# ASC Topic 835: Interest Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/835/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:48:44.160Z to 2026-09-10T01:51:51.446Z Record version: sha256:8cc43da1694b9e04c94130c5a0932a5fafb680f650ac714d02ff99cf080fb7d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic 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. Source downloaded (UTC): 2026-09-10T01:48:44.160Z to 2026-09-10T01:48:52.102Z Record version: sha256:d11045a1d0c23effeca8eea31cf59b08a4693fd99dc49ab8cef967980bf59fd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-10: Interest — Overall ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:48:44.160Z to 2026-09-10T01:48:44.160Z Record version: sha256:1c83bd5abe9a3a60eb7e101ec19c6aec5c0139e30625a354137e402e670412c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/835/10/#00-status) SEC content: no ##### [835-10-00-1](https://asc.understandingaccounting.org/asc/835/10/#835-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:44.160Z to 2026-09-10T01:48:44.160Z Record version: sha256:c48eb57d0ab720f2c7ff5ec48e605b7dcea46d5d2600d9671c89e8320871418d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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
Source downloaded (UTC): 2026-09-10T01:48:47.504Z to 2026-09-10T01:48:47.504Z Record version: sha256:f6ee856d23942597e594e3b5511e46f846d762ee26979d7f6d5da0477bac5b34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/10/#05-overview-and-background) SEC content: no ##### [835-10-05-1](https://asc.understandingaccounting.org/asc/835/10/#835-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:47.504Z to 2026-09-10T01:48:47.504Z Record version: sha256:48542e70ca86fea9eb484202762393a7c2ea86f4ac69148ac4e2ba7611bd464c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Interest Topic contains the following Subtopics: 1. a Overall 2. b Capitalization of Interest 3. c Imputation of Interest. ##### [835-10-05-2](https://asc.understandingaccounting.org/asc/835/10/#835-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:47.504Z to 2026-09-10T01:48:47.504Z Record version: sha256:0eb37e5e790b4c0743ba86d33a5e6ee019402e11ae5bf86937a81def2c7156b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-10-05-3](https://asc.understandingaccounting.org/asc/835/10/#835-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:47.504Z to 2026-09-10T01:48:47.504Z Record version: sha256:0e147a13e65f99af7a4666f559ba1f8fde143264e4727394ca7d6f7d503d5091 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The recognition of interest income and interest expense for specific transactions and specific instrument types is also addressed in various other Topics. Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:f2644d145f8515a55485d38b7f63e9e8e1276dfaef1f7e54695456689ca8333b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/835/10/#60-relationships) SEC content: no #### Presentation of Financial Statements ##### [835-10-60-1](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:3c3eba22a3166bd7e9870637f1ff84b8d7e9ba363ba9dc8fb524ae857d57a099 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the allocation of interest to discontinued operations, see paragraphs [205-20-45-6 through 45-8](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-6) . #### Receivables ##### [835-10-60-2](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:d0d54e9dd698593841325f42cd531b4a3f11e0204daf4e5a14b8bd1f629576bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-13](https://asc.understandingaccounting.org/updates/asu-2016-13/). ##### [835-10-60-3](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:dbabc3e3d07bd7175cd2a13865420ba3262fcd8d5588f794575a875dade4a950 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-13](https://asc.understandingaccounting.org/updates/asu-2016-13/). ##### [835-10-60-4](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:691b608e3433f69acdcdfa76e88522b50cc02299940903e6c9a05f5ad7ea78e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Investments—Debt Securities ##### [835-10-60-5](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:8c7a5472f1a90cc263ec0dad4f3101e74250150883c41ba4c3dc2432baa6eafe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on recognition of interest income on investments in debt securities, see paragraph [320-10-35-4](https://asc.understandingaccounting.org/asc/320/10/#320-10-35-4). ##### [835-10-60-6](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:68305679b5fe755ac618796c561a0b4d644fb137417a470a05f0130919a64ec1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on recognition of interest income on structured notes, see paragraph [320-10-35-38](https://asc.understandingaccounting.org/asc/320/10/#320-10-35-38). #### Investments—Equity Securities ##### [835-10-60-6A](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-6A) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:4252b95b93fcd441d54a1c26d484b8b2de94cb4d38cba34d18284674cd004a7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on recognition of dividend income on investments in equity securities, see paragraph [321-10-35-6](https://asc.understandingaccounting.org/asc/321/10/#321-10-35-6). #### Investments—Other ##### [835-10-60-7](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:8526af8756a3563951f34a27092b769375af2ba2c8e912663bf964c60116f4ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Other Assets and Deferred Costs ##### [835-10-60-8](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:84bdaaae937bfddf1dc4597f7375ad9a9ff95c1ee671f7906e8ca58c0b70be3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/340/30/#340-30-45-2). #### Debt ##### [835-10-60-9](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:f1229af67085806325ef69869c3e2526cd3606f43dbd7d8c729e6fadb9e55902 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-1) . ##### [835-10-60-10](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:a132c0743a28012029cf7970ee21599130d3304bf49f5dd3117faa18c4f8d53d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-11). ##### [835-10-60-11](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:acba17ba003a1c8aac09c1109346a5693adee1fe8d581d36906a394b5b5d5e46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on