b3b2ee5e7459","downloaded_from":"2026-09-10T01:51:14.848Z","last_downloaded_at":"2026-09-10T01:51:14.848Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478144","source_sha256":"bfdd057b2e6617843d740725e919234915afdbf43788141b03cb6a581470a535"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:225d3b69df4adeeb310172ef0edca8c9f1e64f7f8ed8bc2a0e941f4ea3efcf58","downloaded_from":"2026-09-10T01:51:14.848Z","last_downloaded_at":"2026-09-10T01:51:14.848Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478144","source_sha256":"bfdd057b2e6617843d740725e919234915afdbf43788141b03cb6a581470a535"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:682670151a781962db8aab68cfc37d4f636770d75453e0258ab397129de229c3","downloaded_from":"2026-09-10T01:51:14.848Z","last_downloaded_at":"2026-09-10T01:51:14.848Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478144","source_sha256":"bfdd057b2e6617843d740725e919234915afdbf43788141b03cb6a581470a535"}}],"enrichment":{"summary":"This Subtopic governs when an investor-lender may recognize interest income on loans or advances made to a real estate venture (e.g., a joint venture in which the investor holds an equity interest). The core rule is that interest income must be deferred where collectibility is doubtful or other investors may not bear their share of losses; it is recognized in full only where the venture has expensed the interest (or the investor adjusts its equity pickup as if it had); otherwise a portion is deferred in proportion to the investor's interest in the venture's profits and losses (835-970-35-1).","key_points":["The guidance applies to an investor-lender that does not capitalize interest on its own real estate construction and development projects, and only to loans or advances that are not in substance capital contributions (835-970-35-1).","All interest income must be deferred if collectibility of principal or interest is in doubt — which may be indicated by the absence of adequate collateral or other terms an independent lender would require (835-970-35-1(a)(1)).","All interest income must also be deferred if there is a reasonable expectation that the other investors will not bear their shares of losses, creating uncertainty about the lender's share of the venture's interest expense (835-970-35-1(a)(2)).","Full interest income is recorded as earned if neither deferral condition exists and the venture has expensed the interest, or the venture capitalized it but the investor records its equity in venture income or loss as if the interest had been expensed (835-970-35-1(b)).","Otherwise, interest income is deferred in proportion to the investor's percentage interest in the profits and losses of the venture (835-970-35-1(c)).","Even under the partial-deferral approach, the investor must perform an evaluation like that in 970-323-35-8 through 35-10 to avoid recognizing interest income on amounts it will ultimately bear as losses (835-970-35-1(c)).","Certain interest amounts may have to be accounted for as distributions rather than interest income (see 970-323-35-22); Subtopic 835-20 governs interest capitalization."],"categories":["Recognition","Subsequent measurement","Industry-specific","Financial instruments"],"audience_level":"intermediate","student_note":"The point is to stop an equity investor from booking interest income on money it is effectively lending to itself; the common mistake is treating a loan to a venture like any third-party receivable and accruing 100% of the interest, when the codification requires deferral of the investor's proportionate share unless the venture has expensed the interest. Also watch for advances that are \"in substance capital contributions,\" which fall outside this guidance entirely.","related_topics":["835-20","970-323","970-10","323-10","310-10"],"key_concepts":["interest income deferral","investor-lender","real estate venture","loans and advances","in substance capital contribution","equity method","collectibility","interest capitalization"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:acc4681e7aa9b5f3c091054490dff64b55abde27524dfb3d95deda7782c1e640","downloaded_from":"2026-09-10T01:51:09.700Z","last_downloaded_at":"2026-09-10T01:51:14.848Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"835-974","title":"Real Estate—Real Estate Investment 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Ventures","score":0.7599,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cb7271da12bc5ef0e2b59ea3c27a3bbbee908f5435ab49aaf6080fad987e4e62","downloaded_from":"2026-09-09T23:42:35.809Z","last_downloaded_at":"2026-09-09T23:43:01.427Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-10","title":"Overall","topic_title":"Interest","score":0.7243,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8c3776ee17869cb291e2c5121d9c9aaf7d739f512dea6397fa39cf739c62bd3c","downloaded_from":"2026-09-10T01:48:44.160Z","last_downloaded_at":"2026-09-10T01:48:52.102Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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