# ASC 835-970: Interest — Real Estate—General Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/835/970/) 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): 2026-09-10T01:51:09.700Z to 2026-09-10T01:51:14.848Z Record version: sha256:7f87bff1e556a6f12ec5f0d462b74eedcaf0fd5f95161dd52e539fe4ebab380b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-970: Interest — Real Estate—General ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:51:09.700Z to 2026-09-10T01:51:09.700Z Record version: sha256:221ca107304046ac9012c35156686fe1bee888275fe10121f32816a86dc0031a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-970-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/970/#05-overview-and-background) SEC content: no ##### [835-970-05-1](https://asc.understandingaccounting.org/asc/835/970/#835-970-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:09.700Z to 2026-09-10T01:51:09.700Z Record version: sha256:1df5aaefb178101b8090b4a9a60061f05146699eba392ca236d699a021fdc4da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance concerning the recognition of interest income on investor loans or advances to real estate ventures. ##### [835-970-05-2](https://asc.understandingaccounting.org/asc/835/970/#835-970-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:09.700Z to 2026-09-10T01:51:09.700Z Record version: sha256:e61d0573a110e335a8abb231166162aadb85cc52830f12e0f0fcd383541faf21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See also Subtopic 835-20. Source downloaded (UTC): 2026-09-10T01:51:11.695Z to 2026-09-10T01:51:11.695Z Record version: sha256:f71d95aafd80c88e0b299268d3e97963c0432dfb81cbf9343b224ee0df253ecb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-970-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/970/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-970-15-1](https://asc.understandingaccounting.org/asc/835/970/#835-970-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:11.695Z to 2026-09-10T01:51:11.695Z Record version: sha256:4a42de1c33d96b741021d6d846d3e5afc58e572e83fc46faea1721d38f5c3de0 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 970-10-15. Source downloaded (UTC): 2026-09-10T01:51:14.848Z to 2026-09-10T01:51:14.848Z Record version: sha256:682670151a781962db8aab68cfc37d4f636770d75453e0258ab397129de229c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-970-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/970/#35-subsequent-measurement) SEC content: no #### Income from Loans or Advances to a Venture ##### [835-970-35-1](https://asc.understandingaccounting.org/asc/835/970/#835-970-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:14.848Z to 2026-09-10T01:51:14.848Z Record version: sha256:00df75a0b0eccbf7c279cfbaf0de40d9a9ae976b3022fe4499d6b3b2ee5e7459 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-8) 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](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-22) regarding situations where certain amounts of interest are accounted for as distributions rather than as interest income.