a debtor's accounting for a modification or exchange of debt instruments, see Section 470-50-40. ##### [835-10-60-12](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:7f274e2bccd32373fd9adc2222b9f4476d91145eedd573c022e879f9181f743e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-5) . #### Distinguishing Liabilities from Equity ##### [835-10-60-13](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:cfe58b054c8c2ef017000d0e80c86942670dc6131b2aa67461aab7c2d11aeea0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-3). #### Income Taxes ##### [835-10-60-14](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:c4f31d9081002f56a68405e9b378e23b905d2fff211e73c804d8dc45925f2fbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-56). #### Derivatives and Hedging ##### [835-10-60-15](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:5a661527ef8c4d1a1dce37724f7efef1d76b71b9fd5f0700e2e5049b219ae7cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-26) . #### Not-for-Profit Entities ##### [835-10-60-16](https://asc.understandingaccounting.org/asc/835/10/#835-10-60-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:49.212Z to 2026-09-10T01:48:49.212Z Record version: sha256:6aeda68dd22a0df06cb662e2b3b39314b2ab0791e2649669b5ffd2c6f1fd511e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/310/958/#310-958-45-2). Source downloaded (UTC): 2026-09-10T01:48:54.719Z to 2026-09-10T01:49:28.506Z Record version: sha256:a89690481d4736378d7e29b3bec34fdf2b332e602ccc6a7e3e556b22efb9d7d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20: Interest — Capitalization of Interest ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:48:54.719Z to 2026-09-10T01:48:54.719Z Record version: sha256:96a410e93ec6c011d0c93655edf904cb57efca16f839719b9e71cf6869b8336d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/835/20/#00-status) SEC content: no ##### [835-20-00-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:54.719Z to 2026-09-10T01:48:54.719Z Record version: sha256:1c7097040dc5da06ddd171e5938f79bf680c45220657f92768ba2f4449d8b460 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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
Source downloaded (UTC): 2026-09-10T01:48:58.518Z to 2026-09-10T01:48:58.518Z Record version: sha256:71ec9b3c526a6786492ce157a355ad1c0b4b9c691260e5863ee60532e7d68204 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/20/#05-overview-and-background) SEC content: no ##### [835-20-05-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:48:58.518Z to 2026-09-10T01:48:58.518Z Record version: sha256:13be9e51b61b4bb74f0bde9a2f19177d123b5114113540008d6518fca4e55693 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic establishes standards of financial accounting and reporting for capitalizing [interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") 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](https://asc.understandingaccounting.org/glossary/i/#intended-use "Intended use of an asset embraces both readiness for use and readiness for sale, depending on the purpose of acquisition."). If an asset requires a period of time in which to carry out the [activities](https://asc.understandingaccounting.org/glossary/a/#activities "The term activities is to be construed broadly. It encompasses physical construction of the asset. In addition, it includes all the steps required to prepare the asset for its intended use. For example, it includes administrative and technical activities during the preconstruction stage, such as the development of plans or the process of obtaining permits from governmental authorities. It also includes activities undertaken after construction has begun in order to overcome unforeseen obstacles, such as technical problems, labor disputes, or litigation.") necessary to bring it to that condition and location, the interest cost incurred during that period as a result of [expenditures](https://asc.understandingaccounting.org/glossary/e/#expenditures "Expenditures to which capitalization rates are to be applied are capitalized expenditures (net of progress payment collections) for the qualifying asset that have required the payment of cash, the transfer of other assets, or the incurring of a liability on which interest is recognized (in contrast to liabilities, such as trade payables, accruals, and retainages on which interest is not recognized).") for the asset is a part of the historical cost of acquiring the asset. Source downloaded (UTC): 2026-09-10T01:49:00.682Z to 2026-09-10T01:49:00.682Z Record version: sha256:a611831c1e56947537e73c30366af4fe0ee0e55b9c1004a2fccc281c942cec3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/835/20/#10-objectives) SEC content: no ##### [835-20-10-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:00.682Z to 2026-09-10T01:49:00.682Z Record version: sha256:980fffb907b1643fc7bdc4f1b890e9136c17b260faff05b9105d6f7d96699b72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-10-2](https://asc.understandingaccounting.org/asc/835/20/#835-20-10-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:00.682Z to 2026-09-10T01:49:00.682Z Record version: sha256:ed98424f1f4c3d5a587c5b87704682fab7f9ddc560c647e368614b59341a5dd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/i/#intended-use "Intended use of an asset embraces both readiness for use and readiness for sale, depending on the purpose of acquisition."), in principle, the cost incurred in financing [expenditures](https://asc.understandingaccounting.org/glossary/e/#expenditures "Expenditures to which capitalization rates are to be applied are capitalized expenditures (net of progress payment collections) for the qualifying asset that have required the payment of cash, the transfer of other assets, or the incurring of a liability on which interest is recognized (in contrast to liabilities, such as trade payables, accruals, and retainages on which interest is not recognized).") 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](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") 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. Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:b2692b64aa44ae5c98c1679db9ac4a8f8e4510ffcfe6cabfce65ab3f8fab4868 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/20/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [835-20-15-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:5ccca4c5dc22cebb768bd9c5d5997d1c8dfffaf75ad8cba92c4e0e267483c123 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities. #### Other Considerations ##### [835-20-15-2](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:4f82c8800bf048301eaf9c0790a6586cbbef282655445c270ec7a2b55f584af3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In concept, [interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") is capitalizable for all assets that require a period of time to get them ready for their [intended use](https://asc.understandingaccounting.org/glossary/i/#intended-use "Intended use of an asset embraces both readiness for use and readiness for sale, depending on the purpose of acquisition.") (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](https://asc.understandingaccounting.org/glossary/e/#expenditures "Expenditures to which capitalization rates are to be applied are capitalized expenditures (net of progress payment collections) for the qualifying asset that have required the payment of cash, the transfer of other assets, or the incurring of a liability on which interest is recognized (in contrast to liabilities, such as trade payables, accruals, and retainages on which interest is not recognized).") can be separately identified and the number of assets subject to interest capitalization are important factors in assessing the cost of implementation. ##### [835-20-15-3](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:334b8120ab88ab8b74a6d50f860a0f32ad31373d5809ead524b8b187b6b1c0ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-15-4](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:eecfe918687c8a6dc7c0afec3ac4198fbb9dc44382b0dba446a62f2f8259f491 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-15-5](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:7b55471d7afab5260dc423da185ea726f3251ebb7a5342e161c3707a179609a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/a/#activities "The term activities is to be construed broadly. It encompasses physical construction of the asset. In addition, it includes all the steps required to prepare the asset for its intended use. For example, it includes administrative and technical activities during the preconstruction stage, such as the development of plans or the process of obtaining permits from governmental authorities. It also includes activities undertaken after construction has begun in order to overcome unforeseen obstacles, such as technical problems, labor disputes, or litigation.") 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. ##### [835-20-15-6](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:aa9111adb5524eeba9896554db142a5f52d2e2fcfdaacee9daac3f027781cabc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/835/20/#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](https://asc.understandingaccounting.org/asc/835/20/#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. ##### [835-20-15-7](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:5d5974a8b92521781c1e1faf69a1d5376016ce123c355f2804a4afa6b835cb05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-15-8](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:03.693Z to 2026-09-10T01:49:03.693Z Record version: sha256:47a37953a9fe1e09995451e9f2c61a4d395cb8e8caff591a94549881fc15f5b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:9d733d7d3978a02f0d3c4cef331612259951c283a8b61865d14e0b9a382300f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/835/20/#25-recognition) SEC content: no ##### [835-20-25-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:a108851a46a575ba80977f9ed1c291fb0247fc2339a26d43055e62ccd8c37dad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### The Capitalization Period ##### [835-20-25-2](https://asc.understandingaccounting.org/asc/835/20/#835-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:2eb275f7057b75d9179ac03dc455329bae0f701b60a8029946d4e4ba28a3f1b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/a/#activities "The term activities is to be construed broadly. It encompasses physical construction of the asset. In addition, it includes all the steps required to prepare the asset for its intended use. For example, it includes administrative and technical activities during the preconstruction stage, such as the development of plans or the process of obtaining permits from governmental authorities. It also includes activities undertaken after construction has begun in order to overcome unforeseen obstacles, such as technical problems, labor disputes, or litigation.") required to get the asset ready for its [intended use](https://asc.understandingaccounting.org/glossary/i/#intended-use "Intended use of an asset embraces both readiness for use and readiness for sale, depending on the purpose of acquisition."), provided that [expenditures](https://asc.understandingaccounting.org/glossary/e/#expenditures "Expenditures to which capitalization rates are to be applied are capitalized expenditures (net of progress payment collections) for the qualifying asset that have required the payment of cash, the transfer of other assets, or the incurring of a liability on which interest is recognized (in contrast to liabilities, such as trade payables, accruals, and retainages on which interest is not recognized).") for the asset have been made and [interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") is being incurred. Interest capitalization continues as long as those activities and the incurrence of interest cost continue. ##### [835-20-25-3](https://asc.understandingaccounting.org/asc/835/20/#835-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:4d5d5ea45ec07620390a7b4ccb337add149b20e366373abd58397d06af60be50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-25-4](https://asc.understandingaccounting.org/asc/835/20/#835-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:12f2f20aff15ab03b4226982851e0f267feafa1a63e06e06d60bc0bce20c2875 