{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/835/","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","title":"Interest","area":"Broad Transactions","group":null,"subtopics":[{"number":"835-10","topic":"835","title":"Overall","area":"Broad Transactions","paragraphs":21,"summary":"ASC 835-10 is the Overall subtopic of the Interest Topic; it does little more than map the Topic's structure and point readers elsewhere. It explains that Topic 835 addresses interest recognition in two instances — capitalization of interest costs incurred in connection with an investment in an asset (Subtopic 835-20) and imputation of interest where required (Subtopic 835-30) — and acknowledges that interest income/expense for specific transactions and instrument types is governed by other Topics.","concepts":["interest income","interest expense","capitalization of interest","imputation of interest","effective yield","scope and cross-references","interest cost"],"categories":["Recognition","Subsequent measurement","Debt and equity","Financial instruments"],"level":"introductory","topic_title":"Interest","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-10-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
835-10-05-3AmendedAccounting Standards Update No. 2012-0410/01/2012
835-10-60-2SupersededAccounting Standards Update No. 2016-1306/16/2016
835-10-60-3SupersededAccounting Standards Update No. 2016-1306/16/2016
835-10-60-5AmendedAccounting Standards Update No. 2016-0101/05/2016
835-10-60-6AAddedAccounting Standards Update No. 2016-0101/05/2016
835-10-60-7AmendedAccounting Standards Update No. 2009-1612/23/2009
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The Interest Topic contains the following Subtopics:
  1. a
    Overall
  2. b
    Capitalization of Interest
  3. c
    Imputation of Interest.
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This Topic provides guidance for interest income or expense recognition in two instances. Subtopic 835-20 provides guidance for capitalization of interest costs in connection with an investment in an asset. Subtopic 835-30 provides guidance for situations in which imputation of interest is required.
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The recognition of interest income and interest expense for specific transactions and specific instrument types is also addressed in various other Topics.
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For guidance on the allocation of interest to discontinued operations, see paragraphs
205-20-45-6 through 45-8
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Paragraph superseded by Accounting Standards Update No. 2016-13.
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Paragraph superseded by Accounting Standards Update No. 2016-13.
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For guidance on the recognition of loan origination fees and costs and commitment fees and costs and the effect on the yield of the related loan, see Section 310-20-35.
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For guidance on recognition of interest income on investments in debt securities, see paragraph 320-10-35-4.
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For guidance on recognition of interest income on structured notes, see paragraph 320-10-35-38.
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For guidance on recognition of dividend income on investments in equity securities, see paragraph 321-10-35-6.
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For guidance on accounting for a transferor's interests in securitized transactions accounted for as sales (see Topic 860) and purchased beneficial interests, see Subtopic 325-40.
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For guidance on the recognition of changes in the carrying amount of a deposit as interest income or interest expense when an insurance contract is accounted for as a deposit, see paragraph 340-30-45-2.
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For guidance on the method of determining interest expense to be recognized for increasing-rate debt, see paragraphs
470-10-35-1 through 35-2
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","snippet":"For guidance on the method of determining interest expense to be recognized for increasing-rate debt, see paragraphs 470-10-35-1 through 35-2.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f1229af67085806325ef69869c3e2526cd3606f43dbd7d8c729e6fadb9e55902","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}},{"citation":"835-10-60-10","para":"60-10","html":"
For guidance on whether interest should be accrued or imputed to the date of conversion of a debt instrument to an equity instrument where the terms provide that accrued but unpaid interest at the date of the conversion is forfeited by the debt holder, see paragraph 470-20-35-11.
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For guidance on a debtor's accounting for a modification or exchange of debt instruments, see Section 470-50-40.
","snippet":"For guidance on a debtor's accounting for a modification or exchange of debt instruments, see Section 470-50-40.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:acba17ba003a1c8aac09c1109346a5693adee1fe8d581d36906a394b5b5d5e46","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}},{"citation":"835-10-60-12","para":"60-12","html":"
For guidance on the recognition of interest expense on a payable restructured in a troubled debt restructuring, see paragraphs
470-60-35-5 through 35-6
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For guidance on the recognition of interest cost on forward contracts that require physical settlement by repurchase of a fixed number of the issuer's equity shares in exchange for cash, see paragraph 480-10-35-3.
","snippet":"For guidance on the recognition of interest cost on forward contracts that require physical settlement by repurchase of a fixed number of the issuer's equity shares in exchange for cash, see paragraph 480-10-35-3.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cfe58b054c8c2ef017000d0e80c86942670dc6131b2aa67461aab7c2d11aeea0","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2bbee6b25e84d197e652b388ba11c2edf17cb71cdf7f004b2030b0c1fef89e5a","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}},{"block":null,"heading":"Income Taxes","paragraphs":[{"citation":"835-10-60-14","para":"60-14","html":"
For recognition and measurement requirements for the accrual of interest on unrecognized tax benefits and for guidance on the recognition of interest expense when the tax law requires interest to be paid on an underpayment of income taxes, see paragraph 740-10-25-56.
","snippet":"For recognition and measurement requirements for the accrual of interest on unrecognized tax benefits and for guidance on the recognition of interest expense when the tax law requires interest to be paid on an underpayme…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c4f31d9081002f56a68405e9b378e23b905d2fff211e73c804d8dc45925f2fbb","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d5a5e6b5e12fb55a73a97a4595568ad3e15c94e8b0bc3c385d0488e8eabe497f","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}},{"block":null,"heading":"Derivatives and Hedging","paragraphs":[{"citation":"835-10-60-15","para":"60-15","html":"
For guidance on the accounting for embedded features that alter net interest payments on an interest-bearing host contract, see paragraphs
815-15-25-26 through 25-27
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","snippet":"For guidance on the accounting for embedded features that alter net interest payments on an interest-bearing host contract, see paragraphs 815-15-25-26 through 25-27.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5a661527ef8c4d1a1dce37724f7efef1d76b71b9fd5f0700e2e5049b219ae7cf","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4215bae3cc086a9f967f6fb686fb7e643460624eb2700b95a7543980fad042bb","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}},{"block":null,"heading":"Not-for-Profit Entities","paragraphs":[{"citation":"835-10-60-16","para":"60-16","html":"
For guidance on the presentation of accruals of the interest element related to unconditional promises to give by donees and by donors, see paragraph 958-310-45-2.
","snippet":"For guidance on the presentation of accruals of the interest element related to unconditional promises to give by donees and by donors, see paragraph 958-310-45-2.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6aeda68dd22a0df06cb662e2b3b39314b2ab0791e2649669b5ffd2c6f1fd511e","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:69e4bf136a5b276eae80820301c3260bfa0a816d08c478763f3296c469744f2e","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2644d145f8515a55485d38b7f63e9e8e1276dfaef1f7e54695456689ca8333b","downloaded_from":"2026-09-10T01:48:49.212Z","last_downloaded_at":"2026-09-10T01:48:49.212Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483090","source_sha256":"1bb130800dca636587045f19589b3849b1c3d49cdbe76fb37677a42772b9a20f"}}],"enrichment":{"summary":"ASC 835-10 is the Overall subtopic of the Interest Topic; it does little more than map the Topic's structure and point readers elsewhere. It explains that Topic 835 addresses interest recognition in two instances — capitalization of interest costs incurred in connection with an investment in an asset (Subtopic 835-20) and imputation of interest where required (Subtopic 835-30) — and acknowledges that interest income/expense for specific transactions and instrument types is governed by other Topics.","key_points":["Topic 835 comprises three Subtopics: Overall (835-10), Capitalization of Interest (835-20), and Imputation of Interest (835-30) (835-10-05-1).","Topic 835 gives interest recognition guidance in only two instances — capitalization of interest costs in connection with an investment in an asset and situations requiring imputation of interest (835-10-05-2).","Interest income and expense for specific transactions and instrument types is addressed in other Topics, not in Topic 835 (835-10-05-3).","Loan origination fees and costs and commitment fees affect the yield of the related loan under Section 310-20-35, not Topic 835 (835-10-60-4).","Interest income on debt securities (320-10-35-4), structured notes (320-10-35-38), and dividend income on equity securities (321-10-35-6) are recognized under Topic 320/321 (835-10-60-5 through 60-6A).","Debt-specific interest guidance resides in Topic 470 — increasing-rate debt (470-10-35-1 through 35-2), conversion with forfeited accrued interest (470-20-35-11), modifications/exchanges (Section 470-50-40), and troubled debt restructurings (470-60-35-5 through 35-6).","Interest accrued on unrecognized tax benefits and on income tax underpayments follows 740-10-25-56 (835-10-60-14)."],"categories":["Recognition","Subsequent measurement","Debt and equity","Financial instruments"],"audience_level":"introductory","student_note":"Treat 835-10 as a signpost, not a rulebook: the substantive rules live in 835-20 (capitalization) and 835-30 (imputation). The common misunderstanding is assuming Topic 835 governs all interest recognition — in fact interest on loans, debt securities, restructured debt, and tax underpayments is governed by Topics 310, 320, 470, and 740.","related_topics":["835-20","835-30","310-20","320-10","470-50","740-10"],"key_concepts":["interest income","interest expense","capitalization of interest","imputation of interest","effective yield","scope and cross-references","interest cost"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6913b15975e22b1ca0409f0fafd87c175ec53d067d9e5579ca3dce1b8a31d738","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 timestamps"}},"related":[{"number":"835-912","title":"Contractors—Federal Government","topic_title":"Interest","score":0.75,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe5aa169feece73ecd3fac99de41579725979882af97ac909db3ed61b8036b75","downloaded_from":"2026-09-10T01:50:19.327Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-970","title":"Real Estate—General","topic_title":"Interest","score":0.7243,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:947dd8ac004fc4b0b01e5b16594e7fd89d1e43fa45778860e00519878af76660","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"}},{"number":"835-20","title":"Capitalization of Interest","topic_title":"Interest","score":0.7183,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3a3720c5487c22a69c38755e559cad198ad6de55411d7417fc04b2d695719ff0","downloaded_from":"2026-09-10T01:48:54.719Z","last_downloaded_at":"2026-09-10T01:49:28.506Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"325-40","title":"Beneficial Interests in Securitized Financial Assets","topic_title":"Investments—Other","score":0.7088,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d90a22465567cfe2f079fd639f1f0d8f2a0f5eee9f4c5a6143b7f102b4c1933a","downloaded_from":"2026-09-09T23:44:27.827Z","last_downloaded_at":"2026-09-09T23:44:58.835Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-932","title":"Extractive Activities—Oil and Gas","topic_title":"Interest","score":0.7077,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9ba72996f038dbc8db249ee071bec59ebcae4e64bfbc1e810e70aad47ad75e6f","downloaded_from":"2026-09-10T01:50:54.044Z","last_downloaded_at":"2026-09-10T01:51:06.744Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-980","title":"Regulated Operations","topic_title":"Interest","score":0.707,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bce26669f941084d654bcb1d8024525b0d03dee6223d0dd501402d1cd4955a4e","downloaded_from":"2026-09-10T01:51:29.287Z","last_downloaded_at":"2026-09-10T01:51:51.446Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"832-10","title":"Overall","topic_title":"Government Assistance","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f6dff16f0e4ee0650354d51e930104463984764ef0fa1ce2cc568bffcac1f95d","downloaded_from":"2026-09-10T01:48:12.488Z","last_downloaded_at":"2026-09-10T01:48:40.475Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"835-20","title":"Capitalization of Interest","topic_title":"Interest","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:857480fb92400a6760718af00cc4d7c5de96b8251d875b4ab32bbfea3584747b","downloaded_from":"2026-09-10T01:48:54.719Z","last_downloaded_at":"2026-09-10T01:49:28.506Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d11045a1d0c23effeca8eea31cf59b08a4693fd99dc49ab8cef967980bf59fd3","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 timestamps"}},{"number":"835-20","topic":"835","title":"Capitalization of Interest","area":"Broad Transactions","paragraphs":45,"summary":"ASC 835-20 requires interest cost incurred while a qualifying asset is being readied for its intended use to be capitalized as part of the asset's historical cost, on the theory that such interest is an avoidable cost caused by the acquisition. Qualifying assets include assets constructed for an entity's own use, discrete projects built for sale or lease, and equity-method investments in investees that have not yet begun planned principal operations; routinely mass-produced inventory, assets already in use or idle, and gift/grant-funded assets are excluded. The amount capitalized equals the capitalization rate (rate on specific new borrowing, then weighted average of other borrowings) applied to average accumulated expenditures, capped at total interest cost incurred in the period.","concepts":["qualifying asset","capitalization period","average accumulated expenditures","capitalization rate","avoidable interest","substantially complete and ready for intended use","tax-exempt borrowings","equity method investee"],"categories":["Initial measurement","Inventory and PP&E","Disclosure","Recognition"],"level":"intermediate","topic_title":"Interest","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-20-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Finance LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Interest CostAmendedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
835-20-55-2AmendedAccounting Standards Update No. 2014-1006/10/2014
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nContract | Added | Accounting Standards Update No. 2016-02 | 02/25/2016 |\nFinance Lease …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1c7097040dc5da06ddd171e5938f79bf680c45220657f92768ba2f4449d8b460","downloaded_from":"2026-09-10T01:48:54.719Z","last_downloaded_at":"2026-09-10T01:48:54.719Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483038","source_sha256":"2f3880a95012ef5446703f7da7251ebd273dd2f259458ecc38665d7bc7a950fb"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ac2fcc77f62222436f28f15de136f9f0e8232ac7c844d7da27f4fcf7b26e6ed0","downloaded_from":"2026-09-10T01:48:54.719Z","last_downloaded_at":"2026-09-10T01:48:54.719Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483038","source_sha256":"2f3880a95012ef5446703f7da7251ebd273dd2f259458ecc38665d7bc7a950fb"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:96a410e93ec6c011d0c93655edf904cb57efca16f839719b9e71cf6869b8336d","downloaded_from":"2026-09-10T01:48:54.719Z","last_downloaded_at":"2026-09-10T01:48:54.719Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483038","source_sha256":"2f3880a95012ef5446703f7da7251ebd273dd2f259458ecc38665d7bc7a950fb"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-20-05-1","para":"05-1","html":"
This Subtopic establishes standards of financial accounting and reporting for capitalizing interest cost as a part of the historical cost of acquiring certain assets. The historical cost of acquiring an asset includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use. If an asset requires a period of time in which to carry out the activities necessary to bring it to that condition and location, the interest cost incurred during that period as a result of expenditures for the asset is a part of the historical cost of acquiring the asset.
","snippet":"This Subtopic establishes standards of financial accounting and reporting for capitalizing interest cost as a part of the historical cost of acquiring certain assets. The historical cost of acquiring an asset includes th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:13be9e51b61b4bb74f0bde9a2f19177d123b5114113540008d6518fca4e55693","downloaded_from":"2026-09-10T01:48:58.518Z","last_downloaded_at":"2026-09-10T01:48:58.518Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483012","source_sha256":"e0459bf7b0129fdca0580599b8207f6fbd74ffe9639a121f7f2013dc28b26d0c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1fb941fbece7a56d23d4aa99c96a56b56abf68b3afd6abed021a65f016beb51c","downloaded_from":"2026-09-10T01:48:58.518Z","last_downloaded_at":"2026-09-10T01:48:58.518Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483012","source_sha256":"e0459bf7b0129fdca0580599b8207f6fbd74ffe9639a121f7f2013dc28b26d0c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71ec9b3c526a6786492ce157a355ad1c0b4b9c691260e5863ee60532e7d68204","downloaded_from":"2026-09-10T01:48:58.518Z","last_downloaded_at":"2026-09-10T01:48:58.518Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483012","source_sha256":"e0459bf7b0129fdca0580599b8207f6fbd74ffe9639a121f7f2013dc28b26d0c"}},{"number":"10","label":"10 Objectives","anchor":"10-objectives","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-20-10-1","para":"10-1","html":"
The objectives of capitalizing interest are to obtain a measure of acquisition cost that more closely reflects an entity's total investment in the asset and to charge a cost that relates to the acquisition of a resource that will benefit future periods against the revenues of the periods benefited.
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On the premise that the historical cost of acquiring an asset should include all costs necessarily incurred to bring it to the condition and location necessary for its intended use, in principle, the cost incurred in financing expenditures for an asset during a required construction or development period is itself a part of the asset's historical acquisition cost. The cause-and-effect relationship between acquiring an asset and the incurrence of interest cost makes interest cost analogous to a direct cost that is readily and objectively assignable to the acquired asset. Failure to capitalize the interest cost associated with the acquisition of qualifying assets improperly reduces reported earnings during the period of acquisition and increases reported earnings in later periods.
","snippet":"On the premise that the historical cost of acquiring an asset should include all costs necessarily incurred to bring it to the condition and location necessary for its intended use, in principle, the cost incurred in fin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ed98424f1f4c3d5a587c5b87704682fab7f9ddc560c647e368614b59341a5dd6","downloaded_from":"2026-09-10T01:49:00.682Z","last_downloaded_at":"2026-09-10T01:49:00.682Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482984","source_sha256":"bd3ae931cd153c73f2f4c404fbecc6072c062b5bc06eddc3c7334d63201d4236"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a8a427b29e8f43fdb0b4c5aecfd99a605a540348fbfe5a01acb57e0f5584ea73","downloaded_from":"2026-09-10T01:49:00.682Z","last_downloaded_at":"2026-09-10T01:49:00.682Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482984","source_sha256":"bd3ae931cd153c73f2f4c404fbecc6072c062b5bc06eddc3c7334d63201d4236"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a611831c1e56947537e73c30366af4fe0ee0e55b9c1004a2fccc281c942cec3e","downloaded_from":"2026-09-10T01:49:00.682Z","last_downloaded_at":"2026-09-10T01:49:00.682Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482984","source_sha256":"bd3ae931cd153c73f2f4c404fbecc6072c062b5bc06eddc3c7334d63201d4236"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Entities","paragraphs":[{"citation":"835-20-15-1","para":"15-1","html":"
The guidance in this Subtopic applies to all entities.
