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The recognition of interest revenue on loans made by real estate investment trusts shall be discontinued when it is not reasonable to expect that the revenue will be received. Also, certain conditions should be regarded as establishing a presumption (which may be overcome if other facts clearly refute the presumption) that the recording of interest shall be discontinued, including any of the following:
  1. a
    Payments of principal or interest are past due.
  2. b
    The borrower is in default under the terms of the loan agreement.
  3. c
    Foreclosure proceedings have been or are expected to be initiated.
  4. d
    The credit-worthiness of the borrower is in doubt because of pending or actual bankruptcy proceedings, the filing of liens against his assets, and so forth.
  5. e
    Cost overruns or delays in construction cast doubt on the economic viability of the project.
  6. f
    The loan has been renegotiated.
These conditions may also be an indication that an allowance for losses should be provided.
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The discontinuance of interest revenue recognition is related to the question of realization and, consequently, such recognition shall not be resumed, nor shall unrecorded interest be recognized, until it is evident that the principal and interest will be collected.
","snippet":"The discontinuance of interest revenue recognition is related to the question of realization and, consequently, such recognition shall not be resumed, nor shall unrecorded interest be recognized, until it is evident that…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ac90bcd5e1d38160a5e7e3808e64bb86c6979b54e291445cd771474930b2661b","downloaded_from":"2026-09-10T01:51:26.169Z","last_downloaded_at":"2026-09-10T01:51:26.169Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477530","source_sha256":"4266f240c16a0d63361b85d6310095afbdbe64713ad34f414126fc69070629c6"}},{"citation":"835-974-35-3","para":"35-3","html":"
Since interest recognition is discontinued because realization is doubtful, it is not appropriate to include such amounts in interest revenue in the financial statements because such a presentation contradicts economic reality.
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