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-25-5](https://asc.understandingaccounting.org/asc/835/20/#835-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:a566011831152717b13aaa0d171797ac1574b65fefcb0a1cc95837fcdb23c3c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-25-6](https://asc.understandingaccounting.org/asc/835/20/#835-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:cb7b0aa59b77b6febbd7ce00d82c9bc88f415cc23f3063ab433f00587f4767a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-25-7](https://asc.understandingaccounting.org/asc/835/20/#835-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:03c777fa271935b4067ec11cadec65366e170bac83674e44186c10332e2e3497 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### The Capitalization Period for Assets Financed with Tax-Exempt Borrowings ##### [835-20-25-8](https://asc.understandingaccounting.org/asc/835/20/#835-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:08.881Z to 2026-09-10T01:49:08.881Z Record version: sha256:65084364719b9159b1716788a4902c72865dd533b008c5010046d57908addbeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:91b529044b0331c8a68ee61e60fa42e5b4a4baee598257633332b814b8fd8554 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/835/20/#30-initial-measurement) SEC content: no ##### [835-20-30-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:84e83c9bcdc89964ce3db542e326e9fbd33753055842144431434856f5d95b5a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section addresses the amount of [interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") to be capitalized as part of the initial investment in an asset. #### The Amount of Interest Cost to Be Capitalized ##### [835-20-30-2](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:04a0488e3d9f04e25826fa58a386df47470b01f02545f32ef9aed5b75021f25a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/e/#expenditures "Expenditures to which capitalization rates are to be applied are capitalized expenditures (net of progress payment collections) for the qualifying asset that have required the payment of cash, the transfer of other assets, or the incurring of a liability on which interest is recognized (in contrast to liabilities, such as trade payables, accruals, and retainages on which interest is not recognized).") 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. ##### [835-20-30-3](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:ca3b62ea75d418f662cf43b4a8d30e374f6429f67387bc643854e86d50bd5f5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount capitalized in an accounting period shall be determined by applying the [capitalization rate](https://asc.understandingaccounting.org/glossary/c/#capitalization-rate "Rate used to determine amount of interest to be capitalized in an accounting period.") 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. ##### [835-20-30-4](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:159866004d166ab9ee46733e44332a07f1808f1cf71d8d8e05f5d1dd414c6586 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-30-5](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:a18f2cb02598f34b1c04a74c37bf9c3913bf598fc50a9a5822b7b83c5f2a6ccf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-30-6](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:08835bd111b979e470dbe2ae6103525d308f9e2820d431f52dd197eb71fcae6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-30-7](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:cf2963772e73e1341a45ac65b7a583681c25f5971386d3cc79f42513193cbd99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/815/25/#815-25-35-14) and [815-25-55-52](https://asc.understandingaccounting.org/asc/815/25/#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](https://asc.understandingaccounting.org/asc/815/30/#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. ##### [835-20-30-8](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:5e37e61ca04f450c25a2898278aedc2691b46d5c3b324fa139ea56934f2649c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-10) . ##### [835-20-30-9](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:fe022a56ed2f2c166fc7b1a43d38519351918a9a0aa12203c39a3e3e3d52dd44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/i/#intended-use "Intended use of an asset embraces both readiness for use and readiness for sale, depending on the purpose of acquisition.") is an essential part of the cost of acquiring that asset. ##### [835-20-30-10](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:0da5efe45ff0d200f1d954847773c06d5e6873769e3130e84855ceca898d182e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-30-11](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:8bc16cf455b6eca0b402ebd5ded806684a1691c504fb268dbaa627342cb245b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-20-30-12](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:11.642Z to 2026-09-10T01:49:11.642Z Record version: sha256:3863663b8bb416b2a4a78f64e376c3009e3dc7b9a38c882768ea714b6f53c68c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/835/20/#835-20-55-4)) for an illustration of this guidance. Source downloaded (UTC): 2026-09-10T01:49:14.053Z to 2026-09-10T01:49:14.053Z Record version: sha256:97ae5829ff979af50e80ae234aa6a3646e298b87f6004a8d53a35a6855f27ab0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/20/#35-subsequent-measurement) SEC content: no ##### [835-20-35-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:14.053Z to 2026-09-10T01:49:14.053Z Record version: sha256:6a577080e21d02825b08d2ac23fdea3a374ccec6a603797d50d557dec0080194 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section addresses the accounting for capitalized interest subsequent to the initial measurement of the related asset. #### Amortization of Capitalized Interest on an Equity Method Investment ##### [835-20-35-2](https://asc.understandingaccounting.org/asc/835/20/#835-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:14.053Z to 2026-09-10T01:49:14.053Z Record version: sha256:168af64d10e2d558c4c0e4b160c158dfe62f6f240f5e387e644a2d7311ac0fd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic requires capitalization of [interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") on an investment accounted for by the equity method that has not begun its planned principal operations while the investee has [activities](https://asc.understandingaccounting.org/glossary/a/#activities "The term activities is to be construed broadly. It encompasses physical construction of the asset. In addition, it includes all the steps required to prepare the asset for its intended use. For example, it includes administrative and technical activities during the preconstruction stage, such as the development of plans or the process of obtaining permits from governmental authorities. It also includes activities undertaken after construction has begun in order to overcome unforeseen obstacles, such as technical problems, labor disputes, or litigation.") 