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In concept, interest cost is capitalizable for all assets that require a period of time to get them ready for their intended use (an acquisition period). However, in many cases, the benefit in terms of information about the entity's resources and earnings may not justify the additional accounting and administrative cost involved in providing the information. The significance of the effect of interest capitalization in relation to the entity's resources and earnings is the most important consideration in assessing its benefit. The ease with which qualifying assets and related expenditures can be separately identified and the number of assets subject to interest capitalization are important factors in assessing the cost of implementation.
","snippet":"In concept, interest cost is capitalizable for all assets that require a period of time to get them ready for their intended use (an acquisition period). However, in many cases, the benefit in terms of information about …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f82c8800bf048301eaf9c0790a6586cbbef282655445c270ec7a2b55f584af3","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}},{"citation":"835-20-15-3","para":"15-3","html":"
Interest capitalization is required only when the balance of the informational benefit and the cost of implementation is favorable. A favorable balance is most likely to be achieved where an asset is constructed or produced as a discrete project for which costs are separately accumulated and where construction of the asset takes considerable time, entails substantial expenditures, and is likely to involve a significant amount of interest cost. A favorable balance is unlikely in the case of inventory items that are routinely manufactured or otherwise produced in large quantities on a repetitive basis. Accordingly, this Subtopic proscribes interest capitalization on those types of inventories (that is, inventory items that are routinely manufactured or produced in large quantities on a repetitive basis) and provides for interest capitalization on assets that are constructed or produced as discrete projects.
","snippet":"Interest capitalization is required only when the balance of the informational benefit and the cost of implementation is favorable. A favorable balance is most likely to be achieved where an asset is constructed or produ…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:334b8120ab88ab8b74a6d50f860a0f32ad31373d5809ead524b8b187b6b1c0ee","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}},{"citation":"835-20-15-4","para":"15-4","html":"
Minimum threshold levels are common in inventory and property, plant, and equipment accounting. Many entities do not include the costs of minor items in inventory, and many entities do not capitalize individual items of property, plant, and equipment, the costs of which are less than a specified threshold. Such thresholds are designed to minimize the burden of capitalizing large numbers of assets and accounting for those costs as the assets are used. Those thresholds are justified on the grounds that the assets whose costs are charged to expense as purchased are immaterial both individually and in the aggregate. This Subtopic does not affect the use of threshold levels established in conformity with such materiality tests.
","snippet":"Minimum threshold levels are common in inventory and property, plant, and equipment accounting. Many entities do not include the costs of minor items in inventory, and many entities do not capitalize individual items of …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eecfe918687c8a6dc7c0afec3ac4198fbb9dc44382b0dba446a62f2f8259f491","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}},{"citation":"835-20-15-5","para":"15-5","html":"
Interest shall be capitalized for the following types of assets (qualifying assets):
  1. a
    Assets that are constructed or otherwise produced for an entity's own use, including assets constructed or produced for the entity by others for which deposits or progress payments have been made.
  2. b
    Assets intended for sale or lease that are constructed or otherwise produced as discrete projects (for example, ships or real estate developments).
  3. c
    Investments (equity, loans, and advances) accounted for by the equity method while the investee has activities in progress necessary to commence its planned principal operations provided that the investee's activities include the use of funds to acquire qualifying assets for its operations. The investor's investment in the investee, not the individual assets or projects of the investee, is the qualifying asset for purposes of interest capitalization.
","snippet":"Interest shall be capitalized for the following types of assets (qualifying assets):\n(a) Assets that are constructed or otherwise produced for an entity's own use, including assets constructed or produced for the entity …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7b55471d7afab5260dc423da185ea726f3251ebb7a5342e161c3707a179609a3","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}},{"citation":"835-20-15-6","para":"15-6","html":"
Interest shall not be capitalized for the following types of assets:
  1. a
    Assets that are in use or ready for their intended use in the earning activities of the entity
  2. b
    Assets that are not being used in the earning activities of the entity and that are not undergoing the activities necessary to get them ready for use
  3. c
    Assets that are not included in the consolidated balance sheet of the parent entity and consolidated subsidiaries
  4. d
    Investments accounted for by the equity method after the planned principal operations of the investee begin (see paragraph 835-20-55-2 for clarification of the phrase after planned principal operations begin)
  5. e
    Investments in regulated investees that are capitalizing both the cost of debt and equity capital (see paragraph 835-20-55-3 for guidance on capitalization of costs by a regulated investee)
  6. f
    Assets acquired with gifts and grants that are restricted by the donor or grantor to acquisition of those assets to the extent that funds are available from such gifts and grants. Interest earned from temporary investment of those funds that is similarly restricted shall be considered an addition to the gift or grant for this purpose.
  7. g
    Inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis.
","snippet":"Interest shall not be capitalized for the following types of assets:\n(a) Assets that are in use or ready for their intended use in the earning activities of the entity\n(b) Assets that are not being used in the earning ac…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aa9111adb5524eeba9896554db142a5f52d2e2fcfdaacee9daac3f027781cabc","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}},{"citation":"835-20-15-7","para":"15-7","html":"
Accretion expense related to exit costs and asset retirement obligations shall not be considered to be interest cost for purposes of applying this Subtopic. See Topic 420 or Subtopic 410-20 for guidance on those areas. The interest cost component of net periodic pension cost shall not be considered to be interest for purposes of applying this Subtopic. See Subtopic 715-30 for guidance.
","snippet":"Accretion expense related to exit costs and asset retirement obligations shall not be considered to be interest cost for purposes of applying this Subtopic. See Topic 420 or Subtopic 410-20 for guidance on those areas. T…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d5974a8b92521781c1e1faf69a1d5376016ce123c355f2804a4afa6b835cb05","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}},{"citation":"835-20-15-8","para":"15-8","html":"
Land that is not undergoing activities necessary to get it ready for its intended use is not a qualifying asset. If activities are undertaken for the purpose of developing land for a particular use, the expenditures to acquire the land qualify for interest capitalization while those activities are in progress. The interest cost capitalized on those expenditures is a cost of acquiring the asset that results from those activities. If the resulting asset is a structure, such as a plant or a shopping center, interest capitalized on the land expenditures is part of the acquisition cost of the structure. If the resulting asset is developed land, such as land that is to be sold as developed lots, interest capitalized on the land expenditures is part of the acquisition cost of the developed land.
","snippet":"Land that is not undergoing activities necessary to get it ready for its intended use is not a qualifying asset. If activities are undertaken for the purpose of developing land for a particular use, the expenditures to a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:47a37953a9fe1e09995451e9f2c61a4d395cb8e8caff591a94549881fc15f5b1","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1cb3add3ca64206ce5f998c1e544aed22c32a3aa4ab98290ff5e51c440953fee","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b2692b64aa44ae5c98c1679db9ac4a8f8e4510ffcfe6cabfce65ab3f8fab4868","downloaded_from":"2026-09-10T01:49:03.693Z","last_downloaded_at":"2026-09-10T01:49:03.693Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482960","source_sha256":"652a48f98dd7cb11720cb2f890f879c9da921fe6c527b2717442406adabb054a"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-20-25-1","para":"25-1","html":"
This Section provides guidance on the capitalization period over which capitalizable interest costs are required to be recognized. See Section 835-20-30 for guidance on the amount of interest costs that is capitalizable as part of the initial investment in an asset.
","snippet":"This Section provides guidance on the capitalization period over which capitalizable interest costs are required to be recognized. See Section 835-20-30 for guidance on the amount of interest costs that is capitalizable …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a108851a46a575ba80977f9ed1c291fb0247fc2339a26d43055e62ccd8c37dad","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2d6570d2811e32e2ec6167fa4ce4d6680bb14cf2972ff342de5cd4c4bd0458a0","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}},{"block":null,"heading":"The Capitalization Period","paragraphs":[{"citation":"835-20-25-2","para":"25-2","html":"
The capitalization period is determined by the definition of the circumstances in which interest is capitalizable. Essentially, the capitalization period covers the duration of the activities required to get the asset ready for its intended use, provided that expenditures for the asset have been made and interest cost is being incurred. Interest capitalization continues as long as those activities and the incurrence of interest cost continue.
","snippet":"The capitalization period is determined by the definition of the circumstances in which interest is capitalizable. Essentially, the capitalization period covers the duration of the activities required to get the asset re…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2eb275f7057b75d9179ac03dc455329bae0f701b60a8029946d4e4ba28a3f1b1","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}},{"citation":"835-20-25-3","para":"25-3","html":"
The capitalization period shall begin when the following three conditions are present:
  1. a
    Expenditures for the asset have been made.
  2. b
    Activities that are necessary to get the asset ready for its intended use are in progress.
  3. c
    Interest cost is being incurred.
Interest capitalization shall continue as long as those three conditions are present.
","snippet":"The capitalization period shall begin when the following three conditions are present:\n(a) Expenditures for the asset have been made.\n(b) Activities that are necessary to get the asset ready for its intended use are in p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4d5d5ea45ec07620390a7b4ccb337add149b20e366373abd58397d06af60be50","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}},{"citation":"835-20-25-4","para":"25-4","html":"
If the entity suspends substantially all activities related to acquisition of the asset, interest capitalization shall cease until activities are resumed. However, brief interruptions in activities, interruptions that are externally imposed, and delays that are inherent in the asset acquisition process shall not require cessation of interest capitalization.
","snippet":"If the entity suspends substantially all activities related to acquisition of the asset, interest capitalization shall cease until activities are resumed. However, brief interruptions in activities, interruptions that ar…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:12f2f20aff15ab03b4226982851e0f267feafa1a63e06e06d60bc0bce20c2875","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}},{"citation":"835-20-25-5","para":"25-5","html":"
The capitalization period shall end when the asset is substantially complete and ready for its intended use. Consider the capitalization period that is appropriate in each of the following examples:
  1. a
    Some assets are completed in parts, and each part is capable of being used independently while work is continuing on other parts. An example is a condominium. For such assets, interest capitalization shall stop on each part when it is substantially complete and ready for use.
  2. b
    Some assets must be completed in their entirety before any part of the asset can be used. An example is a facility designed to manufacture products by sequential processes. For such assets, interest capitalization shall continue until the entire asset is substantially complete and ready for use.
  3. c
    Some assets cannot be used effectively until a separate facility has been completed. Examples are the oil wells drilled in Alaska before completion of the pipeline. For such assets, interest capitalization shall continue until the separate facility is substantially complete and ready for use.
","snippet":"The capitalization period shall end when the asset is substantially complete and ready for its intended use. Consider the capitalization period that is appropriate in each of the following examples:\n(a) Some assets are c…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a566011831152717b13aaa0d171797ac1574b65fefcb0a1cc95837fcdb23c3c3","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}},{"citation":"835-20-25-6","para":"25-6","html":"
With respect to the requirement that the capitalization period ends when the asset is substantially complete and ready for its intended use, the words substantially complete prohibit continuation of interest capitalization in situations in which completion of the asset is intentionally delayed. For example, it is customary for a condominium developer to defer installation of certain fixtures and fittings until units are sold, so that buyers may choose the types and colors they want. An intentional delay of that kind is related more to marketing of the asset than to the exigencies of the asset acquisition process. Similarly, interest is not to be capitalized during periods when the entity intentionally defers or suspends activities related to the asset. Interest cost incurred during such periods is a holding cost, not an acquisition cost. However, delays that are inherent in the asset acquisition process and interruptions in activities that are imposed by external forces are unavoidable in acquiring the asset and as such do not call for a cessation of interest capitalization.
","snippet":"With respect to the requirement that the capitalization period ends when the asset is substantially complete and ready for its intended use, the words substantially complete prohibit continuation of interest capitalizati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cb7b0aa59b77b6febbd7ce00d82c9bc88f415cc23f3063ab433f00587f4767a8","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}},{"citation":"835-20-25-7","para":"25-7","html":"
Interest capitalization shall not cease when present accounting principles require recognition of a lower value for the asset than acquisition cost. The provision required to reduce acquisition cost to such lower value shall be increased appropriately. See Subtopic 360-10 for guidance on recognizing impairment of long-lived assets held for use.
","snippet":"Interest capitalization shall not cease when present accounting principles require recognition of a lower value for the asset than acquisition cost. The provision required to reduce acquisition cost to such lower value s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:03c777fa271935b4067ec11cadec65366e170bac83674e44186c10332e2e3497","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1cc22a4c40711ad75c32671c491c7c636c116e50581c08e0115beacd9a8f527c","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}},{"block":null,"heading":"The Capitalization Period for Assets Financed with Tax-Exempt Borrowings","paragraphs":[{"citation":"835-20-25-8","para":"25-8","html":"
In situations involving qualifying assets financed with the proceeds of tax-exempt borrowings that are externally restricted as specified in this Subtopic, the capitalization period begins at the date of the borrowing.
","snippet":"In situations involving qualifying assets financed with the proceeds of tax-exempt borrowings that are externally restricted as specified in this Subtopic, the capitalization period begins at the date of the borrowing.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:65084364719b9159b1716788a4902c72865dd533b008c5010046d57908addbeb","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c93a84d8a1a3652e3c07a66409867218b420499f282b09d355b5e35eff01e116","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9d733d7d3978a02f0d3c4cef331612259951c283a8b61865d14e0b9a382300f4","downloaded_from":"2026-09-10T01:49:08.881Z","last_downloaded_at":"2026-09-10T01:49:08.881Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482910","source_sha256":"89453682171c77bd7f84de629a12c7ca2ea094fbd89d85dc8235612c8947e166"}},{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-20-30-1","para":"30-1","html":"
This Section addresses the amount of interest cost to be capitalized as part of the initial investment in an asset.
","snippet":"This Section addresses the amount of interest cost to be capitalized as part of the initial investment in an asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:84e83c9bcdc89964ce3db542e326e9fbd33753055842144431434856f5d95b5a","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8eee2fb032e767c39634b4e0a58a80989524908b421d44eb54fc5a6791ed7cc5","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"block":null,"heading":"The Amount of Interest Cost to Be Capitalized","paragraphs":[{"citation":"835-20-30-2","para":"30-2","html":"
The amount of interest cost to be capitalized for qualifying assets is intended to be that portion of the interest cost incurred during the assets' acquisition periods that theoretically could have been avoided (for example, by avoiding additional borrowings or by using the funds expended for the assets to repay existing borrowings) if expenditures for the assets had not been made. The notion of interest on borrowings as an avoidable cost does not require that the practicability of repaying individual borrowings be considered.
","snippet":"The amount of interest cost to be capitalized for qualifying assets is intended to be that portion of the interest cost incurred during the assets' acquisition periods that theoretically could have been avoided (for exam…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04a0488e3d9f04e25826fa58a386df47470b01f02545f32ef9aed5b75021f25a","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"citation":"835-20-30-3","para":"30-3","html":"
The amount capitalized in an accounting period shall be determined by applying the capitalization rate to the average amount of accumulated expenditures for the asset during the period. The capitalization rates used in an accounting period shall be based on the rates applicable to borrowings outstanding during the period. If an entity's financing plans associate a specific new borrowing with a qualifying asset, the entity may use the rate on that borrowing as the capitalization rate to be applied to that portion of the average accumulated expenditures for the asset that does not exceed the amount of that borrowing. If average accumulated expenditures for the asset exceed the amounts of specific new borrowings associated with the asset, the capitalization rate to be applied to such excess shall be a weighted average of the rates applicable to other borrowings of the entity.
","snippet":"The amount capitalized in an accounting period shall be determined by applying the capitalization rate to the average amount of accumulated expenditures for the asset during the period. The capitalization rates used in a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ca3b62ea75d418f662cf43b4a8d30e374f6429f67387bc643854e86d50bd5f5c","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"citation":"835-20-30-4","para":"30-4","html":"
In identifying the borrowings to be included in the weighted average rate, the objective is a reasonable measure of the cost of financing acquisition of the asset in terms of the interest cost incurred that otherwise could have been avoided. Accordingly, judgment will be required to make a selection of borrowings that best accomplishes that objective in the circumstances. For example, depending on the facts and circumstances, it may be appropriate to include all borrowings of the parent entity and its consolidated subsidiaries or to include only the borrowings of the corporate entity constructing the qualifying asset. For some multinational entities, it may be appropriate for each foreign subsidiary to use an average of the rates applicable to its own borrowings. However, the use of judgment in determining capitalization rates shall not circumvent the requirement that a capitalization rate be applied to all capitalized expenditures for a qualifying asset to the extent that interest cost has been incurred during an accounting period.
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Reasonable approximations of net capitalized expenditures may be used. For example, capitalized costs for an asset may be used as a reasonable approximation of capitalized expenditures unless the difference is material. Capitalized asset retirement costs do not qualify as expenditures. See Subtopic 410-20 for guidance on asset retirement obligations.
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The total amount of interest cost capitalized in an accounting period shall not exceed the total amount of interest cost incurred by the entity in that period. In consolidated financial statements, that limitation shall be applied by reference to the total amount of interest cost incurred by the parent entity and consolidated subsidiaries on a consolidated basis. In any separately issued financial statements of a parent entity or a consolidated subsidiary and in the financial statements (whether separately issued or not) of unconsolidated subsidiaries and other investees accounted for by the equity method, the limitation shall be applied by reference to the total amount of interest cost (including interest on intra-entity borrowings) incurred by the separate entity.
