# ASC 835-974: Interest — Real Estate—Real Estate Investment Trusts Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/835/974/) 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): 2026-09-10T01:51:18.569Z to 2026-09-10T01:51:26.169Z Record version: sha256:897c83f9490a5f5ac6b1e0059fc398e7c528b47d35b3c2e8bef48f0ddf91edd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-974: Interest — Real Estate—Real Estate Investment Trusts ### Machine-generated study aids ```json { "summary": "This Subtopic governs when a real estate investment trust must stop recognizing interest revenue on loans it holds. Interest recognition must be discontinued when it is no longer reasonable to expect the revenue will be received, and certain conditions (past-due payments, default, foreclosure, borrower creditworthiness doubts, construction cost overruns/delays, renegotiation) create a rebuttable presumption that recognition should stop (835-974-35-1). Once discontinued, recognition may not resume and unrecorded interest may not be recognized until it is evident that principal and interest will be collected (835-974-35-2).", "key_points": [ "Recognition of interest revenue on REIT loans shall be discontinued when it is not reasonable to expect that the revenue will be received (835-974-35-1).", "Any of six listed conditions establishes a presumption that interest recording should be discontinued: past-due principal or interest, borrower default, actual or expected foreclosure proceedings, doubtful creditworthiness (bankruptcy, liens), cost overruns or construction delays casting doubt on project viability, or loan renegotiation (835-974-35-1).", "The presumption is rebuttable and may be overcome if other facts clearly refute it (835-974-35-1).", "The same conditions may also indicate that an allowance for losses should be provided (835-974-35-1).", "Because discontinuance is a realization question, interest recognition shall not resume and unrecorded interest shall not be recognized until it is evident that principal and interest will be collected (835-974-35-2).", "Including doubtful amounts in interest revenue is inappropriate because such presentation contradicts economic reality (835-974-35-3).", "Scope follows Section 974-10-15 (835-974-15-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Impairment", "Industry-specific" ], "audience_level": "intermediate", "student_note": "This is the classic \"nonaccrual\" rule applied to REIT mortgage loans: the trigger is doubtful realization, not a fixed number of days past due. The common mistake is thinking accrual can restart once a borrower makes one payment—recognition resumes only when it is evident that both principal and interest will be collected.", "related_topics": [ "974-10", "310-10", "326-20", "835-30", "310-40" ], "key_concepts": [ "interest revenue recognition", "nonaccrual loans", "realization", "rebuttable presumption", "real estate investment trust", "allowance for loan losses", "loan renegotiation", "foreclosure" ] } ``` Source downloaded (UTC): 2026-09-10T01:51:18.569Z to 2026-09-10T01:51:18.569Z Record version: sha256:767f73afbdc5b90f662cdbfc3f2e7d4431c1be5174329ed729f9134ddef48832 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-974-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/974/#05-overview-and-background) SEC content: no ##### [835-974-05-1](https://asc.understandingaccounting.org/asc/835/974/#835-974-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:18.569Z to 2026-09-10T01:51:18.569Z Record version: sha256:f494dc3b80f775323f1fa70c6d61679f3921de78289ea0de66649f08fd777ed3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses measurement issues related to interest revenue on loans held by [real estate investment trusts](https://asc.understandingaccounting.org/glossary/r/#real-estate-investment-trust "Real estate investment trusts generally are formed as trusts, associations, or corporations. They employ equity capital, coupled with substantial amounts of debt financing, in making real estate loans and investments. Real estate investment trusts must distribute substantially all of their taxable income to their shareholders annually in order to retain their favorable tax status (that is, dividends paid are treated as deductions in arriving at taxable income)."). Source downloaded (UTC): 2026-09-10T01:51:20.383Z to 2026-09-10T01:51:20.383Z Record version: sha256:a6d1cbcb0b16f7331e30ebaf9f26409cd90e0abc2dd5e45f3c2a1da34b53a7a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-974-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/974/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-974-15-1](https://asc.understandingaccounting.org/asc/835/974/#835-974-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:20.383Z to 2026-09-10T01:51:20.383Z Record version: sha256:cd3d8d89e2500c85b4f19252941ad5cd626a714d2df2045c89e295fc8c71b019 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 974-10-15. Source downloaded (UTC): 2026-09-10T01:51:26.169Z to 2026-09-10T01:51:26.169Z Record version: sha256:d4aa69aeaf36f0e5933f34cd879c96f42fe0fc2ee414c596f220ced4256ad6da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-974-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/974/#35-subsequent-measurement) SEC content: no #### Discontinuance of Interest Revenue Recognition ##### [835-974-35-1](https://asc.understandingaccounting.org/asc/835/974/#835-974-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:26.169Z to 2026-09-10T01:51:26.169Z Record version: sha256:d3f5f7512db433ae47d7663cd06663a4370c08d12188289c9b14e15cebde6e81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The recognition of interest revenue on loans made by [real estate investment trusts](https://asc.understandingaccounting.org/glossary/r/#real-estate-investment-trust "Real estate investment trusts generally are formed as trusts, associations, or corporations. They employ equity capital, coupled with substantial amounts of debt financing, in making real estate loans and investments. Real estate investment trusts must distribute substantially all of their taxable income to their shareholders annually in order to retain their favorable tax status (that is, dividends paid are treated as deductions in arriving at taxable income).") 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. ##### [835-974-35-2](https://asc.understandingaccounting.org/asc/835/974/#835-974-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:26.169Z to 2026-09-10T01:51:26.169Z Record version: sha256:ac90bcd5e1d38160a5e7e3808e64bb86c6979b54e291445cd771474930b2661b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-974-35-3](https://asc.understandingaccounting.org/asc/835/974/#835-974-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:26.169Z to 2026-09-10T01:51:26.169Z Record version: sha256:9423af79b6760899da58bbadc869f00303f8f9256ab2e8e83db393e2606abf1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.