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](https://asc.understandingaccounting.org/asc/323/10/#323-10-35-13). #### Compounding of Interest ##### [835-20-35-3](https://asc.understandingaccounting.org/asc/835/20/#835-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:14.053Z to 2026-09-10T01:49:14.053Z Record version: sha256:2b854d91def3f83d34d039c5dfa158c6cdeee1f697422718d353fc48cb4bdd53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This paragraph addresses whether capitalized interest should be compounded. The compounding of capitalized interest is conceptually consistent with the conclusion that interest on [expenditures](https://asc.understandingaccounting.org/glossary/e/#expenditures "Expenditures to which capitalization rates are to be applied are capitalized expenditures (net of progress payment collections) for the qualifying asset that have required the payment of cash, the transfer of other assets, or the incurring of a liability on which interest is recognized (in contrast to liabilities, such as trade payables, accruals, and retainages on which interest is not recognized).") 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. Source downloaded (UTC): 2026-09-10T01:49:16.051Z to 2026-09-10T01:49:16.051Z Record version: sha256:9082c428b9dee7e0b641d2ce84899397a3a509f5e32e95a95dc373c3e7306781 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/835/20/#40-derecognition) SEC content: no ##### [835-20-40-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:16.051Z to 2026-09-10T01:49:16.051Z Record version: sha256:a4f377a8339cf7d09ff978e4c089fd8790d601839cf7e54879d8736df53724ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") 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. ##### [835-20-40-2](https://asc.understandingaccounting.org/asc/835/20/#835-20-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:16.051Z to 2026-09-10T01:49:16.051Z Record version: sha256:28ce40e573a6955e2719b944deb342a3b19ee7f0a9a7c5b37eef33f15582941b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest capitalized on an investment accounted for by the equity method shall be accounted for in accordance with paragraph [323-10-35-13](https://asc.understandingaccounting.org/asc/323/10/#323-10-35-13). Source downloaded (UTC): 2026-09-10T01:49:19.551Z to 2026-09-10T01:49:19.551Z Record version: sha256:2f7688374b86e891fa400ae77a4bc318ae7659f90ab6fd0bb0efee06688a29ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/835/20/#50-disclosure) SEC content: no ##### [835-20-50-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:19.551Z to 2026-09-10T01:49:19.551Z Record version: sha256:5dc6875d2bbb86d94a738d0890dcea2b83f8935c2ef0b3b3544c3f0b8364da4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the following information with respect to [interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") 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. Source downloaded (UTC): 2026-09-10T01:49:23.304Z to 2026-09-10T01:49:23.304Z Record version: sha256:2668fe4a8ca9eda2f4f10bafcfa5c32ce4247a5f486d29abae3c308fb909d492 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/835/20/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [835-20-55-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:23.304Z to 2026-09-10T01:49:23.304Z Record version: sha256:9a28279339b0544e2381414bd006e9fbf1aff25b43acf5b09ca2ce3b619aa54f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following provides implementation guidance related to the application of the scope guidance in paragraph [835-20-15-6(d) through (e)](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-6). ##### [835-20-55-2](https://asc.understandingaccounting.org/asc/835/20/#835-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:23.304Z to 2026-09-10T01:49:23.304Z Record version: sha256:0cdf918ae37776dd50637f17fd63438f4471c4723bcab99546f5c8b5a8dbaf05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This paragraph provides clarification of the phrase _when planned principal operations begin_ (in paragraph [835-20-15-6(d)](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-6)) to be able to determine when the investment in the investee that is the qualifying asset is ready for its [intended use](https://asc.understandingaccounting.org/glossary/i/#intended-use "Intended use of an asset embraces both readiness for use and readiness for sale, depending on the purpose of acquisition.") 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](https://asc.understandingaccounting.org/glossary/a/#activities "The term activities is to be construed broadly. It encompasses physical construction of the asset. In addition, it includes all the steps required to prepare the asset for its intended use. For example, it includes administrative and technical activities during the preconstruction stage, such as the development of plans or the process of obtaining permits from governmental authorities. It also includes activities undertaken after construction has begun in order to overcome unforeseen obstacles, such as technical problems, labor disputes, or litigation.") 