","snippet":"The total amount of interest cost capitalized in an accounting period shall not exceed the total amount of interest cost incurred by the entity in that period. In consolidated financial statements, that limitation shall …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:08835bd111b979e470dbe2ae6103525d308f9e2820d431f52dd197eb71fcae6d","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"citation":"835-20-30-7","para":"30-7","html":"
Subtopic 815-25 addresses the effect of derivative gains and losses on the capitalization of interest under this Subtopic. See paragraphs 815-25-35-14 and 815-25-55-52 for guidance on the appropriate interest rate to be used in capitalizing interest related to fixed-rate debt designated as the hedged item in a fair value hedge. See paragraph 815-30-35-45 for guidance on reclassifying amounts in accumulated comprehensive income related to a cash flow hedge of the variability of interest when the variable-rate interest on a specific borrowing is associated with an asset under construction and capitalized as a cost of that asset.
","snippet":"Subtopic 815-25 addresses the effect of derivative gains and losses on the capitalization of interest under this Subtopic. See paragraphs 815-25-35-14 and 815-25-55-52 for guidance on the appropriate interest rate to be …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cf2963772e73e1341a45ac65b7a583681c25f5971386d3cc79f42513193cbd99","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"citation":"835-20-30-8","para":"30-8","html":"
If qualifying assets are financed with the proceeds of tax-exempt borrowings and those funds are externally restricted to the acquisition of specified qualifying assets or to service the related debt, the amount of interest cost capitalized shall be determined in accordance with paragraphs
835-20-30-10 through 30-12
.
","snippet":"If qualifying assets are financed with the proceeds of tax-exempt borrowings and those funds are externally restricted to the acquisition of specified qualifying assets or to service the related debt, the amount of inter…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e37e61ca04f450c25a2898278aedc2691b46d5c3b324fa139ea56934f2649c3","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"citation":"835-20-30-9","para":"30-9","html":"
The timing and use of tax-exempt borrowings are generally an integral part of the decision to acquire the related asset, and the net interest cost from the date of borrowing to the time the acquired asset is substantially complete and ready for its intended use is an essential part of the cost of acquiring that asset.
","snippet":"The timing and use of tax-exempt borrowings are generally an integral part of the decision to acquire the related asset, and the net interest cost from the date of borrowing to the time the acquired asset is substantiall…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe022a56ed2f2c166fc7b1a43d38519351918a9a0aa12203c39a3e3e3d52dd44","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"citation":"835-20-30-10","para":"30-10","html":"
Interest earned shall not be offset against interest cost in determining either capitalization rates or limitations on the amount of interest cost to be capitalized except in situations involving acquisition of qualifying assets financed with the proceeds of tax-exempt borrowings if those funds are externally restricted to finance acquisition of specified qualifying assets or to service the related debt. Those situations include many governmental borrowings and most governmentally sponsored borrowings (such as industrial revenue bonds and pollution control bonds). In such situations, interest earned generally is considered in and is significant to the initial decision to acquire the asset, and the capitalization of net interest cost provides a better measure of the entity's net investment in the qualifying assets. In those circumstances the association is direct and the funds flows from borrowing, temporary investment, and construction expenditures are so intertwined and restricted as to require accounting for the total net cost of financing as a cost of the qualifying assets. In all other situations, offsetting of interest income against interest cost is not appropriate.
","snippet":"Interest earned shall not be offset against interest cost in determining either capitalization rates or limitations on the amount of interest cost to be capitalized except in situations involving acquisition of qualifyin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0da5efe45ff0d200f1d954847773c06d5e6873769e3130e84855ceca898d182e","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"citation":"835-20-30-11","para":"30-11","html":"
The amount of interest cost capitalized on qualifying assets acquired with proceeds of tax-exempt borrowings that are externally restricted as specified in the preceding paragraph shall be all interest cost of the borrowing less any interest earned on related interest-bearing investments acquired with proceeds of the related tax-exempt borrowings from the date of the borrowing until the assets are ready for their intended use. The interest cost and interest earned on any portion of the proceeds of the tax-exempt borrowings that are not designated for the acquisition of specified qualifying assets and servicing the related debt are excluded.
","snippet":"The amount of interest cost capitalized on qualifying assets acquired with proceeds of tax-exempt borrowings that are externally restricted as specified in the preceding paragraph shall be all interest cost of the borrow…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8bc16cf455b6eca0b402ebd5ded806684a1691c504fb268dbaa627342cb245b0","downloaded_from":"2026-09-10T01:49:11.642Z","last_downloaded_at":"2026-09-10T01:49:11.642Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483089","source_sha256":"8c5a18167ebdb644e333dd3a0454dcc90aec2037cb7ba6ef760a474cdae3fe15"}},{"citation":"835-20-30-12","para":"30-12","html":"
Interest cost of a tax-exempt borrowing shall be eligible for capitalization on other qualifying assets of the entity when the specified qualifying assets are no longer eligible for interest capitalization. The entire interest cost on that portion of the proceeds that is available for other uses (such as refunding of an existing debt issue other than a construction loan related to those assets) is eligible for capitalization on other qualifying assets.
See Example 1 (paragraph 835-20-55-4) for an illustration of this guidance.
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This Section addresses the accounting for capitalized interest subsequent to the initial measurement of the related asset.
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This Subtopic requires capitalization of interest cost on an investment accounted for by the equity method that has not begun its planned principal operations while the investee has activities in progress necessary to commence its planned principal operations provided that the investee's activities include the use of funds to acquire qualifying assets for its operations. Under those circumstances, capitalized interest cost may be associated with the estimated useful lives of the investee's assets and amortized over the same period as those assets. Interest capitalized on the investments accounted for by the equity method is amortized consistent with paragraph 323-10-35-13.
","snippet":"This Subtopic requires capitalization of interest cost on an investment accounted for by the equity method that has not begun its planned principal operations while the investee has activities in progress necessary to co…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:168af64d10e2d558c4c0e4b160c158dfe62f6f240f5e387e644a2d7311ac0fd1","downloaded_from":"2026-09-10T01:49:14.053Z","last_downloaded_at":"2026-09-10T01:49:14.053Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483065","source_sha256":"1ed5060c14cde78ff2dabb41e380247f4cf61d3879d14039c1ee5d83310c85e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c390e78fdfc6af51c81169a4986fed0fac3e7683af91a9842cdde765bce941a5","downloaded_from":"2026-09-10T01:49:14.053Z","last_downloaded_at":"2026-09-10T01:49:14.053Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483065","source_sha256":"1ed5060c14cde78ff2dabb41e380247f4cf61d3879d14039c1ee5d83310c85e0"}},{"block":null,"heading":"Compounding of Interest","paragraphs":[{"citation":"835-20-35-3","para":"35-3","html":"
This paragraph addresses whether capitalized interest should be compounded. The compounding of capitalized interest is conceptually consistent with the conclusion that interest on expenditures for the asset is a cost of acquiring the asset. While some portion of the interest incurred during an accounting period may be unpaid at the end of the period, that complication usually may be ignored to simplify practical application.
","snippet":"This paragraph addresses whether capitalized interest should be compounded. The compounding of capitalized interest is conceptually consistent with the conclusion that interest on expenditures for the asset is a cost of …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2b854d91def3f83d34d039c5dfa158c6cdeee1f697422718d353fc48cb4bdd53","downloaded_from":"2026-09-10T01:49:14.053Z","last_downloaded_at":"2026-09-10T01:49:14.053Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483065","source_sha256":"1ed5060c14cde78ff2dabb41e380247f4cf61d3879d14039c1ee5d83310c85e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fa0898a694fc14d3a3c82c25516deb67d4d57bf22e36170c72b8e7816feec747","downloaded_from":"2026-09-10T01:49:14.053Z","last_downloaded_at":"2026-09-10T01:49:14.053Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483065","source_sha256":"1ed5060c14cde78ff2dabb41e380247f4cf61d3879d14039c1ee5d83310c85e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:97ae5829ff979af50e80ae234aa6a3646e298b87f6004a8d53a35a6855f27ab0","downloaded_from":"2026-09-10T01:49:14.053Z","last_downloaded_at":"2026-09-10T01:49:14.053Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483065","source_sha256":"1ed5060c14cde78ff2dabb41e380247f4cf61d3879d14039c1ee5d83310c85e0"}},{"number":"40","label":"40 Derecognition","anchor":"40-derecognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-20-40-1","para":"40-1","html":"
Interest cost is an integral part of the total cost of acquiring a qualifying asset. Therefore, its disposition shall be the same as the disposition of other components of asset cost.
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Interest capitalized on an investment accounted for by the equity method shall be accounted for in accordance with paragraph 323-10-35-13.
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An entity shall disclose the following information with respect to interest cost in the financial statements or related notes:
  1. a
    For an accounting period in which no interest cost is capitalized, the amount of interest cost incurred and charged to expense during the period
  2. b
    For an accounting period in which some interest cost is capitalized, the total amount of interest cost incurred during the period and the amount thereof that has been capitalized.
","snippet":"An entity shall disclose the following information with respect to interest cost in the financial statements or related notes:\n(a) For an accounting period in which no interest cost is capitalized, the amount of interest…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5dc6875d2bbb86d94a738d0890dcea2b83f8935c2ef0b3b3544c3f0b8364da4e","downloaded_from":"2026-09-10T01:49:19.551Z","last_downloaded_at":"2026-09-10T01:49:19.551Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483013","source_sha256":"86a94ea6d1c9b5697d60d340365548864aed1641259a34c3c6a63ecf3ba4ae58"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7cfe9149e5736901a3d4dfb83b2db35062b9a7bc67f780a7bb71d5daaaab03fe","downloaded_from":"2026-09-10T01:49:19.551Z","last_downloaded_at":"2026-09-10T01:49:19.551Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483013","source_sha256":"86a94ea6d1c9b5697d60d340365548864aed1641259a34c3c6a63ecf3ba4ae58"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2f7688374b86e891fa400ae77a4bc318ae7659f90ab6fd0bb0efee06688a29ed","downloaded_from":"2026-09-10T01:49:19.551Z","last_downloaded_at":"2026-09-10T01:49:19.551Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483013","source_sha256":"86a94ea6d1c9b5697d60d340365548864aed1641259a34c3c6a63ecf3ba4ae58"}},{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"835-20-55-1","para":"55-1","html":"
The following provides implementation guidance related to the application of the scope guidance in paragraph 835-20-15-6(d) through (e).
","snippet":"The following provides implementation guidance related to the application of the scope guidance in paragraph 835-20-15-6(d) through (e).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9a28279339b0544e2381414bd006e9fbf1aff25b43acf5b09ca2ce3b619aa54f","downloaded_from":"2026-09-10T01:49:23.304Z","last_downloaded_at":"2026-09-10T01:49:23.304Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482985","source_sha256":"f769ff2d34cece0c528853f57965865729a38b7185b49d19a542c983638645de"}},{"citation":"835-20-55-2","para":"55-2","html":"
This paragraph provides clarification of the phrase when planned principal operations begin (in paragraph 835-20-15-6(d)) to be able to determine when the investment in the investee that is the qualifying asset is ready for its intended use and interest capitalization ceases. Planned principal operations may not have commenced if the entity is devoting substantially all of its efforts to establishing a new business through activities such as the following:
  1. a
    Financial planning
  2. b
    Raising capital
  3. c
    Exploring for natural resources
  4. d
    Developing natural resources
  5. e
    Research and development
  6. f
    Establishing sources of supply
  7. g
    Acquiring property, plant, and equipment or other operating assets, such as mineral rights
  8. h
    Recruiting and training personnel
  9. i
    Developing markets
  10. j
    Starting up production.
","snippet":"This paragraph provides clarification of the phrase when planned principal operations begin (in paragraph 835-20-15-6(d)) to be able to determine when the investment in the investee that is the qualifying asset is ready …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0cdf918ae37776dd50637f17fd63438f4471c4723bcab99546f5c8b5a8dbaf05","downloaded_from":"2026-09-10T01:49:23.304Z","last_downloaded_at":"2026-09-10T01:49:23.304Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482985","source_sha256":"f769ff2d34cece0c528853f57965865729a38b7185b49d19a542c983638645de"}},{"citation":"835-20-55-3","para":"55-3","html":"
This paragraph elaborates on the guidance in paragraph 835-20-15-6(e) regarding an investment by an investor in a regulated investee that is accounted for by the equity method while the investee is constructing qualifying assets. Paragraphs 980-835-25-1, 980-835-30-1, and 980-835-35-1 address how a regulated investee capitalizes both a cost of debt and a cost of equity capital during its construction period rather than the amount of interest that it would capitalize in accordance with this Subtopic. That method imputes a cost to the investee's equity capital and recognizes that cost as part of the carrying amount of the asset under construction and as current earnings of the investee. Since the investor, by recognizing its equity in the investee's current earnings, includes its prorated share of that imputed cost in the carrying amount of its investment and in its current earnings, the investor should not capitalize an additional cost.
","snippet":"This paragraph elaborates on the guidance in paragraph 835-20-15-6(e) regarding an investment by an investor in a regulated investee that is accounted for by the equity method while the investee is constructing qualifyin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6e9cff22c2a2e9a20a2521d22194217ad04dbb3707fb451c67f6dfdb590eed72","downloaded_from":"2026-09-10T01:49:23.304Z","last_downloaded_at":"2026-09-10T01:49:23.304Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482985","source_sha256":"f769ff2d34cece0c528853f57965865729a38b7185b49d19a542c983638645de"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3029c72dee969c9941a77a57857a26d5328488cd33ab57cf1db204b3b5df1a07","downloaded_from":"2026-09-10T01:49:23.304Z","last_downloaded_at":"2026-09-10T01:49:23.304Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482985","source_sha256":"f769ff2d34cece0c528853f57965865729a38b7185b49d19a542c983638645de"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"835-20-55-4","para":"55-4","html":"
This Example illustrates the application of the guidance in this Subtopic related to capitalization of interest cost in situations involving certain tax-exempt borrowings and certain gifts and grants (see paragraphs
835-20-30-10 through 30-12
).
  1. a
    Entity A is committed to construct a project at a cost of $10 million. The project is to be financed from three sources:
    1. 1
      $4 million government grant restricted to use for the specified construction project, payable $1 million per year
    2. 2
      $4 million tax-exempt borrowing at an interest rate of 8 percent ($320,000 per year)
    3. 3
      $2 million from operations.
  2. b
    Entity A has $10 million in other borrowings that are outstanding throughout the construction of the project. The interest rate on those borrowings is 6 percent. Other qualifying assets of the entity never exceed $5 million during the construction of the project.
  3. c
    The proceeds from the borrowing and the initial phase of the grant are received 1 year in advance of starting construction on the project and are temporarily invested in interest-bearing investments yielding 12 percent. Interest income earned from temporary investments is not reinvested.
  4. d
    The project will take four years after start of construction to complete.
  5. e
    The following table sets forth the amount of interest to be capitalized as part of the entity's investment in the project.
    • \"
      Year 19X1 19X2 19X3 19X4 19X5 (amounts in thousands) (1)\tAssumed average qualifying assets $- \" $2,000 \" \" $5,000 \" \" $8,000 \" \" $9,000 \" (2)\tAverage funding received Borrowing \" 4,000 \" \" 4,000 \" \" 4,000 \" \" 4,000 \" \" 4,000 \" Grant \" 1,000 \" \" 2,000 \" \" 3,000 \" \" 4,000 \" \" 4,000 \" (3)\t\"Average temporary investments [(2) - (1), not less than zero] (a)\" Borrowing \" 4,000 \" \" 3,000 \" \" 1,000 \" - - Grant \" 1,000 \" \" 1,000 \" \" 1,000 \" - - (4)\tInterest earned [(3) x 12 percent] (a) Borrowing 480 360 120 - - (b) Grant 120 120 120 - - (5)\t\"Average qualifying assets in excess of borrowing, grant,and interest earned on grant (b)\" - - - - 640 (6)\tInterest cost capitalized—other borrowings [(5) x 6 percent] - - - - 38 (7)\tInterest cost—tax-exempt borrowings 320 320 320 320 320 (8)\tInterest capitalized [(6) + (7) - (4)(a)] (c) (160) (40) 200 320 358 (a)\tBalances of unexpended borrowings and unexpended grants can vary depending on the source from which the entity elects to disburse funds. (b)\t\"That is, (1) average qualifying assets minus the sum of [(2) average funding received plus (4)(b) cumulative interest earned on grant], not less than zero.\" (c)\tNote that amounts in parentheses are reductions in the cost of the asset.
  6. f
    Over the course of construction, the net cost of financing is $678,000, the sum of the interest capitalized for the five years. Accordingly, Entity A's total net investment in the project will be $10,678,000.
","snippet":"This Example illustrates the application of the guidance in this Subtopic related to capitalization of interest cost in situations involving certain tax-exempt borrowings and certain gifts and grants (see paragraphs 835-…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9a9dd0fa8472efe52345af795fe98cda6d05239b19e86d5b161f803a7aa24561","downloaded_from":"2026-09-10T01:49:23.304Z","last_downloaded_at":"2026-09-10T01:49:23.304Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482985","source_sha256":"f769ff2d34cece0c528853f57965865729a38b7185b49d19a542c983638645de"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2bfc814c422825a32ed9737a03919bcde6123d6add81a15f4296bff087a87239","downloaded_from":"2026-09-10T01:49:23.304Z","last_downloaded_at":"2026-09-10T01:49:23.304Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482985","source_sha256":"f769ff2d34cece0c528853f57965865729a38b7185b49d19a542c983638645de"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2668fe4a8ca9eda2f4f10bafcfa5c32ce4247a5f486d29abae3c308fb909d492","downloaded_from":"2026-09-10T01:49:23.304Z","last_downloaded_at":"2026-09-10T01:49:23.304Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482985","source_sha256":"f769ff2d34cece0c528853f57965865729a38b7185b49d19a542c983638645de"}},{"number":"60","label":"60 Relationships","anchor":"60-relationships","is_sec":false,"groups":[{"block":null,"heading":"Accounting Changes and Error Corrections","paragraphs":[{"citation":"835-20-60-1","para":"60-1","html":"
For guidance on reporting for previously capitalized interest cost when an accounting change results in financial statements that are, in effect, the statements of a different reporting entity, see Subtopic 250-10.
","snippet":"For guidance on reporting for previously capitalized interest cost when an accounting change results in financial statements that are, in effect, the statements of a different reporting entity, see Subtopic 250-10.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:93421f7103497fe3b034eb63bd87908e83d2de76bbac7aa93a84538dbc4b8c46","downloaded_from":"2026-09-10T01:49:26.346Z","last_downloaded_at":"2026-09-10T01:49:26.346Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482951","source_sha256":"be9661286391b0d5ee7d42cbf06ca75a62bfb706309698cb44b165b90ab40980"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3db485d51df845cdcfe5c39ffb42bd5248aea88f804296348130c897053e14b6","downloaded_from":"2026-09-10T01:49:26.346Z","last_downloaded_at":"2026-09-10T01:49:26.346Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482951","source_sha256":"be9661286391b0d5ee7d42cbf06ca75a62bfb706309698cb44b165b90ab40980"}},{"block":null,"heading":"Debt","paragraphs":[{"citation":"835-20-60-2","para":"60-2","html":"
For guidance on the capitalization of interest recognized for a participating mortgage loan, see Subtopic 470-30.
","snippet":"For guidance on the capitalization of interest recognized for a participating mortgage loan, see Subtopic 470-30.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:266042aeb55de69ad9925faae6a8811bb0b51b5804e77e3bf5c1f4372eb1ace9","downloaded_from":"2026-09-10T01:49:26.346Z","last_downloaded_at":"2026-09-10T01:49:26.346Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482951","source_sha256":"be9661286391b0d5ee7d42cbf06ca75a62bfb706309698cb44b165b90ab40980"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e2fec52af5330dd26aef991b020590538eefe54aced2db0a6be20244d8241da","downloaded_from":"2026-09-10T01:49:26.346Z","last_downloaded_at":"2026-09-10T01:49:26.346Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482951","source_sha256":"be9661286391b0d5ee7d42cbf06ca75a62bfb706309698cb44b165b90ab40980"}},{"block":null,"heading":"Extractive Activities—Oil and Gas","paragraphs":[{"citation":"835-20-60-3","para":"60-3","html":"
For guidance for when capitalization of interest cost is permitted in oil- and gas-producing operations, see Subtopic 932-835.
","snippet":"For guidance for when capitalization of interest cost is permitted in oil- and gas-producing operations, see Subtopic 932-835.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:db5f40a7741f1bb702587e1690562304e06d3bab5f875df1a5a941da2b7adf30","downloaded_from":"2026-09-10T01:49:26.346Z","last_downloaded_at":"2026-09-10T01:49:26.346Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482951","source_sha256":"be9661286391b0d5ee7d42cbf06ca75a62bfb706309698cb44b165b90ab40980"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3d05afca7116dbb52b89d1635be4a231896d1f46e2ce53d5486eebf410aa79a3","downloaded_from":"2026-09-10T01:49:26.346Z","last_downloaded_at":"2026-09-10T01:49:26.346Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482951","source_sha256":"be9661286391b0d5ee7d42cbf06ca75a62bfb706309698cb44b165b90ab40980"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8ad43c66aa6ff01ab4a8c90503e24e76cd362c6cfb6b77ac694d8552dcf1c7ec","downloaded_from":"2026-09-10T01:49:26.346Z","last_downloaded_at":"2026-09-10T01:49:26.346Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482951","source_sha256":"be9661286391b0d5ee7d42cbf06ca75a62bfb706309698cb44b165b90ab40980"}}],"enrichment":{"summary":"ASC 835-20 requires interest cost incurred while a qualifying asset is being readied for its intended use to be capitalized as part of the asset's historical cost, on the theory that such interest is an avoidable cost caused by the acquisition. Qualifying assets include assets constructed for an entity's own use, discrete projects built for sale or lease, and equity-method investments in investees that have not yet begun planned principal operations; routinely mass-produced inventory, assets already in use or idle, and gift/grant-funded assets are excluded. The amount capitalized equals the capitalization rate (rate on specific new borrowing, then weighted average of other borrowings) applied to average accumulated expenditures, capped at total interest cost incurred in the period.","key_points":["Interest is capitalized only on qualifying assets — assets constructed or produced for the entity's own use (including those built by others with deposits/progress payments), assets built as discrete projects for sale or lease, and equity-method investments while the investee has activities in progress to commence planned principal operations (835-20-15-5).","Interest is not capitalized on assets in use or ready for use, idle assets not undergoing readying activities, assets outside the consolidated balance sheet, equity-method investees after planned principal operations begin, regulated investees capitalizing debt and equity cost, assets funded by restricted gifts and grants, or inventories routinely produced in large quantities on a repetitive basis (835-20-15-6).","The capitalization period begins when all three conditions exist — expenditures have been made, activities necessary to ready the asset are in progress, and interest cost is being incurred — and continues while they persist (835-20-25-3).","Capitalization ceases when the asset is substantially complete and ready for its intended use, and is suspended if the entity suspends substantially all activities, though brief, externally imposed, or inherent delays do not stop capitalization (835-20-25-4 through 25-6).","The amount capitalized equals the capitalization rate times average accumulated expenditures; a specific new borrowing's rate applies up to that borrowing's amount, with a weighted average of other borrowing rates applied to the excess (835-20-30-3), and total interest capitalized may not exceed total interest cost incurred in the period (835-20-30-6).","Interest earned may not be offset against interest cost except for qualifying assets financed with externally restricted tax-exempt borrowings, where net interest (cost less interest earned on related investments) is capitalized from the date of borrowing (835-20-30-8 through 30-11; 835-20-25-8).","Disclose interest cost incurred and charged to expense when none is capitalized, and both total interest incurred and the amount capitalized when some is capitalized (835-20-50-1)."],"categories":["Initial measurement","Inventory and PP&E","Disclosure","Recognition"],"audience_level":"intermediate","student_note":"Exam questions almost always test the mechanics: average accumulated expenditures × capitalization rate, capped at actual interest incurred. The classic trap is offsetting interest income against interest cost — prohibited except for externally restricted tax-exempt borrowings — and forgetting that routinely mass-produced inventory and idle or already-in-use assets never qualify.","related_topics":["360-10","323-10","410-20","815-25","980-835","932-835"],"key_concepts":["qualifying asset","capitalization period","average accumulated expenditures","capitalization rate","avoidable interest","substantially complete and ready for intended use","tax-exempt borrowings","equity method investee"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ba7ec82d82226e6a46d4908ad32775b74e36f6924d3935ae4b79e737f56d2e78","downloaded_from":"2026-09-10T01:48:54.719Z","last_downloaded_at":"2026-09-10T01:49:28.506Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"835-980","title":"Regulated Operations","topic_title":"Interest","score":0.8323,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e44433abe0f9079e28d2724394b469660af5c66fe1ef2f6d26558e3a95187f6b","downloaded_from":"2026-09-10T01:51:29.287Z","last_downloaded_at":"2026-09-10T01:51:51.446Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-912","title":"Contractors—Federal Government","topic_title":"Interest","score":0.7944,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:399aec1b5bea57bfd2ac4eff46ecf2b8f0229f6ec8e675b0650557f790aae898","downloaded_from":"2026-09-10T01:50:19.327Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"340-970","title":"Real Estate—General","topic_title":"Other Assets and Deferred Costs","score":0.7591,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:000bddd733370a6f00ccf2b549151c81e9b56f48dc084c7e60ef66fe6140404b","downloaded_from":"2026-09-09T23:58:59.193Z","last_downloaded_at":"2026-09-09T23:59:17.895Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-932","title":"Extractive Activities—Oil and Gas","topic_title":"Interest","score":0.7365,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:16e7dbe5eeb1eb7ba95589ce4528dd262e085762e706830dc62b645d24b6eead","downloaded_from":"2026-09-10T01:50:54.044Z","last_downloaded_at":"2026-09-10T01:51:06.744Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not 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Costs","score":0.7333,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:76502b932d68f4b3077c96912e22dce96f7ec6602617f383d8a052418717a370","downloaded_from":"2026-09-09T23:54:15.524Z","last_downloaded_at":"2026-09-09T23:55:04.724Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"835-10","title":"Overall","topic_title":"Interest","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:adebe9773db0fed200d534776a9c9c39a3cf0c02981e0875cc2dc5a02cdd9554","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 timestamps"}},"next":{"number":"835-30","title":"Imputation of Interest","topic_title":"Interest","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:69994b08b87cee535ae6aa942c711940dd9518e0cbd91855bb4566ce3bd40330","downloaded_from":"2026-09-10T01:49:32.218Z","last_downloaded_at":"2026-09-10T01:50:15.507Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a89690481d4736378d7e29b3bec34fdf2b332e602ccc6a7e3e556b22efb9d7d7","downloaded_from":"2026-09-10T01:48:54.719Z","last_downloaded_at":"2026-09-10T01:49:28.506Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-30","topic":"835","title":"Imputation of Interest","area":"Broad Transactions","paragraphs":46,"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.","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"],"categories":["Initial measurement","Subsequent measurement","Presentation","Debt and equity"],"level":"intermediate","topic_title":"Interest","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-30-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Contract Superseded Accounting Standards Update No. 2020-10 10/29/2020
Contract Added Accounting Standards Update No. 2014-09 05/28/2014
Contract Asset Added Accounting Standards Update No. 2014-09 05/28/2014
Contract Liability Added Accounting Standards Update No. 2014-09 05/28/2014
Customer(1st def.) Superseded Accounting Standards Update No. 2020-10 10/29/2020
Customer Added Accounting Standards Update No. 2014-09 05/28/2014
Fair Value (3rd def.) Added Accounting Standards Update No. 2012-04 10/01/2012
Public Business Entity Amended Maintenance Update 2017-06 (PDF) 04/07/2017
Public Business Entity Amended Maintenance Update 2016-11 (PDF) 06/27/2016
Public Business Entity Added Accounting Standards Update No. 2015-03 04/07/2015
835-30-05-2 Amended Accounting Standards Update No. 2012-04 10/01/2012
835-30-15-3 Amended Accounting Standards Update No. 2020-10 10/29/2020
835-30-15-3 Amended Accounting Standards Update No. 2014-09 05/28/2014
835-30-15-4 Amended Accounting Standards Update No. 2020-06 08/05/2020
835-30-25-2 Amended Accounting Standards Update No. 2012-04 10/01/2012
835-30-25-5 Amended Accounting Standards Update No. 2012-04 10/01/2012
835-30-25-10 Amended Accounting Standards Update No. 2012-04 10/01/2012
835-30-25-11 Amended Accounting Standards Update No. 2012-04 10/01/2012
835-30-45-1 Amended Accounting Standards Update No. 2015-03 04/07/2015
835-30-45-1A Amended Accounting Standards Update No. 2015-03 04/07/2015
835-30-45-2 Amended Accounting Standards Update No. 2020-10 10/29/2020
835-30-45-3 Amended Accounting Standards Update No. 2015-03 04/07/2015
835-30-45-4 Amended Accounting Standards Update No. 2015-03 04/07/2015
835-30-50-1 Added Accounting Standards Update No. 2020-10 10/29/2020
835-30-55-8 Amended Accounting Standards Update No. 2015-03 04/07/2015
835-30-65-1 Added Accounting Standards Update No. 2015-03 04/07/2015
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nContract | Superseded | Accounting Standards Update No. 2020-10 | 10/29/2020 |\nContract …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b80cfc029a3b563ec6181a5a4e699e1b5548064da0ebdbd8148341e900d45757","downloaded_from":"2026-09-10T01:49:32.218Z","last_downloaded_at":"2026-09-10T01:49:32.218Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482902","source_sha256":"360e9093fe998e430da34e6576199f6e8c92275fab21c66d9aa63d1989b9ae91"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2c896c12ba31564ea04d6555c68fc924a925dd221ef0c4bfa4e8535f87f90e6","downloaded_from":"2026-09-10T01:49:32.218Z","last_downloaded_at":"2026-09-10T01:49:32.218Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482902","source_sha256":"360e9093fe998e430da34e6576199f6e8c92275fab21c66d9aa63d1989b9ae91"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7209a58e8945996cf95f58fd5bfd59c58fa8c6bc4c19953e29ead431e02b29fd","downloaded_from":"2026-09-10T01:49:32.218Z","last_downloaded_at":"2026-09-10T01:49:32.218Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482902","source_sha256":"360e9093fe998e430da34e6576199f6e8c92275fab21c66d9aa63d1989b9ae91"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-30-05-1","para":"05-1","html":"
This Subtopic addresses the imputation of interest.
","snippet":"This Subtopic addresses the imputation of interest.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bc5c6c0b435d328817023d08d26e3415a77ffbf0da8f3fd927e58da42cc8b663","downloaded_from":"2026-09-10T01:49:36.267Z","last_downloaded_at":"2026-09-10T01:49:36.267Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483079","source_sha256":"12c9409890e5b29663a4f3889107a3c3c61eb9cd1c9ef1ae42984b2379c1b2da"}},{"citation":"835-30-05-2","para":"05-2","html":"
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 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.
","snippet":"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 a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4141e1901e2a24b60cbf70104c2a092cac73195f0d3bed9f08855d24c452db62","downloaded_from":"2026-09-10T01:49:36.267Z","last_downloaded_at":"2026-09-10T01:49:36.267Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483079","source_sha256":"12c9409890e5b29663a4f3889107a3c3c61eb9cd1c9ef1ae42984b2379c1b2da"}},{"citation":"835-30-05-3","para":"05-3","html":"
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.
","snippet":"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 …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9b6d8af238533299db42db8127ba2fcd81183821d19174582267be6ac12a505b","downloaded_from":"2026-09-10T01:49:36.267Z","last_downloaded_at":"2026-09-10T01:49:36.267Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483079","source_sha256":"12c9409890e5b29663a4f3889107a3c3c61eb9cd1c9ef1ae42984b2379c1b2da"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8dbc0d506b5bf0326fe59600cdb12b91a046bd5fa48ed8bcb10b7b21ccdf6894","downloaded_from":"2026-09-10T01:49:36.267Z","last_downloaded_at":"2026-09-10T01:49:36.267Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483079","source_sha256":"12c9409890e5b29663a4f3889107a3c3c61eb9cd1c9ef1ae42984b2379c1b2da"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:57ecb4168925e75381a5cb31ea05c2bfb459c9aac89dd696f8e8c51e4ddd02e7","downloaded_from":"2026-09-10T01:49:36.267Z","last_downloaded_at":"2026-09-10T01:49:36.267Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483079","source_sha256":"12c9409890e5b29663a4f3889107a3c3c61eb9cd1c9ef1ae42984b2379c1b2da"}},{"number":"10","label":"10 Objectives","anchor":"10-objectives","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-30-10-1","para":"10-1","html":"
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.
","snippet":"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 ter…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:da7b74f748e996e0537718c769823185aff2b49149f401078cd99030e7923d96","downloaded_from":"2026-09-10T01:49:39.975Z","last_downloaded_at":"2026-09-10T01:49:39.975Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483057","source_sha256":"0480b10e8af145f1cfceacf9d6fdaffaa0df1116211d2aab4f24c2fab7d21e9e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c0672d14adb7851ba3bf8da842b9dfb030e31d85cc31760735cf14a7371503ce","downloaded_from":"2026-09-10T01:49:39.975Z","last_downloaded_at":"2026-09-10T01:49:39.975Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483057","source_sha256":"0480b10e8af145f1cfceacf9d6fdaffaa0df1116211d2aab4f24c2fab7d21e9e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1ef9c337c56a1eb6aaf81155ff1bf9eb3cd3a707f1d54e59d3a3a401ec6bfd88","downloaded_from":"2026-09-10T01:49:39.975Z","last_downloaded_at":"2026-09-10T01:49:39.975Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483057","source_sha256":"0480b10e8af145f1cfceacf9d6fdaffaa0df1116211d2aab4f24c2fab7d21e9e"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Entities","paragraphs":[{"citation":"835-30-15-1","para":"15-1","html":"
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.
","snippet":"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 fin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:76ac68c3a2ad0602aaa95effb1532e07cd16534b652a8c00e26c55c60f333133","downloaded_from":"2026-09-10T01:49:42.386Z","last_downloaded_at":"2026-09-10T01:49:42.386Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483031","source_sha256":"7b3126b27b1a294daf4a19ec3466f526b25341548ceaacb365baa0347cc0b5e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:31111eda135ff6764ca18c16e1db13d3ece33e2daae9ed9d00b3232abd392af4","downloaded_from":"2026-09-10T01:49:42.386Z","last_downloaded_at":"2026-09-10T01:49:42.386Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483031","source_sha256":"7b3126b27b1a294daf4a19ec3466f526b25341548ceaacb365baa0347cc0b5e0"}},{"block":null,"heading":"Instruments","paragraphs":[{"citation":"835-30-15-2","para":"15-2","html":"
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.
","snippet":"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 sta…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e311901085854b51b18c8549423932561f022b3cda14581b53f5515e0277a8c","downloaded_from":"2026-09-10T01:49:42.386Z","last_downloaded_at":"2026-09-10T01:49:42.386Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483031","source_sha256":"7b3126b27b1a294daf4a19ec3466f526b25341548ceaacb365baa0347cc0b5e0"}},{"citation":"835-30-15-3","para":"15-3","html":"
With the exception of guidance in paragraphs
835-30-45-1A through 45-3
addressing the presentation of discount and premium in the financial statements, which is applicable in all circumstances, and the guidance in paragraphs
835-30-55-2 through 55-3
regarding the application of the interest method, 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)
  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, and contract liabilities in contracts with customers, see paragraphs
    606-10-32-15 through 32-20
    for guidance on identifying a significant financing component in a contract with a customer.