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. ##### [835-20-55-3](https://asc.understandingaccounting.org/asc/835/20/#835-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:23.304Z to 2026-09-10T01:49:23.304Z Record version: sha256:6e9cff22c2a2e9a20a2521d22194217ad04dbb3707fb451c67f6dfdb590eed72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This paragraph elaborates on the guidance in paragraph [835-20-15-6(e)](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-6) 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](https://asc.understandingaccounting.org/asc/835/980/#835-980-25-1), [980-835-30-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-30-1), and [980-835-35-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-35-1) 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. #### Illustrations ##### [835-20-55-4](https://asc.understandingaccounting.org/asc/835/20/#835-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:23.304Z to 2026-09-10T01:49:23.304Z Record version: sha256:9a9dd0fa8472efe52345af795fe98cda6d05239b19e86d5b161f803a7aa24561 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of the guidance in this Subtopic related to capitalization of [interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") in situations involving certain tax-exempt borrowings and certain gifts and grants (see paragraphs [835-20-30-10 through 30-12](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-10) ). 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. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-68003CE2-0F58-4D74-8305-4FD8405EED14-low.gif) Year 19X1 19X2 19X3 19X4 19X5 (amounts in thousands) (1) Assumed average qualifying assets $- " $2,000 " " $5,000 " " $8,000 " " $9,000 " (2) Average 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) "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) Interest earned \[(3) x 12 percent\] (a) Borrowing 480 360 120 - - (b) Grant 120 120 120 - - (5) "Average qualifying assets in excess of borrowing, grant,and interest earned on grant (b)" - - - - 640 (6) Interest cost capitalized—other borrowings \[(5) x 6 percent\] - - - - 38 (7) Interest cost—tax-exempt borrowings 320 320 320 320 320 (8) Interest capitalized \[(6) + (7) - (4)(a)\] (c) (160) (40) 200 320 358 (a) Balances of unexpended borrowings and unexpended grants can vary depending on the source from which the entity elects to disburse funds. (b) "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) Note 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. Source downloaded (UTC): 2026-09-10T01:49:26.346Z to 2026-09-10T01:49:26.346Z Record version: sha256:8ad43c66aa6ff01ab4a8c90503e24e76cd362c6cfb6b77ac694d8552dcf1c7ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-20-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/835/20/#60-relationships) SEC content: no #### Accounting Changes and Error Corrections ##### [835-20-60-1](https://asc.understandingaccounting.org/asc/835/20/#835-20-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:26.346Z to 2026-09-10T01:49:26.346Z Record version: sha256:93421f7103497fe3b034eb63bd87908e83d2de76bbac7aa93a84538dbc4b8c46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on reporting for previously capitalized [interest cost](https://asc.understandingaccounting.org/glossary/i/#interest-cost "Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.") when an accounting change results in financial statements that are, in effect, the statements of a different reporting entity, see Subtopic 250-10. #### Debt ##### [835-20-60-2](https://asc.understandingaccounting.org/asc/835/20/#835-20-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:26.346Z to 2026-09-10T01:49:26.346Z Record version: sha256:266042aeb55de69ad9925faae6a8811bb0b51b5804e77e3bf5c1f4372eb1ace9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the capitalization of interest recognized for a participating mortgage loan, see Subtopic 470-30. #### Extractive Activities—Oil and Gas ##### [835-20-60-3](https://asc.understandingaccounting.org/asc/835/20/#835-20-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:26.346Z to 2026-09-10T01:49:26.346Z Record version: sha256:db5f40a7741f1bb702587e1690562304e06d3bab5f875df1a5a941da2b7adf30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance for when capitalization of interest cost is permitted in oil- and gas-producing operations, see Subtopic 932-835. Source downloaded (UTC): 2026-09-10T01:49:32.218Z to 2026-09-10T01:50:15.507Z Record version: sha256:362550137fe84061d251370c9acd95daac36d8d05207b13f4877a6e098fe87e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30: Interest — Imputation of Interest ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:49:32.218Z to 2026-09-10T01:49:32.218Z Record version: sha256:7209a58e8945996cf95f58fd5bfd59c58fa8c6bc4c19953e29ead431e02b29fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/835/30/#00-status) SEC content: no ##### [835-30-00-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:32.218Z to 2026-09-10T01:49:32.218Z Record version: sha256:b80cfc029a3b563ec6181a5a4e699e1b5548064da0ebdbd8148341e900d45757 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ContractSupersededAccounting Standards Update No. 2020-1010/29/2020
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
Contract AssetAddedAccounting Standards Update No. 2014-0905/28/2014
Contract LiabilityAddedAccounting Standards Update No. 2014-0905/28/2014
Customer(1st def.)SupersededAccounting Standards Update No. 2020-1010/29/2020
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
Fair Value (3rd def.)AddedAccounting Standards Update No. 2012-0410/01/2012
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Public Business EntityAddedAccounting Standards Update No. 2015-0304/07/2015
835-30-05-2AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-15-3AmendedAccounting Standards Update No. 2020-1010/29/2020
835-30-15-3AmendedAccounting Standards Update No. 2014-0905/28/2014
835-30-15-4AmendedAccounting Standards Update No. 2020-0608/05/2020
835-30-25-2AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-25-5AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-25-10AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-25-11AmendedAccounting Standards Update No. 2012-0410/01/2012
835-30-45-1AmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-45-1AAmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-45-2AmendedAccounting Standards Update No. 2020-1010/29/2020
835-30-45-3AmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-45-4AmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-50-1AddedAccounting Standards Update No. 2020-1010/29/2020
835-30-55-8AmendedAccounting Standards Update No. 2015-0304/07/2015