","snippet":"With the exception of guidance in paragraphs 835-30-45-1A through 45-3 addressing the presentation of discount and premium in the financial statements, which is applicable in all circumstances, and the guidance in paragr…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2211fe64635a42063e5ed0aa9bd772ed05396cf31573a103649115f69b40ec37","downloaded_from":"2026-09-10T01:49:42.386Z","last_downloaded_at":"2026-09-10T01:49:42.386Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483031","source_sha256":"7b3126b27b1a294daf4a19ec3466f526b25341548ceaacb365baa0347cc0b5e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a70a03f93c1eb01b21b0c5419ce4e58905d8f9c5ca11fc98c39ab87cd1907cfe","downloaded_from":"2026-09-10T01:49:42.386Z","last_downloaded_at":"2026-09-10T01:49:42.386Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483031","source_sha256":"7b3126b27b1a294daf4a19ec3466f526b25341548ceaacb365baa0347cc0b5e0"}},{"block":null,"heading":"Other Considerations","paragraphs":[{"citation":"835-30-15-4","para":"15-4","html":"
This Subtopic does not modify the following accounting guidance addressed in other Topics:
  1. a
    Subparagraph superseded by Accounting Standards Update No. 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.
","snippet":"This Subtopic does not modify the following accounting guidance addressed in other Topics:\n(a) Subparagraph superseded by Accounting Standards Update No. 2020-06.\n(b) The guidance that deferred income taxes should not be…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d552d69f433db5f399b341f409e7b137fe74d4809cd6bc6cd9eee5726093bba","downloaded_from":"2026-09-10T01:49:42.386Z","last_downloaded_at":"2026-09-10T01:49:42.386Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483031","source_sha256":"7b3126b27b1a294daf4a19ec3466f526b25341548ceaacb365baa0347cc0b5e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b29178b5d0f824207e3e99e82e1c91e72c02f89aded93eb441812a05bdf0cae","downloaded_from":"2026-09-10T01:49:42.386Z","last_downloaded_at":"2026-09-10T01:49:42.386Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483031","source_sha256":"7b3126b27b1a294daf4a19ec3466f526b25341548ceaacb365baa0347cc0b5e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7084b4f1158e2bced7a839cd06dd69b7f3bca64724312bb5b0f1f2f3e30d0d12","downloaded_from":"2026-09-10T01:49:42.386Z","last_downloaded_at":"2026-09-10T01:49:42.386Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483031","source_sha256":"7b3126b27b1a294daf4a19ec3466f526b25341548ceaacb365baa0347cc0b5e0"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-30-25-1","para":"25-1","html":"
This Section provides guidance on the imputation of interest.
","snippet":"This Section provides guidance on the imputation of interest.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:33985eb50a8da6264eb0bae18eab933ed3c9e4487778a0ead8c19915da5fd75b","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6a99a2346462471842d4423947aceb613f6da4e491925331fecfd8918f08e38d","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"block":null,"heading":"Imputation of Interest","paragraphs":[{"citation":"835-30-25-2","para":"25-2","html":"
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.
","snippet":"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 prese…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aace124c4978a7df668fd5d0ca8a6ff06cac549691fbdc5aaa0bec9c2ef8c8a9","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-3","para":"25-3","html":"
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. 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.
","snippet":"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 a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:68f72dc6ca581ea8eed67054df72ea26f915f970d7ec2038b23b3b5b356d1251","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-4","para":"25-4","html":"
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.
","snippet":"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…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7d98728f3969cf3f839f0fe1ac0d9cdf26e7febe04c46567afc39f1b9ad6ee4e","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-5","para":"25-5","html":"
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 or premium. 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 upon issuance.
","snippet":"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 lend…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:380148685350de21f54405f26abf319e36952d4dc29fc98f15ad2b8ef2be55a4","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-6","para":"25-6","html":"
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.
","snippet":"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 acco…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ec6ff8f5934714215ba29b1983b82033444af95ae6c0e3a44544a77481e370c","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-7","para":"25-7","html":"
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.
","snippet":"A note exchanged for property, goods, or service represents the following two elements, which may or may not be stipulated in the note:\n(a) The principal amount, equivalent to the bargained exchange price of the property…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4acabcef425e7156bee93032dd3c592d227057e75cf7faa0c99434067f704444","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-8","para":"25-8","html":"
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.
","snippet":"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…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:85dafaeb0cc3d4d563e29c94e628dc4104a9adcb606a04b1f32ac21b4862ee12","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-9","para":"25-9","html":"
The difference between the face amount and the present value upon issuance is shown as either discount or premium.
","snippet":"The difference between the face amount and the present value upon issuance is shown as either discount or premium.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f6dbf240204de3db2cd689ee40abaf9554ff78a4ecb6a405512cf3a641b359d","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-10","para":"25-10","html":"
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.
","snippet":"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 …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:70668a58461db5711844ce6547d06235bfe75803c79a35a0e144d9ef42c4acca","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-11","para":"25-11","html":"
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), 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.
","snippet":"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), the present value of a note that stipulates eit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cf2e9247dbd36964336e967c0b3c716abf122fff1a107ad43cf946cc03f26b60","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:91b27cea6368a0f398239f8c495b8dad1dff5e44584db70af9c4447f97ed4935","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"block":null,"heading":"Determining an Appropriate Interest Rate","paragraphs":[{"citation":"835-30-25-12","para":"25-12","html":"
Paragraph 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.
","snippet":"Paragraph 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 al…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ade33242548390d2b03f9847f64cd5b9ced43293750f5319938299eccf3df04a","downloaded_from":"2026-09-10T01:49:48.308Z","last_downloaded_at":"2026-09-10T01:49:48.308Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482981","source_sha256":"b6f432359e40b701b8460ea4a599441ddf45cdf4a03fd2bab0183ad774b470bb"}},{"citation":"835-30-25-13","para":"25-13","html":"
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.
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This Section provides guidance for the measurement of interest income or expense over the term of a note.
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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 or premium 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.
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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.
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Other methods of amortization may be used if the results obtained are not materially different from those that would result from the interest method.
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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.
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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.
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The discount or premium 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.
","snippet":"The discount or premium 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 sha…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04806a836063a17a87c143bc61ec397eb11a5de8c92e3a1d73980d799413e14a","downloaded_from":"2026-09-10T01:49:53.944Z","last_downloaded_at":"2026-09-10T01:49:53.944Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482925","source_sha256":"74377f8da24f3b6cd6a704740154ffc3a3546dc69c2b287b6b7b878345b3d174"}},{"citation":"835-30-45-2","para":"45-2","html":"
Paragraph 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.)
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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.
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See Example 2 (paragraph 835-30-55-8) for illustrations of balance sheet presentation of a discount and debt issuance costs on a note.
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Paragraph 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.)
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The guidance in the following paragraphs is not subject to the scope limitation in paragraph 835-30-15-3(b).
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Generally accepted accounting principles (GAAP) require use of the interest method. 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.
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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.
","snippet":"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 t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:34772db067ab8a33f235a43c6ae01ac7ac7fe3b5e47a45f884e9eb33e9f44d4d","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c30f75fd9d2c40aaf2918b7556bf6ca8e9e2806465a1f4164ffdfa358c8c32c4","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"835-30-55-4","para":"55-4","html":"
This Example illustrates the guidance in paragraphs 835-30-05-2,
835-30-25-3 through 25-4
, and
835-30-25-10 through 25-11
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.
","snippet":"This Example illustrates the guidance in paragraphs 835-30-05-2, 835-30-25-3 through 25-4, and 835-30-25-10 through 25-11 that the coupon or stated rate of interest and the face amount of a note or bond may not be the ap…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a0f95e4ed7c2c3d456418a313eba998fd71b200206ae19497fa139e9b8171c1b","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}},{"citation":"835-30-55-5","para":"55-5","html":"
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 or discount arises when the prevailing market rate of interest differs from the coupon rate.
","snippet":"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 matur…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:48d24853320edb35d64a7f9b9ce06ba041c898215ccdf43d1a39a669029b94ae","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}},{"citation":"835-30-55-6","para":"55-6","html":"
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.
","snippet":"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.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:16c388f568dbf4f8ec3b11e728c05227d367d7a7178e59b9334d6f8170b97c88","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}},{"citation":"835-30-55-7","para":"55-7","html":"
Comparison of the two tables shows the significant impact of interest.
","snippet":"Comparison of the two tables shows the significant impact of interest.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4c5a051a1391d9847ca98e1b82e79fbb8a02abcb0cdbd4d3b35b4cc36c808b0a","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}},{"citation":"835-30-55-8","para":"55-8","html":"
This Example is an illustration of the guidance in paragraphs
835-30-45-1 through 45-3
related to the balance sheet presentation of notes that are discounted.
","snippet":"This Example is an illustration of the guidance in paragraphs 835-30-45-1 through 45-3 related to the balance sheet presentation of notes that are discounted.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:66467164ac39f1e2982a763252fdf7a268a7ecfb7efd1cdb22af95112e5f71f6","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9fe390a7cf51a124309e4bb5968cc59ee65d944d49375375a064c1e9c633d561","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:72cb202ad064a54cefb9a8384fc833ffb328c82ac9051c6d501e800e197d4eef","downloaded_from":"2026-09-10T01:49:57.466Z","last_downloaded_at":"2026-09-10T01:49:57.466Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482949","source_sha256":"5f00d5730922563df49fa5ae0416a193df1de2a80be7f6fe0af3cedb8c38734e"}},{"number":"60","label":"60 Relationships","anchor":"60-relationships","is_sec":false,"groups":[{"block":null,"heading":"Income Taxes","paragraphs":[{"citation":"835-30-60-1","para":"60-1","html":"
For guidance on accounting for differences between the recognition for financial accounting purposes and income tax purposes of discount or premium resulting from determination of the present value of a note, see Topic 740.
","snippet":"For guidance on accounting for differences between the recognition for financial accounting purposes and income tax purposes of discount or premium resulting from determination of the present value of a note, see Topic 7…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b1f9710414684e0b4448e0281d539812c5ee86865e41acd761d50e87030c3f01","downloaded_from":"2026-09-10T01:50:00.269Z","last_downloaded_at":"2026-09-10T01:50:00.269Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482924","source_sha256":"c54ddeef3074db73059f3fe1cef7a6d97a1bf83ab2d3255c71c8f67e4d38dca8"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:631e5d61b83dc9d3b7ef470a808d5253d608e0e1eb2f7bcd94eb89f4c8026abd","downloaded_from":"2026-09-10T01:50:00.269Z","last_downloaded_at":"2026-09-10T01:50:00.269Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482924","source_sha256":"c54ddeef3074db73059f3fe1cef7a6d97a1bf83ab2d3255c71c8f67e4d38dca8"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:276587da354a01518144ea98cbca6d95a9b2c429243aa642cd57c2ab76f59793","downloaded_from":"2026-09-10T01:50:00.269Z","last_downloaded_at":"2026-09-10T01:50:00.269Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482924","source_sha256":"c54ddeef3074db73059f3fe1cef7a6d97a1bf83ab2d3255c71c8f67e4d38dca8"}},{"number":"65","label":"65 Transition and Open Effective Date Information","anchor":"65-transition-and-open-effective-date-information","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-30-65-1","para":"65-1","html":"
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.
","snippet":"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 Issuanc…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:951a531a8afa9f5711212ef21f557b68930856e45deaefb1401da06aa3451f7a","downloaded_from":"2026-09-10T01:50:01.944Z","last_downloaded_at":"2026-09-10T01:50:01.944Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482898","source_sha256":"0e1bb6697993071ad8bb8191b5327ff50a5a6ff690856b1dbfef66e19dce424f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b1de29c10e994754294d75f5ced70c5e48f509d3c1b67c262283b1779857784b","downloaded_from":"2026-09-10T01:50:01.944Z","last_downloaded_at":"2026-09-10T01:50:01.944Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482898","source_sha256":"0e1bb6697993071ad8bb8191b5327ff50a5a6ff690856b1dbfef66e19dce424f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e6c135ae0aad3abf6125f1c4b5455e41227f407176891822fb39dcd5d23e7522","downloaded_from":"2026-09-10T01:50:01.944Z","last_downloaded_at":"2026-09-10T01:50:01.944Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482898","source_sha256":"0e1bb6697993071ad8bb8191b5327ff50a5a6ff690856b1dbfef66e19dce424f"}},{"number":"S00","label":"SEC 00 Status","anchor":"sec-00-status","is_sec":true,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-30-S00-1","para":"S00-1","html":"
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
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nLine-of-Credit Arrangement | Added | Accounting Standards Update No. 2015-15 | 08/18/201…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e6b622ae34c32537b147d4d4f07f303bf202f1e7af08eab63767ca4bbcd113b","downloaded_from":"2026-09-10T01:50:08.039Z","last_downloaded_at":"2026-09-10T01:50:08.039Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479410","source_sha256":"0dcdeb187a17e36ea07bee64e520d2fe4fee1fe4bf94d0840ab9be1be483cece"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7d3bb9f622990d46a6b8588a9abd5678efe8631012dc4f32afb08c423c0a715d","downloaded_from":"2026-09-10T01:50:08.039Z","last_downloaded_at":"2026-09-10T01:50:08.039Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479410","source_sha256":"0dcdeb187a17e36ea07bee64e520d2fe4fee1fe4bf94d0840ab9be1be483cece"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9e1fedde0bd63e804d778fd43790c7ae7b7014022f63b0530bf7be1caa9a83d8","downloaded_from":"2026-09-10T01:50:08.039Z","last_downloaded_at":"2026-09-10T01:50:08.039Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479410","source_sha256":"0dcdeb187a17e36ea07bee64e520d2fe4fee1fe4bf94d0840ab9be1be483cece"}},{"number":"S35","label":"SEC 35 Subsequent Measurement","anchor":"sec-35-subsequent-measurement","is_sec":true,"groups":[{"block":null,"heading":"SEC Staff Guidance","paragraphs":[{"citation":"835-30-S35-1","para":"S35-1","html":"
See paragraph 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.
","snippet":"See paragraph 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 measu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2f769471d4c787534cdb43c6e824d7cf75a53c32ccf5d80824311ce3b34f162f","downloaded_from":"2026-09-10T01:50:11.615Z","last_downloaded_at":"2026-09-10T01:50:11.615Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479385","source_sha256":"65cf690c10e1f48579d565af876a0d503b83b9221a41ffce4247ab8451ec2aa6"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:72275e4e38c87b16e9d1d6c9ae8c6329b2fed4ead92acd3b7a546017b7a4d294","downloaded_from":"2026-09-10T01:50:11.615Z","last_downloaded_at":"2026-09-10T01:50:11.615Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479385","source_sha256":"65cf690c10e1f48579d565af876a0d503b83b9221a41ffce4247ab8451ec2aa6"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4468bacf085b6e1d3f496522da324475ef4c2f7cfefef17abc63bc0e51074085","downloaded_from":"2026-09-10T01:50:11.615Z","last_downloaded_at":"2026-09-10T01:50:11.615Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479385","source_sha256":"65cf690c10e1f48579d565af876a0d503b83b9221a41ffce4247ab8451ec2aa6"}},{"number":"S45","label":"SEC 45 Other Presentation Matters","anchor":"sec-45-other-presentation-matters","is_sec":true,"groups":[{"block":null,"heading":"SEC Staff Guidance","paragraphs":[{"citation":"835-30-S45-1","para":"S45-1","html":"
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) does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements.
","snippet":"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 issua…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:abcf0be7b573f912564ef4288090528b9fa503d4a859ed57dd1c8c0cceedf802","downloaded_from":"2026-09-10T01:50:15.507Z","last_downloaded_at":"2026-09-10T01:50:15.507Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479359","source_sha256":"3fcac757ea202219d408501934dd7abaeb2e9d47468d177a8c05cfa42dca3b31"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e4fc4acf635b1ae70df5913cac89e651db7d975eaebde7cd6f730ba10c86cf0a","downloaded_from":"2026-09-10T01:50:15.507Z","last_downloaded_at":"2026-09-10T01:50:15.507Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479359","source_sha256":"3fcac757ea202219d408501934dd7abaeb2e9d47468d177a8c05cfa42dca3b31"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:459627147b4af3e2a58a4a111e5a81cc76daff9574dc9def5002e4e35e03fc08","downloaded_from":"2026-09-10T01:50:15.507Z","last_downloaded_at":"2026-09-10T01:50:15.507Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479359","source_sha256":"3fcac757ea202219d408501934dd7abaeb2e9d47468d177a8c05cfa42dca3b31"}}],"enrichment":{"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"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8b00f5a5175bdc594a96ff30ad6042aee98053b667250a8577a3774014416d5e","downloaded_from":"2026-09-10T01:49:32.218Z","last_downloaded_at":"2026-09-10T01:50:15.507Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by 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Costs","score":0.7809,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:de7529896e2941a9e3121450ce14968a0cb33b4537e16adf517dd588715ef110","downloaded_from":"2026-09-09T23:54:15.524Z","last_downloaded_at":"2026-09-09T23:55:04.724Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"320-10","title":"Overall","topic_title":"Investments—Debt Securities","score":0.7673,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8e73cd967ab3b93408a98cfd5e01b619d8f5c8c19be959345d09e880ae270c3c","downloaded_from":"2026-09-09T23:34:37.849Z","last_downloaded_at":"2026-09-09T23:35:28.596Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by 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Because assets built under contracts where revenue is recognized over time are \"employed in the earnings activities\" of the contractor (and often involve routinely produced inventories), interest capitalization is prohibited for those long-term contracts. Only when revenue is recognized at a point in time and fulfillment costs are capitalized as an asset under Subtopic 340-40 can those costs be qualifying assets for interest capitalization, and then the investment is limited to uncollected receivables net of related non-interest-bearing liabilities.","concepts":["capitalization of interest","qualifying asset","government contracts","revenue recognized over time","point-in-time revenue recognition","costs to fulfill a contract","assets employed in earnings activities","uncollected receivables"],"categories":["Initial measurement","Recognition","Industry-specific","Revenue"],"level":"intermediate","topic_title":"Interest","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-912-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Contract Added Accounting Standards Update No. 2014-09 05/28/2014
Customer Added Accounting Standards Update No. 2014-09 05/28/2014
Revenue Added Accounting Standards Update No. 2014-09 05/28/2014
912-835-25-1 through 25-3
 Amended Accounting Standards Update No. 2014-09 05/28/2014
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This Subtopic provides guidance to government contractors related to capitalization of interest.
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 912-10-15.
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Some government contracts may appear to qualify for capitalization of interest costs (see Subtopic 835-20). However, paragraph 835-20-15-6 proscribes interest capitalization for assets employed in the earnings activities of an entity. Because many contractors recognize revenue over time in accordance with the guidance on the transfer of control in paragraphs
606-10-25-27 through 25-29
, measuring progress toward complete satisfaction of a performance obligation in accordance with paragraphs
606-10-25-31 through 25-37
 as the related asset is being constructed, the asset is considered to be employed in the earnings activities of the contractor. Further, many contracts with customers require the manufacture of inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis, for which interest capitalization is considered to be inappropriate. Accordingly, government contractors shall exclude capitalized interest from long-term contracts with customers that are performed over time in accordance with the guidance on the transfer of control in paragraphs
606-10-25-27 through 25-29
.
","snippet":"Some government contracts may appear to qualify for capitalization of interest costs (see Subtopic 835-20). However, paragraph 835-20-15-6 proscribes interest capitalization for assets employed in the earnings activities…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9303c4f306d1139261e8076a64ce492304f39425869962093ea1ef3d9b3b155c","downloaded_from":"2026-09-10T01:50:30.147Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477671","source_sha256":"ec7383b2c1a9231e62968d9edba5d6a0f758cad4b15b7caecb1122d186d72b46"}},{"citation":"835-912-25-2","para":"25-2","html":"
When revenue is recognized at a point in time in accordance with the guidance on the transfer of control in paragraph 606-10-25-30, costs may be recognized as an asset in accordance with the guidance on costs to fulfill a contract in Subtopic 340-40. If costs are recognized as an asset accordingly, such costs incurred on a discrete project are qualifying assets when activities are underway to bring the asset to the condition and location necessary for its intended use.
","snippet":"When revenue is recognized at a point in time in accordance with the guidance on the transfer of control in paragraph 606-10-25-30, costs may be recognized as an asset in accordance with the guidance on costs to fulfill …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8d9d31dd18e61b2fd60ff7f6c8b379966bc6969eba9f50feab2e0cdf827e2e30","downloaded_from":"2026-09-10T01:50:30.147Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477671","source_sha256":"ec7383b2c1a9231e62968d9edba5d6a0f758cad4b15b7caecb1122d186d72b46"}},{"citation":"835-912-25-3","para":"25-3","html":"
If a contractor recognizes revenue at a point in time in accordance with the guidance on the transfer of control in paragraph 606-10-25-30 and bills all costs currently, its investment in the asset shall be limited to uncollected receivables. Such uncollected amounts shall be reduced by related non-interest-bearing liabilities, such as accounts and wages payable and accrued payroll taxes. Significant fluctuations in both outstanding receivables and accrued costs may require accumulation for each contract on a daily basis to reasonably determine the amount of such costs qualifying for interest capitalization.
","snippet":"If a contractor recognizes revenue at a point in time in accordance with the guidance on the transfer of control in paragraph 606-10-25-30 and bills all costs currently, its investment in the asset shall be limited to un…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0018e412b7c3a6f9373766ae0075eda55d0f0dee3b6e328d7f7dc5280b94523b","downloaded_from":"2026-09-10T01:50:30.147Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477671","source_sha256":"ec7383b2c1a9231e62968d9edba5d6a0f758cad4b15b7caecb1122d186d72b46"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:13ddd523c78770b8763e9817db3dc895949a6899278e288b67cf6ff0741d1912","downloaded_from":"2026-09-10T01:50:30.147Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477671","source_sha256":"ec7383b2c1a9231e62968d9edba5d6a0f758cad4b15b7caecb1122d186d72b46"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0606f41800585da420d7daa91a2cfaa2cc768b92612a0106b1fc67f04ee5d5b5","downloaded_from":"2026-09-10T01:50:30.147Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477671","source_sha256":"ec7383b2c1a9231e62968d9edba5d6a0f758cad4b15b7caecb1122d186d72b46"}}],"enrichment":{"summary":"This Subtopic tells federal government contractors when interest cost may (and may not) be capitalized. Because assets built under contracts where revenue is recognized over time are \"employed in the earnings activities\" of the contractor (and often involve routinely produced inventories), interest capitalization is prohibited for those long-term contracts. Only when revenue is recognized at a point in time and fulfillment costs are capitalized as an asset under Subtopic 340-40 can those costs be qualifying assets for interest capitalization, and then the investment is limited to uncollected receivables net of related non-interest-bearing liabilities.","key_points":["Government contractors shall exclude capitalized interest from long-term contracts with customers performed over time under the transfer-of-control guidance in 606-10-25-27 through 25-29 (835-912-25-1).","Paragraph 835-20-15-6 proscribes interest capitalization for assets employed in the earnings activities of an entity, and an asset being constructed while progress is measured under 606-10-25-31 through 25-37 is so employed (835-912-25-1).","Interest capitalization is also inappropriate for inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis (835-912-25-1).","When revenue is recognized at a point in time under 606-10-25-30 and costs are recognized as an asset under the costs-to-fulfill-a-contract guidance in Subtopic 340-40, those costs on a discrete project are qualifying assets while activities are underway to bring the asset to the condition and location necessary for its intended use (835-912-25-2).","For point-in-time contractors that bill all costs currently, the investment in the asset is limited to uncollected receivables, reduced by related non-interest-bearing liabilities such as accounts and wages payable and accrued payroll taxes (835-912-25-3).","Significant fluctuations in outstanding receivables and accrued costs may require daily accumulation by contract to determine amounts qualifying for interest capitalization (835-912-25-3).","The Subtopic follows the same scope and scope exceptions as Section 912-10-15 (835-912-15-1)."],"categories":["Initial measurement","Recognition","Industry-specific","Revenue"],"audience_level":"intermediate","student_note":"The exam trap is assuming construction-type contract assets are always \"qualifying assets\" for interest capitalization — for government contractors recognizing revenue over time, interest capitalization is flatly prohibited; it is only possible in point-in-time situations, and even then capped at uncollected receivables net of non-interest-bearing liabilities.","related_topics":["835-20","340-40","606-10","912-10","912-340"],"key_concepts":["capitalization of interest","qualifying asset","government contracts","revenue recognized over time","point-in-time revenue recognition","costs to fulfill a contract","assets employed in earnings activities","uncollected receivables"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:30ca2ce9b8ee5258c536c0f2e33ed8902f3cea95df1d16655e85c1df638d0d78","downloaded_from":"2026-09-10T01:50:19.327Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"835-980","title":"Regulated Operations","topic_title":"Interest","score":0.8021,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c819282cedbdd390e79171d0eec9c2d972ecc539ed867fbed2e8aabb317d396","downloaded_from":"2026-09-10T01:51:29.287Z","last_downloaded_at":"2026-09-10T01:51:51.446Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-20","title":"Capitalization of Interest","topic_title":"Interest","score":0.7944,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:384c066839be4fb1bbcd589e35ada724e5e92a46f54e77d7a5d2e0441cada652","downloaded_from":"2026-09-10T01:48:54.719Z","last_downloaded_at":"2026-09-10T01:49:28.506Z","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":0.75,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0604673792674f9b90251ba0986d157a3c1fc7fafa0cfec444e94dbeed1d00ea","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 timestamps"}},{"number":"835-932","title":"Extractive Activities—Oil and Gas","topic_title":"Interest","score":0.7329,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f40ad72b910814af5da19ce2391a7005605b915b88c35a9eacf061be33c29d49","downloaded_from":"2026-09-10T01:50:54.044Z","last_downloaded_at":"2026-09-10T01:51:06.744Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-922","title":"Entertainment—Cable Television","topic_title":"Interest","score":0.6978,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eca63edaa06560903768e5c3efd5064c90a30017059edcc78235e2dd2c561599","downloaded_from":"2026-09-10T01:50:34.120Z","last_downloaded_at":"2026-09-10T01:50:42.248Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-970","title":"Real Estate—General","topic_title":"Interest","score":0.6957,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7321ec6718f9feb2c98a83ab0690e0cfd8bfc5cf8226602a35863660daf634a0","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"}}],"prev":{"number":"835-30","title":"Imputation of Interest","topic_title":"Interest","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:69994b08b87cee535ae6aa942c711940dd9518e0cbd91855bb4566ce3bd40330","downloaded_from":"2026-09-10T01:49:32.218Z","last_downloaded_at":"2026-09-10T01:50:15.507Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"835-922","title":"Entertainment—Cable Television","topic_title":"Interest","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1555fe2d0381615c906b8ad4bbe4d2eec79af8d6ff66ac64ae538fa506566204","downloaded_from":"2026-09-10T01:50:34.120Z","last_downloaded_at":"2026-09-10T01:50:42.248Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:48e8a3711b027e68ec82198a778190cd5bee6a92bedc3a8117bd3603721b81ea","downloaded_from":"2026-09-10T01:50:19.327Z","last_downloaded_at":"2026-09-10T01:50:30.147Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-922","topic":"835","title":"Entertainment—Cable Television","area":"Broad Transactions","paragraphs":4,"summary":"This Subtopic tells cable television entities how much interest cost to capitalize while a cable system is under construction during the \"prematurity period.\" Interest is capitalized under Topic 835 by applying the capitalization rate from 835-20-30-3 through 30-4 to the average qualifying assets, capped at total interest incurred for that system in the period. Because part of the system is already in service earning revenue, only the accumulated expenditures exceeding the fraction in 922-360-35-3 of total estimated system cost qualify.","concepts":["capitalized interest","prematurity period","qualifying assets","interest capitalization rate","cable television system","assets completed in parts","accumulated expenditures"],"categories":["Initial measurement","Inventory and PP&E","Industry-specific"],"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":"835-922-05-1","para":"05-1","html":"
This Subtopic provides guidance on the accounting for interest costs incurred by an entity in the cable television industry during the period of construction of the cable system.
","snippet":"This Subtopic provides guidance on the accounting for interest costs incurred by an entity in the cable television industry during the period of construction of the cable system.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b0dd684a663729b3acaae4134f97e3b6da194664b30a10b481ed92c3ce4c28a","downloaded_from":"2026-09-10T01:50:34.120Z","last_downloaded_at":"2026-09-10T01:50:34.120Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477594","source_sha256":"f190af2a24c5b74c46da204f3c8a3948cfe384b63666d218a5ef07e58a417952"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:26aa556c07790a6345a29318b941efda9508aaaa17cba366ecc9fff25277690d","downloaded_from":"2026-09-10T01:50:34.120Z","last_downloaded_at":"2026-09-10T01:50:34.120Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477594","source_sha256":"f190af2a24c5b74c46da204f3c8a3948cfe384b63666d218a5ef07e58a417952"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:529f2acf88cd88aa1e9d80a3d63b713be5fb94ab5feceb599dc3b8f31d7f12d5","downloaded_from":"2026-09-10T01:50:34.120Z","last_downloaded_at":"2026-09-10T01:50:34.120Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477594","source_sha256":"f190af2a24c5b74c46da204f3c8a3948cfe384b63666d218a5ef07e58a417952"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"835-922-15-1","para":"15-1","html":"
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 922-10-15.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 922-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a10699d3df21282fb63182da39ee9a972349d90c20555d0a8b78d794f927da98","downloaded_from":"2026-09-10T01:50:35.976Z","last_downloaded_at":"2026-09-10T01:50:35.976Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478825","source_sha256":"3c303c9a6e843d1dc0e8338ddca5534b6b48943e8f364ada986a97b6cce5666b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bfa5f2b2b93d05c9fa4b10a6c6742e3262fabb308bd4d4a7098d5379356cca6d","downloaded_from":"2026-09-10T01:50:35.976Z","last_downloaded_at":"2026-09-10T01:50:35.976Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478825","source_sha256":"3c303c9a6e843d1dc0e8338ddca5534b6b48943e8f364ada986a97b6cce5666b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f09fecbe8dc51e8c3669fbfb0c4cde98b02673b9c8c831e3cfcd4b321e0a393","downloaded_from":"2026-09-10T01:50:35.976Z","last_downloaded_at":"2026-09-10T01:50:35.976Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478825","source_sha256":"3c303c9a6e843d1dc0e8338ddca5534b6b48943e8f364ada986a97b6cce5666b"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Prematurity Period—Interest Cost Capitalization","paragraphs":[{"citation":"835-922-25-1","para":"25-1","html":"
The amount of interest cost that is capitalized during the prematurity period shall be determined in accordance with Topic 835 by applying an interest capitalization rate determined in accordance with paragraphs
835-20-30-3 through 30-4
to the average amount of qualifying assets for the system during the period. Qualifying assets shall be determined in accordance with the guidance in paragraphs 835-20-30-5 and 835-20-25-5. The amount of interest cost capitalized shall not exceed the total amount of interest cost incurred by the cable television system in that period. During the prematurity period, a portion of the system is in use in the earnings activity of the entity and is not eligible for interest capitalization. The portion of the cost of the system that represents a qualifying asset is the amount of accumulated expenditures in excess of the fraction specified in paragraph 922-360-35-3 of the total estimated cost of the system at the end of the prematurity period.
","snippet":"The amount of interest cost that is capitalized during the prematurity period shall be determined in accordance with Topic 835 by applying an interest capitalization rate determined in accordance with paragraphs 835-20-3…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:85a0952ed2b1ec2f77aa199b4077ff6be600e65dfc10d89fd8a627f0ffffe2d5","downloaded_from":"2026-09-10T01:50:42.248Z","last_downloaded_at":"2026-09-10T01:50:42.248Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477501","source_sha256":"84ee1baf63b4a0c72d9c86783da0a7e6c8672c50ffe3cbbbede807646f80d6ff"}},{"citation":"835-922-25-2","para":"25-2","html":"
Paragraph 835-20-25-5 states that for assets completed in parts, and where each part is capable of being used independently while work is continuing on other parts, interest capitalization shall stop on each part when it is substantially complete and ready for use. Therefore, that guidance prohibits capitalization of interest cost on the portion of the cable television system that is substantially complete and ready for its intended use. Accordingly, this Topic clarifies that all interest cost incurred during the prematurity period is not necessarily eligible to be capitalized.
","snippet":"Paragraph 835-20-25-5 states that for assets completed in parts, and where each part is capable of being used independently while work is continuing on other parts, interest capitalization shall stop on each part when it…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:820daa6a5a2ee83b7b4690a73d948db21d615640e8fd39c9c74cf692b940b795","downloaded_from":"2026-09-10T01:50:42.248Z","last_downloaded_at":"2026-09-10T01:50:42.248Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477501","source_sha256":"84ee1baf63b4a0c72d9c86783da0a7e6c8672c50ffe3cbbbede807646f80d6ff"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ccd7c008c4e5a5ae1bb049a802e85b1ec06e32436d09751e7495a8988ebf6742","downloaded_from":"2026-09-10T01:50:42.248Z","last_downloaded_at":"2026-09-10T01:50:42.248Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477501","source_sha256":"84ee1baf63b4a0c72d9c86783da0a7e6c8672c50ffe3cbbbede807646f80d6ff"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:393b095477f55a50168846f286a502836ef526cd3677c91418d9365f14cd7f68","downloaded_from":"2026-09-10T01:50:42.248Z","last_downloaded_at":"2026-09-10T01:50:42.248Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477501","source_sha256":"84ee1baf63b4a0c72d9c86783da0a7e6c8672c50ffe3cbbbede807646f80d6ff"}}],"enrichment":{"summary":"This Subtopic tells cable television entities how much interest cost to capitalize while a cable system is under construction during the \"prematurity period.\" Interest is capitalized under Topic 835 by applying the capitalization rate from 835-20-30-3 through 30-4 to the average qualifying assets, capped at total interest incurred for that system in the period. Because part of the system is already in service earning revenue, only the accumulated expenditures exceeding the fraction in 922-360-35-3 of total estimated system cost qualify.","key_points":["Interest capitalized during the prematurity period is computed by applying an interest capitalization rate determined under 835-20-30-3 through 30-4 to the average amount of qualifying assets for the system (835-922-25-1).","The amount of interest capitalized cannot exceed the total interest cost actually incurred by the cable television system in that period (835-922-25-1).","Qualifying assets are determined under 835-20-30-5 and 835-20-25-5; the qualifying portion equals accumulated expenditures in excess of the fraction specified in 922-360-35-3 of the total estimated cost of the system at the end of the prematurity period (835-922-25-1).","The portion of the system already in use in the entity's earnings activity during the prematurity period is not eligible for interest capitalization (835-922-25-1).","Under 835-20-25-5, for assets completed in parts that can be used independently, interest capitalization stops on each part when it is substantially complete and ready for use, so not all interest incurred during the prematurity period is eligible for capitalization (835-922-25-2).","The Subtopic follows the same scope and scope exceptions as Section 922-10-15 (835-922-15-1)."],"categories":["Initial measurement","Inventory and PP&E","Industry-specific"],"audience_level":"intermediate","student_note":"The trap here is assuming all interest incurred during the prematurity period gets capitalized — it does not, because the portion of the cable system already in service is treated as substantially complete and ineligible; only expenditures above the 922-360-35-3 fraction of total estimated cost are qualifying assets.","related_topics":["835-20","922-10","922-360","360"],"key_concepts":["capitalized interest","prematurity period","qualifying assets","interest 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Other","score":0.8615,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d7622463c6daca652c0ffdc43d9d5d0eb53cda12e9b065d5c2da49f42f45bb7b","downloaded_from":"2026-09-10T00:04:18.369Z","last_downloaded_at":"2026-09-10T00:04:37.790Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"720-922","title":"Entertainment—Cable Television","topic_title":"Other Expenses","score":0.7803,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:347365a7ac762b5fd8dcd424efba87ac20e6f5ee878cca68a36a1100aaf8a5b6","downloaded_from":"2026-09-10T01:09:40.397Z","last_downloaded_at":"2026-09-10T01:09:54.134Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-980","title":"Regulated Operations","topic_title":"Interest","score":0.7299,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f592bb8dd2d14cfc04f3fc43e2f06fcdbc3437b1832b470ef984f0657796cef5","downloaded_from":"2026-09-10T01:51:29.287Z","last_downloaded_at":"2026-09-10T01:51:51.446Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-20","title":"Capitalization of 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timestamps"}},{"number":"835-926","topic":"835","title":"Entertainment—Films","area":"Broad Transactions","paragraphs":3,"summary":"This short subtopic tells film producers and distributors how to handle interest costs incurred while a film is being produced. The rule is simple: interest costs related to film production are accounted for under the general interest-capitalization guidance in Subtopic 835-20 (835-926-25-1). Its scope follows the Entertainment—Films overall scope in Section 926-10-15.","concepts":["interest cost","capitalization of interest","film production costs","qualifying asset","film cost capitalization","industry-specific interest guidance"],"categories":["Initial measurement","Industry-specific","Recognition"],"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":"835-926-05-1","para":"05-1","html":"
This Subtopic addresses the accounting and reporting by entities in the film production and distribution industry for interest costs incurred in the production of a film.