835-30-65-1AddedAccounting Standards Update No. 2015-0304/07/2015
Source downloaded (UTC): 2026-09-10T01:49:36.267Z to 2026-09-10T01:49:36.267Z Record version: sha256:57ecb4168925e75381a5cb31ea05c2bfb459c9aac89dd696f8e8c51e4ddd02e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/30/#05-overview-and-background) SEC content: no ##### [835-30-05-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:36.267Z to 2026-09-10T01:49:36.267Z Record version: sha256:bc5c6c0b435d328817023d08d26e3415a77ffbf0da8f3fd927e58da42cc8b663 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the imputation of interest. ##### [835-30-05-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:36.267Z to 2026-09-10T01:49:36.267Z Record version: sha256:4141e1901e2a24b60cbf70104c2a092cac73195f0d3bed9f08855d24c452db62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") 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. ##### [835-30-05-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:36.267Z to 2026-09-10T01:49:36.267Z Record version: sha256:9b6d8af238533299db42db8127ba2fcd81183821d19174582267be6ac12a505b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:49:39.975Z to 2026-09-10T01:49:39.975Z Record version: sha256:1ef9c337c56a1eb6aaf81155ff1bf9eb3cd3a707f1d54e59d3a3a401ec6bfd88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/835/30/#10-objectives) SEC content: no ##### [835-30-10-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:39.975Z to 2026-09-10T01:49:39.975Z Record version: sha256:da7b74f748e996e0537718c769823185aff2b49149f401078cd99030e7923d96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:7084b4f1158e2bced7a839cd06dd69b7f3bca64724312bb5b0f1f2f3e30d0d12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/30/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [835-30-15-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:76ac68c3a2ad0602aaa95effb1532e07cd16534b652a8c00e26c55c60f333133 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Instruments ##### [835-30-15-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:7e311901085854b51b18c8549423932561f022b3cda14581b53f5515e0277a8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-30-15-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:2211fe64635a42063e5ed0aa9bd772ed05396cf31573a103649115f69b40ec37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. With the exception of guidance in paragraphs [835-30-45-1A through 45-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1A) addressing the presentation of [discount](https://asc.understandingaccounting.org/glossary/d/#discount "The difference between the net proceeds, after expense, received upon issuance of debt and the amount repayable at its maturity. See Premium.") and [premium](https://asc.understandingaccounting.org/glossary/p/#premium "The excess of the net proceeds, after expense, received upon issuance of debt over the amount repayable at its maturity. See Discount.") in the financial statements, which is applicable in all circumstances, and the guidance in paragraphs [835-30-55-2 through 55-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-2) regarding the application of the [interest method](https://asc.understandingaccounting.org/glossary/i/#interest-method "The method used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period."), 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](https://asc.understandingaccounting.org/asc/835/932/#835-932-25-2)) 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](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance)."), and [contract liabilities](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.") in contracts with customers, see paragraphs [606-10-32-15 through 32-20](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-15) for guidance on identifying a significant financing component in a contract with a customer. #### Other Considerations ##### [835-30-15-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:42.386Z to 2026-09-10T01:49:42.386Z Record version: sha256:0d552d69f433db5f399b341f409e7b137fe74d4809cd6bc6cd9eee5726093bba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not modify the following accounting guidance addressed in other Topics: 1. a [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-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. Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:e19cf93a2d8b6353f5d4552f96950bcf1da9a82863a15225a8468bae38499f3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/835/30/#25-recognition) SEC content: no ##### [835-30-25-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:33985eb50a8da6264eb0bae18eab933ed3c9e4487778a0ead8c19915da5fd75b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides guidance on the imputation of interest. #### Imputation of Interest ##### [835-30-25-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:aace124c4978a7df668fd5d0ca8a6ff06cac549691fbdc5aaa0bec9c2ef8c8a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-30-25-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:68f72dc6ca581ea8eed67054df72ea26f915f970d7ec2038b23b3b5b356d1251 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/i/#imputed-interest-rate "The interest rate that results from a process of approximation (or imputation) required when the present value of a note must be estimated because an established exchange price is not determinable and the note has no ready market."). 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. ##### [835-30-25-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:7d98728f3969cf3f839f0fe1ac0d9cdf26e7febe04c46567afc39f1b9ad6ee4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-6). ##### [835-30-25-5](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:380148685350de21f54405f26abf319e36952d4dc29fc98f15ad2b8ef2be55a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/d/#discount "The difference between the net proceeds, after expense, received upon issuance of debt and the amount repayable at its maturity. See Premium.") or [premium](https://asc.understandingaccounting.org/glossary/p/#premium "The excess of the net proceeds, after expense, received upon issuance of debt over the amount repayable at its maturity. See Discount."). 