","snippet":"This Subtopic addresses the accounting and reporting by entities in the film production and distribution industry for interest costs incurred in the production of a film.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:113becdf9c60ac266b6b399c2d3b9050a72740dce18dee2292638ba0b65f6304","downloaded_from":"2026-09-10T01:50:45.748Z","last_downloaded_at":"2026-09-10T01:50:45.748Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478363","source_sha256":"de78424676544566bfe4286b17be26237b5402aed005c4e567d70bcfafd0a003"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9a11db530f27258a9a603fb3eaa52673885a9f6d37fbec7c6ed92e3b5d766f06","downloaded_from":"2026-09-10T01:50:45.748Z","last_downloaded_at":"2026-09-10T01:50:45.748Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478363","source_sha256":"de78424676544566bfe4286b17be26237b5402aed005c4e567d70bcfafd0a003"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5f7ebff8369b25ba9beaf2ca1537b3208b4ec42df3ba617b8ed649771e7ea033","downloaded_from":"2026-09-10T01:50:45.748Z","last_downloaded_at":"2026-09-10T01:50:45.748Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478363","source_sha256":"de78424676544566bfe4286b17be26237b5402aed005c4e567d70bcfafd0a003"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"835-926-15-1","para":"15-1","html":"
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-10-15.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8fe78dac7914cef4689bd1ebb3c415152e3e267b763663ca75e84bb0bdf47ec1","downloaded_from":"2026-09-10T01:50:47.974Z","last_downloaded_at":"2026-09-10T01:50:47.974Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477288","source_sha256":"d4dbb0da5afc4cf25012f3e1b053df3802170e34a70f247b8a4bcfb24f65818c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:53dbd33005984527fdb7c3f843d9593f5fe4c73fddb2c6486b22f15af9846721","downloaded_from":"2026-09-10T01:50:47.974Z","last_downloaded_at":"2026-09-10T01:50:47.974Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477288","source_sha256":"d4dbb0da5afc4cf25012f3e1b053df3802170e34a70f247b8a4bcfb24f65818c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2455d8f005e6dde2923d0ba34186f561d3f797536c837eb450578c2a72b5f330","downloaded_from":"2026-09-10T01:50:47.974Z","last_downloaded_at":"2026-09-10T01:50:47.974Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477288","source_sha256":"d4dbb0da5afc4cf25012f3e1b053df3802170e34a70f247b8a4bcfb24f65818c"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Film Production Interest Costs","paragraphs":[{"citation":"835-926-25-1","para":"25-1","html":"
An entity shall account for interest costs related to the production of a film in accordance with Subtopic 835-20.
","snippet":"An entity shall account for interest costs related to the production of a film in accordance with Subtopic 835-20.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5da8a5b142119f031eb04a54381e84532e8f838ac9bdc65cca4710d3c5619770","downloaded_from":"2026-09-10T01:50:51.672Z","last_downloaded_at":"2026-09-10T01:50:51.672Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478378","source_sha256":"043202c142b9cf5919cfd3d400b1523e0c7d47487a578ecf27f66cc5c656d110"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0abb73acaf1a179ff38e00de5fa1ecc3c15458007a6afa38dfc51df69b270fe1","downloaded_from":"2026-09-10T01:50:51.672Z","last_downloaded_at":"2026-09-10T01:50:51.672Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478378","source_sha256":"043202c142b9cf5919cfd3d400b1523e0c7d47487a578ecf27f66cc5c656d110"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3d7d40c8cf1dc8ac8936ec90d0cb898544cc99fe782d877f1fda74f2c5be4829","downloaded_from":"2026-09-10T01:50:51.672Z","last_downloaded_at":"2026-09-10T01:50:51.672Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478378","source_sha256":"043202c142b9cf5919cfd3d400b1523e0c7d47487a578ecf27f66cc5c656d110"}}],"enrichment":{"summary":"This short subtopic tells film producers and distributors how to handle interest costs incurred while a film is being produced. The rule is simple: interest costs related to film production are accounted for under the general interest-capitalization guidance in Subtopic 835-20 (835-926-25-1). Its scope follows the Entertainment—Films overall scope in Section 926-10-15.","key_points":["The subtopic addresses accounting and reporting by entities in the film production and distribution industry for interest costs incurred in producing a film (835-926-05-1).","Scope is the same as the Entertainment—Films Overall Subtopic, Section 926-10-15 (835-926-15-1).","Interest costs related to the production of a film must be accounted for in accordance with Subtopic 835-20, Interest—Capitalization of Interest (835-926-25-1).","The subtopic itself creates no film-specific measurement rule; it simply directs the entity to the general capitalization-of-interest model, so a film in production is treated as a qualifying asset under that model."],"categories":["Initial measurement","Industry-specific","Recognition"],"audience_level":"intermediate","student_note":"This is a pure cross-reference subtopic: the exam point is that film production interest is capitalized under 835-20 like any other qualifying asset, not expensed as incurred. Students often assume the film industry has a special interest rule; it does not.","related_topics":["835-20","926-10","926-20","835"],"key_concepts":["interest cost","capitalization of interest","film production costs","qualifying asset","film cost capitalization","industry-specific interest guidance"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:280d4aa89388398b82167d2607963c68c25cd5bb93b83865dbbf9f17594ab106","downloaded_from":"2026-09-10T01:50:45.748Z","last_downloaded_at":"2026-09-10T01:50:51.672Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"720-926","title":"Entertainment—Films","topic_title":"Other 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Costs already being depreciated, depleted, or amortized are treated as assets in use and do not qualify for interest capitalization, while unusually significant unproved properties and major development projects not yet being amortized and on which exploration or development is in progress do qualify. It also addresses pipeline advances made to encourage exploration, which fall within the imputation-of-interest exclusion in 835-30-15-3(b) unless the advance is in a Topic 606 contract with a customer.","concepts":["full cost method","capitalized interest","qualifying assets","unproved properties","major development projects","cost center","pipeline advances","imputation of interest"],"categories":["Initial measurement","Industry-specific","Inventory and PP&E","Revenue"],"level":"intermediate","topic_title":"Interest","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-932-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
ProductionAmendedAccounting Standards Update No. 2010-0301/06/2010
PropertiesAmendedAccounting Standards Update No. 2010-0301/06/2010
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
932-835-25-2AmendedAccounting Standards Update No. 2014-0905/28/2014
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nContract | Added | Accounting Standards Update No. 2014-09 | 05/28/2014 |\nCustomer | Add…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f726010ede73f2c711f47128d740c0a8a9180167fae40b3dc543fa70d8f65806","downloaded_from":"2026-09-10T01:50:54.044Z","last_downloaded_at":"2026-09-10T01:50:54.044Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478956","source_sha256":"641aaf507e239f1d7abefa377ff070f94dcd71071ccba012417a4e521ab56f4e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d0315e0ad6419b9891fa42898e88a1c2d06e5571b42e14f5679afa8c9cdd565","downloaded_from":"2026-09-10T01:50:54.044Z","last_downloaded_at":"2026-09-10T01:50:54.044Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478956","source_sha256":"641aaf507e239f1d7abefa377ff070f94dcd71071ccba012417a4e521ab56f4e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e7633d72eda56c683260bfdb3a22c25995a1e61334a87c1d074d991c2d221619","downloaded_from":"2026-09-10T01:50:54.044Z","last_downloaded_at":"2026-09-10T01:50:54.044Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478956","source_sha256":"641aaf507e239f1d7abefa377ff070f94dcd71071ccba012417a4e521ab56f4e"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-932-05-1","para":"05-1","html":"
This Subtopic addresses interest capitalization under the full cost method of accounting in the oil and gas industry.
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 932-10-15.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 932-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c4da5f6637c8f8053d512bb41561850e21025ad9ce3d0f40d60d1c165f05eff1","downloaded_from":"2026-09-10T01:50:58.535Z","last_downloaded_at":"2026-09-10T01:50:58.535Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478061","source_sha256":"4c861eab45c2b0568abb41ce6c3bbe23c92a72b7ab11804c707cbe483e3bec4a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:49503d9fa0053075a3f40fda82af6bafc191d950b80a238b16188957dd29e60a","downloaded_from":"2026-09-10T01:50:58.535Z","last_downloaded_at":"2026-09-10T01:50:58.535Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478061","source_sha256":"4c861eab45c2b0568abb41ce6c3bbe23c92a72b7ab11804c707cbe483e3bec4a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:55d23220a007e8ae58998dd92347c8202ea03ac7f090f3ad1dcdb919bc54c598","downloaded_from":"2026-09-10T01:50:58.535Z","last_downloaded_at":"2026-09-10T01:50:58.535Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478061","source_sha256":"4c861eab45c2b0568abb41ce6c3bbe23c92a72b7ab11804c707cbe483e3bec4a"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Assets Qualifying for Interest Capitalization","paragraphs":[{"citation":"835-932-25-1","para":"25-1","html":"
For purposes of applying interest capitalization (see Subtopic 835-20) to oil- and gas-producing operations accounted for by the full cost method, assets whose costs are being currently depreciated, depleted, or amortized are assets in use in the earning activities of the entity and are not assets qualifying for capitalization of interest cost as defined in paragraph 835-20-15-5. Unusually significant investments in unproved properties and major development projects that are not being currently depreciated, depleted, or amortized and on which exploration or development activities are in progress are assets qualifying for capitalization of interest cost. Similarly, in a cost center with no production, significant properties and projects on which exploration or development activities are in progress are assets qualifying for capitalization of interest cost.
","snippet":"For purposes of applying interest capitalization (see Subtopic 835-20) to oil- and gas-producing operations accounted for by the full cost method, assets whose costs are being currently depreciated, depleted, or amortize…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bbec8b4fae35792e632478438d375c7e3d7f2c8c11a170eb93fe218b98269a0d","downloaded_from":"2026-09-10T01:51:04.953Z","last_downloaded_at":"2026-09-10T01:51:04.953Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477587","source_sha256":"97f32839acff4acffed752cb656e39b4f6c6f797c8c47bc41ba6ebf2385d6e39"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c1a614c0fad133cb258c2e994c6c0967873da26d0a9a1d4a2d765a62c0e8d2e5","downloaded_from":"2026-09-10T01:51:04.953Z","last_downloaded_at":"2026-09-10T01:51:04.953Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477587","source_sha256":"97f32839acff4acffed752cb656e39b4f6c6f797c8c47bc41ba6ebf2385d6e39"}},{"block":null,"heading":"Advances Satisfied by Delivery of Future Production","paragraphs":[{"citation":"835-932-25-2","para":"25-2","html":"
In certain transactions, pipeline entities make advances to encourage exploration. These advances are satisfied by delivery of future production, but there is also a definite obligation to repay if the future production is insufficient to discharge the obligation by a definite date. The advance is covered by the exclusion in paragraph 835-30-15-3(b) even though there may be an obligation to repay should the future production prove insufficient to discharge the obligation. However, if the advance is in a contract with a customer within the scope of Topic 606 on revenue from contracts with customers, the guidance in Topic 606shall be applied.
","snippet":"In certain transactions, pipeline entities make advances to encourage exploration. These advances are satisfied by delivery of future production, but there is also a definite obligation to repay if the future production …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f9b3c63e3145f8e62a4df00884d2a55ed8ce9e6118c31aa2b3aac14e58c4d95","downloaded_from":"2026-09-10T01:51:04.953Z","last_downloaded_at":"2026-09-10T01:51:04.953Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477587","source_sha256":"97f32839acff4acffed752cb656e39b4f6c6f797c8c47bc41ba6ebf2385d6e39"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ac92cadfad25d8a55008dca4acd2c8bec9cb9b92ee97380179b2e39bf52cbd9c","downloaded_from":"2026-09-10T01:51:04.953Z","last_downloaded_at":"2026-09-10T01:51:04.953Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477587","source_sha256":"97f32839acff4acffed752cb656e39b4f6c6f797c8c47bc41ba6ebf2385d6e39"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ae2ba662655d8f241a5058a06b02e491423617c45f13ca8f92150239f1a690b8","downloaded_from":"2026-09-10T01:51:04.953Z","last_downloaded_at":"2026-09-10T01:51:04.953Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477587","source_sha256":"97f32839acff4acffed752cb656e39b4f6c6f797c8c47bc41ba6ebf2385d6e39"}}],"enrichment":{"summary":"This subtopic applies the general interest capitalization rules of Subtopic 835-20 to oil- and gas-producing operations that use the full cost method. Costs already being depreciated, depleted, or amortized are treated as assets in use and do not qualify for interest capitalization, while unusually significant unproved properties and major development projects not yet being amortized and on which exploration or development is in progress do qualify. It also addresses pipeline advances made to encourage exploration, which fall within the imputation-of-interest exclusion in 835-30-15-3(b) unless the advance is in a Topic 606 contract with a customer.","key_points":["Under the full cost method, assets whose costs are currently being depreciated, depleted, or amortized are assets in use in the earning activities of the entity and are not qualifying assets for interest capitalization under paragraph 835-20-15-5 (835-932-25-1).","Unusually significant investments in unproved properties and major development projects that are not currently being depreciated, depleted, or amortized, and on which exploration or development activities are in progress, are qualifying assets for interest capitalization (835-932-25-1).","In a cost center with no production, significant properties and projects on which exploration or development activities are in progress are qualifying assets for interest capitalization (835-932-25-1).","Pipeline entity advances to encourage exploration, satisfied by delivery of future production but with a definite obligation to repay by a definite date if production is insufficient, are covered by the imputed-interest exclusion in paragraph 835-30-15-3(b) (835-932-25-2).","If such an advance is in a contract with a customer within the scope of Topic 606, the guidance in Topic 606 shall be applied instead (835-932-25-2).","The scope of this Subtopic follows Section 932-10-15 (835-932-15-1)."],"categories":["Initial measurement","Industry-specific","Inventory and PP&E","Revenue"],"audience_level":"intermediate","student_note":"The trap is assuming all full cost pool assets qualify for interest capitalization: once costs enter the amortization base they are \"in use\" and no longer qualifying, so only significant unproved properties and major development projects still under exploration or development (or any active project in a non-producing cost center) support capitalized interest.","related_topics":["835-20","835-30","932-10","932-360","606"],"key_concepts":["full cost method","capitalized interest","qualifying assets","unproved properties","major development projects","cost center","pipeline advances","imputation of interest"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:199b2faa48b7e2fe8958ffd3fe088be7c40f175f879488971b2207410967b647","downloaded_from":"2026-09-10T01:50:54.044Z","last_downloaded_at":"2026-09-10T01:51:06.744Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"470-932","title":"Extractive Activities—Oil and 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timestamps"}},{"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.
","snippet":"See also Subtopic 835-20.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e61d0573a110e335a8abb231166162aadb85cc52830f12e0f0fcd383541faf21","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"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9dac81e7ecba6fefa6a0025d92c7b0b6a2d694eaec0609d6d0fc87e412878cdd","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"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:221ca107304046ac9012c35156686fe1bee888275fe10121f32816a86dc0031a","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"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"835-970-15-1","para":"15-1","html":"
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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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).","concepts":["interest revenue recognition","nonaccrual loans","realization","rebuttable presumption","real estate investment trust","allowance for loan losses","loan renegotiation","foreclosure"],"categories":["Recognition","Subsequent measurement","Impairment","Industry-specific"],"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":"835-974-05-1","para":"05-1","html":"
This Subtopic addresses measurement issues related to interest revenue on loans held by real estate investment trusts.
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 974-10-15.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 974-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cd3d8d89e2500c85b4f19252941ad5cd626a714d2df2045c89e295fc8c71b019","downloaded_from":"2026-09-10T01:51:20.383Z","last_downloaded_at":"2026-09-10T01:51:20.383Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477241","source_sha256":"8fc1fcfc24f5ea6c435b456b94572f2432b2288a79dd7e33e6c478163a4e26b4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:106965256a046f76a1b4d1da71cde2814dc5be77f0c9f391a9dd2b5f9b976314","downloaded_from":"2026-09-10T01:51:20.383Z","last_downloaded_at":"2026-09-10T01:51:20.383Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477241","source_sha256":"8fc1fcfc24f5ea6c435b456b94572f2432b2288a79dd7e33e6c478163a4e26b4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a6d1cbcb0b16f7331e30ebaf9f26409cd90e0abc2dd5e45f3c2a1da34b53a7a7","downloaded_from":"2026-09-10T01:51:20.383Z","last_downloaded_at":"2026-09-10T01:51:20.383Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477241","source_sha256":"8fc1fcfc24f5ea6c435b456b94572f2432b2288a79dd7e33e6c478163a4e26b4"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Discontinuance of Interest Revenue Recognition","paragraphs":[{"citation":"835-974-35-1","para":"35-1","html":"
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.
","snippet":"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 …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d3f5f7512db433ae47d7663cd06663a4370c08d12188289c9b14e15cebde6e81","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":"835-974-35-2","para":"35-2","html":"
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.
","snippet":"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 r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9423af79b6760899da58bbadc869f00303f8f9256ab2e8e83db393e2606abf1c","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"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4ed39bc11b53e140cbfab2df58774478a9881926755dd4435acb18cbd11487a","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"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d4aa69aeaf36f0e5933f34cd879c96f42fe0fc2ee414c596f220ced4256ad6da","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"}}],"enrichment":{"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"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ab9dd2f7e38aa45117b099b3ad1bff930657149f5c45ed7cc8c0256d24cfbddb","downloaded_from":"2026-09-10T01:51:18.569Z","last_downloaded_at":"2026-09-10T01:51:26.169Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"835-970","title":"Real Estate—General","topic_title":"Interest","score":0.7955,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b69cd0c0baf5a5ce54e55daccae0d18415e98d47620272c375b6f9914843266","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"}},{"number":"810-974","title":"Real Estate—Real Estate Investment Trusts","topic_title":"Consolidation","score":0.78,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2dd2616c2506a5778fd38189cb3ea742ad02b3d173712d9dff4794bb47db8a81","downloaded_from":"2026-09-10T01:33:51.197Z","last_downloaded_at":"2026-09-10T01:34:06.992Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"974-10","title":"Overall","topic_title":"Real Estate—Real Estate Investment Trusts","score":0.7306,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a96e929b7a97b6a9a57bd98c2096c400bdf111f84c0ccc6c59a683fafae6a99f","downloaded_from":"2026-09-10T02:26:25.491Z","last_downloaded_at":"2026-09-10T02:26:47.600Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"720-974","title":"Real Estate—Real Estate Investment Trusts","topic_title":"Other 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Ventures","score":0.7196,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:981a2b9cbbe1b997c709c306a791c0be920194c386a3c2d41d5d7f57d0b3d298","downloaded_from":"2026-09-09T23:43:04.021Z","last_downloaded_at":"2026-09-09T23:43:16.668Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"835-970","title":"Real Estate—General","topic_title":"Interest","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dad4de79887acf4ea69738f8b1d6f4bf0303acb37560107228582ab84b366ccb","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"}},"next":{"number":"835-980","title":"Regulated Operations","topic_title":"Interest","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71c5fbadd695a03c8b461b16fc90c55ab98f4098d1929728371b3dfa51bef0e4","downloaded_from":"2026-09-10T01:51:29.287Z","last_downloaded_at":"2026-09-10T01:51:51.446Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:897c83f9490a5f5ac6b1e0059fc398e7c528b47d35b3c2e8bef48f0ddf91edd9","downloaded_from":"2026-09-10T01:51:18.569Z","last_downloaded_at":"2026-09-10T01:51:26.169Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"835-980","topic":"835","title":"Regulated Operations","area":"Broad Transactions","paragraphs":9,"summary":"This Subtopic governs how entities with regulated operations account for the financing cost of construction — the allowance for funds used during construction (AFUDC), which includes both a computed interest component and a designated cost of equity funds. When a regulator requires such capitalization, the rate-making amount (not the amount computed under Subtopic 835-20) is capitalized for financial reporting purposes, but only if subsequent inclusion in allowable costs for rate-making purposes is probable. The credit is reported in the income statement as other income, a reduction of interest expense, or both.","concepts":["allowance for funds used during construction","regulated operations","capitalized interest","cost of equity funds","probable inclusion in allowable costs","rate-making","prudence disallowance","abandoned plant"],"categories":["Initial measurement","Inventory and PP&E","Industry-specific","Presentation"],"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":"835-980-05-1","para":"05-1","html":"
This Subtopic provides guidance on accounting for interest for entities with regulated operations.
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 980-10-15.
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In some cases, a regulator requires an entity subject to its authority to capitalize, as part of the cost of plant and equipment, the cost of financing construction as financed partially by borrowings and partially by equity. This cost of financing construction is referred to as an allowance for funds used during construction.
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If the specific criteria in paragraph 980-835-35-1 are met but an allowance for funds used during construction is not capitalized because its inclusion in the cost that will become the basis for future rates is not probable, the regulated entity may not alternatively capitalize interest cost in accordance with Subtopic 835-20.
","snippet":"If the specific criteria in paragraph 980-835-35-1 are met but an allowance for funds used during construction is not capitalized because its inclusion in the cost that will become the basis for future rates is not proba…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:78c79135be615b94bd860ccf8a094353e5ef2ad4e7541ae6669f6d7b7ac07242","downloaded_from":"2026-09-10T01:51:37.091Z","last_downloaded_at":"2026-09-10T01:51:37.091Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478698","source_sha256":"6abf41cd20f36fdf541e29f4a63c0b21512dd45ca9e48f031ab21af984d569a4"}},{"citation":"835-980-25-3","para":"25-3","html":"
If completion of a plant under construction is reasonably possible but no longer probable, and the regulator in the governing jurisdiction routinely disallows accumulated allowance for funds used during construction on abandoned plants, the criteria required to write off such previously recognized amounts are not met since disallowance is not probable; thus, such previously capitalized amounts shall not be written off. However, because inclusion of allowance for funds used during construction in the cost allowed for future rates is no longer probable, further capitalization of such amounts is not warranted.
","snippet":"If completion of a plant under construction is reasonably possible but no longer probable, and the regulator in the governing jurisdiction routinely disallows accumulated allowance for funds used during construction on a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d0cbc739d9148015a256afab92ceea9d994b87aad3515a5ae24d640ab89b7d23","downloaded_from":"2026-09-10T01:51:37.091Z","last_downloaded_at":"2026-09-10T01:51:37.091Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478698","source_sha256":"6abf41cd20f36fdf541e29f4a63c0b21512dd45ca9e48f031ab21af984d569a4"}},{"citation":"835-980-25-4","para":"25-4","html":"
Assume that a prudence investigation is in process or has taken place, and a disallowance of cost (including subsequent allowance for funds used during construction on those costs) is reasonably possible, and that the range of such disallowance is from zero to some maximum amount, with no point within the range being more likely than any other. In that situation, because a disallowance of the maximum amount in the range is reasonably possible and thus inclusion of that amount in rates is no longer probable, subsequent capitalization of allowance for funds used during construction shall be discontinued for an amount of costs equal to the maximum amount that is within the range.
","snippet":"Assume that a prudence investigation is in process or has taken place, and a disallowance of cost (including subsequent allowance for funds used during construction on those costs) is reasonably possible, and that the ra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:320ce1c789f27e350788d148016026267a5caf7136058435fa7f05239163ebfd","downloaded_from":"2026-09-10T01:51:37.091Z","last_downloaded_at":"2026-09-10T01:51:37.091Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478698","source_sha256":"6abf41cd20f36fdf541e29f4a63c0b21512dd45ca9e48f031ab21af984d569a4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2fcf500854d3c1a34919865c87e12ee00b139c8a5eaa59d8b1cc9919461df393","downloaded_from":"2026-09-10T01:51:37.091Z","last_downloaded_at":"2026-09-10T01:51:37.091Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478698","source_sha256":"6abf41cd20f36fdf541e29f4a63c0b21512dd45ca9e48f031ab21af984d569a4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:89df4a4b352501eff6d170f515caabd97b9cfb81666f37671c867ca99be88c76","downloaded_from":"2026-09-10T01:51:37.091Z","last_downloaded_at":"2026-09-10T01:51:37.091Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478698","source_sha256":"6abf41cd20f36fdf541e29f4a63c0b21512dd45ca9e48f031ab21af984d569a4"}},{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-980-30-1","para":"30-1","html":"
If a regulator requires an entity to capitalize certain costs as discussed in paragraph 980-835-25-1, a computed interest cost and a designated cost of equity funds are capitalized, and net income for the current period is increased by a corresponding amount. In such cases, the amounts capitalized for rate-making purposes as part of the cost of acquiring the assets shall be capitalized for financial reporting purposes instead of the amount of interest that would be capitalized in accordance with Subtopic 835-20. Those amounts shall be capitalized only if their subsequent inclusion in allowable costs for rate-making purposes is probable.
","snippet":"If a regulator requires an entity to capitalize certain costs as discussed in paragraph 980-835-25-1, a computed interest cost and a designated cost of equity funds are capitalized, and net income for the current period …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d25cc761618ee5b689bb7267fefa426336980f3cadba162f02692beccad221a6","downloaded_from":"2026-09-10T01:51:40.838Z","last_downloaded_at":"2026-09-10T01:51:40.838Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478497","source_sha256":"4f2803ac7932d11d25000a466eda74c9bb48a51c70abf8915714fa8489465133"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:db2f8ef709d36f5f5da00bff34a973127797b5e56dd0792505fb74b80be1c190","downloaded_from":"2026-09-10T01:51:40.838Z","last_downloaded_at":"2026-09-10T01:51:40.838Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478497","source_sha256":"4f2803ac7932d11d25000a466eda74c9bb48a51c70abf8915714fa8489465133"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7150cb2dbcea1e679c012b7e4e1b829bf4abc281563dbdfb9fb68e1fcc93e79c","downloaded_from":"2026-09-10T01:51:40.838Z","last_downloaded_at":"2026-09-10T01:51:40.838Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478497","source_sha256":"4f2803ac7932d11d25000a466eda74c9bb48a51c70abf8915714fa8489465133"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-980-35-1","para":"35-1","html":"
After construction is completed, the resulting capitalized cost, including the allowance for funds used during construction, is the basis for depreciation and unrecovered investment for rate-making purposes.
","snippet":"After construction is completed, the resulting capitalized cost, including the allowance for funds used during construction, is the basis for depreciation and unrecovered investment for rate-making purposes.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f69794400b5151cce3b5946aa07a968dbc6689d021929882d4a77ebd5d6680fd","downloaded_from":"2026-09-10T01:51:43.899Z","last_downloaded_at":"2026-09-10T01:51:43.899Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478355","source_sha256":"1ee60d6fd82ab6d710c1a9e31d4baaabed9666890a15fe74fb6cf6ab2af846fd"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e5a7d7ee6b203b2b3c16563e8fc5f9fa46bfcd6cb165eceb201aea4a64d171b3","downloaded_from":"2026-09-10T01:51:43.899Z","last_downloaded_at":"2026-09-10T01:51:43.899Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478355","source_sha256":"1ee60d6fd82ab6d710c1a9e31d4baaabed9666890a15fe74fb6cf6ab2af846fd"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:807323e67f296da4f7352b53ef7631b238f03d79352471842f2807303ac8a83a","downloaded_from":"2026-09-10T01:51:43.899Z","last_downloaded_at":"2026-09-10T01:51:43.899Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478355","source_sha256":"1ee60d6fd82ab6d710c1a9e31d4baaabed9666890a15fe74fb6cf6ab2af846fd"}},{"number":"45","label":"45 Other Presentation Matters","anchor":"45-other-presentation-matters","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-980-45-1","para":"45-1","html":"
The income statement shall include an item of other income, a reduction of interest expense, or both, in a manner that indicates the basis for the amount of construction financing cost capitalized as required by paragraph 980-835-25-1.
","snippet":"The income statement shall include an item of other income, a reduction of interest expense, or both, in a manner that indicates the basis for the amount of construction financing cost capitalized as required by paragrap…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ee2fe40b1b192ea78984b913d6a4cd9f9148c4542b0104dec96bcdba32d1f06f","downloaded_from":"2026-09-10T01:51:47.374Z","last_downloaded_at":"2026-09-10T01:51:47.374Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479123","source_sha256":"dcc5303b5837f2c5961e02c031da19fae24df0e73e0468e8a2b00d04d23b14d9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c0cffbdd9956eb1f1b924fda7776a2ba8c8cf9bcaaaa3ff5f66483c0699f1979","downloaded_from":"2026-09-10T01:51:47.374Z","last_downloaded_at":"2026-09-10T01:51:47.374Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479123","source_sha256":"dcc5303b5837f2c5961e02c031da19fae24df0e73e0468e8a2b00d04d23b14d9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a3208a65260264333570a134da69dbeb0fef97558ddb4675cc199c2fbb1a5512","downloaded_from":"2026-09-10T01:51:47.374Z","last_downloaded_at":"2026-09-10T01:51:47.374Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479123","source_sha256":"dcc5303b5837f2c5961e02c031da19fae24df0e73e0468e8a2b00d04d23b14d9"}}],"enrichment":{"summary":"This Subtopic governs how entities with regulated operations account for the financing cost of construction — the allowance for funds used during construction (AFUDC), which includes both a computed interest component and a designated cost of equity funds. When a regulator requires such capitalization, the rate-making amount (not the amount computed under Subtopic 835-20) is capitalized for financial reporting purposes, but only if subsequent inclusion in allowable costs for rate-making purposes is probable. The credit is reported in the income statement as other income, a reduction of interest expense, or both.","key_points":["A regulator may require capitalization, as part of plant and equipment cost, of the cost of financing construction funded by both borrowings and equity — the allowance for funds used during construction (835-980-25-1).","When a regulator requires capitalization, the amounts capitalized for rate-making purposes (computed interest plus a designated cost of equity funds), rather than the amount under Subtopic 835-20, are capitalized for financial reporting, and net income is increased correspondingly (835-980-30-1).","AFUDC is capitalized only if its subsequent inclusion in allowable costs for rate-making purposes is probable (835-980-30-1).","If AFUDC is not capitalized because inclusion in the future rate base is not probable, the entity may not instead capitalize interest cost under Subtopic 835-20 (835-980-25-2).","If completion of a plant is only reasonably possible and the regulator routinely disallows accumulated AFUDC on abandoned plants, previously capitalized amounts are not written off (disallowance is not probable), but further capitalization is not warranted (835-980-25-3).","Where a prudence investigation makes disallowance reasonably possible over a range with no point more likely than another, further AFUDC capitalization is discontinued on an amount of costs equal to the maximum amount in the range (835-980-25-4).","After construction is complete, the capitalized cost including AFUDC is the basis for depreciation and unrecovered investment for rate-making purposes (835-980-35-1), and the income statement must present the credit as other income, a reduction of interest expense, or both (835-980-45-1)."],"categories":["Initial measurement","Inventory and PP&E","Industry-specific","Presentation"],"audience_level":"intermediate","student_note":"The key exam trap is that AFUDC includes an equity return component and boosts current net income — unlike ordinary capitalized interest under 835-20 — and that it is an either/or choice: if AFUDC fails the \"probable\" recovery test, the entity cannot fall back on normal interest capitalization.","related_topics":["980-835","980-10","835-20","980-340","980-360"],"key_concepts":["allowance for funds used during construction","regulated operations","capitalized interest","cost of equity funds","probable inclusion in allowable costs","rate-making","prudence disallowance","abandoned plant"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3de7c6043a0e5147fb19a757bb472f1542df9dfb61e46084db1932f13c6daaaf","downloaded_from":"2026-09-10T01:51:29.287Z","last_downloaded_at":"2026-09-10T01:51:51.446Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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established by retrieval timestamps"}},"next":{"number":"840-10","title":"Overall","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6c0d7ba203e34fea41d37b53c2b2e6301d966d821f7fc84126edb3c5f617027b","downloaded_from":"2026-09-10T01:51:53.475Z","last_downloaded_at":"2026-09-10T01:52:34.111Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8d7ad5f8db757c349e9b0c567f069433cd0748e916e25d0669d53d93331725f7","downloaded_from":"2026-09-10T01:51:29.287Z","last_downloaded_at":"2026-09-10T01:51:51.446Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"paragraphs":148,"summary":"ASC 835 addresses the two situations in which the Codification itself provides interest recognition guidance: capitalizing interest cost incurred while a qualifying asset is being readied for its intended use (835-20) and imputing interest on notes whose face amount does not reasonably represent the present value of the consideration exchanged (835-30); the Overall subtopic (835-10) merely maps this structure and cross-references other Topics (310, 320/321, 470, 740) for instrument- and transaction-specific interest. Under 835-20, capitalized interest is treated as part of the asset's historical cost, measured as a capitalization rate applied to average accumulated expenditures and capped at total interest cost incurred; under 835-30, the note and related sales price/cost are recorded at fair value (of the goods or of the note, whichever is more clearly determinable) with the resulting discount or premium amortized by the interest method and presented as a direct deduction from or addition to the note's face amount. Numerous industry subtopics tailor these models — government contractors (835-912), cable television (835-922), films (835-926), oil and gas full cost (835-932), real estate ventures (835-970) and REITs (835-974), and regulated operations' AFUDC (835-980). The unifying idea is that interest is capitalized only where it is an avoidable cost of getting an asset ready for use, and interest income is recognized only when its receipt is reasonably expected.","concepts":["capitalization of interest cost","qualifying assets and capitalization period","capitalization rate and average accumulated expenditures","imputation of interest on notes","interest method amortization of discount or premium","allowance for funds used during construction (afudc)","discontinuance of interest revenue recognition","presentation of discount, premium, and debt issuance costs"],"categories":["Initial measurement","Recognition","Presentation","Industry-specific"],"level":"intermediate","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8cc43da1694b9e04c94130c5a0932a5fafb680f650ac714d02ff99cf080fb7d8","downloaded_from":"2026-09-10T01:48:44.160Z","last_downloaded_at":"2026-09-10T01:51:51.446Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}