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](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") upon issuance. ##### [835-30-25-6](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:5ec6ff8f5934714215ba29b1983b82033444af95ae6c0e3a44544a77481e370c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-30-25-7](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:4acabcef425e7156bee93032dd3c592d227057e75cf7faa0c99434067f704444 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-30-25-8](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:85dafaeb0cc3d4d563e29c94e628dc4104a9adcb606a04b1f32ac21b4862ee12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-30-25-9](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:3f6dbf240204de3db2cd689ee40abaf9554ff78a4ecb6a405512cf3a641b359d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The difference between the face amount and the present value upon issuance is shown as either discount or premium. ##### [835-30-25-10](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:70668a58461db5711844ce6547d06235bfe75803c79a35a0e144d9ef42c4acca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-30-25-11](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:cf2e9247dbd36964336e967c0b3c716abf122fff1a107ad43cf946cc03f26b60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/835/30/#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. #### Determining an Appropriate Interest Rate ##### [835-30-25-12](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:ade33242548390d2b03f9847f64cd5b9ced43293750f5319938299eccf3df04a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [835-30-10-1](https://asc.understandingaccounting.org/asc/835/30/#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. ##### [835-30-25-13](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:48.308Z to 2026-09-10T01:49:48.308Z Record version: sha256:3a52126c180d1fd170845292d80887d0e7859a868bd12702e37d8398e27a9abc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:cf96de06abb11384ec5683edc5152872640600308165593911fdbfb23e0c719f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/30/#35-subsequent-measurement) SEC content: no ##### [835-30-35-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:2268ee184fe0d86ea8c8031202b7ca6ffaf074a8f6b3b1c57cdd6d9e06abb618 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides guidance for the measurement of interest income or expense over the term of a note. #### The Interest Method ##### [835-30-35-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:a5416811fbbb4f2083dc6ae0bb01a1002daea5391c372de52f0205af71c7efbf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/d/#discount "The difference between the net proceeds, after expense, received upon issuance of debt and the amount repayable at its maturity. See Premium.") or [premium](https://asc.understandingaccounting.org/glossary/p/#premium "The excess of the net proceeds, after expense, received upon issuance of debt over the amount repayable at its maturity. See Discount.") 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](https://asc.understandingaccounting.org/glossary/i/#interest-method "The method used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period."). ##### [835-30-35-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:9f70d8edfb8899e9161c74639a72d994e7f934972194fd83ad9cfcaec1cafcca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Other Methods of Amortization ##### [835-30-35-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:c1d7b0700c462f878e9147cc5f400f151680125266fe013fc25237daea655c3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other methods of amortization may be used if the results obtained are not materially different from those that would result from the interest method. #### Eligibility for Interest Capitalization ##### [835-30-35-5](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:51.488Z to 2026-09-10T01:49:51.488Z Record version: sha256:25baf65491a54a8be75799a64afd1a89acf913c5174159adc68628272b369613 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:e2fa3c2bd5e2586cd2f95abee341bc58de39c9ae0058eec68c4a9d983b15c3f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/835/30/#45-other-presentation-matters) SEC content: no ##### [835-30-45-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:c2859d1390f89474710ddc540774cc5df5251a1ae9a10be7c1fdfe67293b31d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-30-45-1A](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:04806a836063a17a87c143bc61ec397eb11a5de8c92e3a1d73980d799413e14a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [discount](https://asc.understandingaccounting.org/glossary/d/#discount "The difference between the net proceeds, after expense, received upon issuance of debt and the amount repayable at its maturity. See Premium.") or [premium](https://asc.understandingaccounting.org/glossary/p/#premium "The excess of the net proceeds, after expense, received upon issuance of debt over the amount repayable at its maturity. See Discount.") 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. ##### [835-30-45-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:79fd525a2c4b09a59e20e82d3965b27db216050bc6b6b8c9868cca87dd435cf5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [835-30-45-1A](https://asc.understandingaccounting.org/asc/835/30/#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](https://asc.understandingaccounting.org/asc/835/30/#835-30-50-1).) ##### [835-30-45-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:ef1f3a2d9f2250b88556a828c18ece0b8454689356aa4f2e962131c53be7e0cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-30-45-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:53.944Z to 2026-09-10T01:49:53.944Z Record version: sha256:a07ba5e78e59cfaa327994eb54fe470a441f0e5343b5bd38003377c91029c649 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 2 (paragraph [835-30-55-8](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-8)) for illustrations of balance sheet presentation of a discount and debt issuance costs on a note. Source downloaded (UTC): 2026-09-10T01:49:55.627Z to 2026-09-10T01:49:55.627Z Record version: sha256:e291d0da545f5eae9bc68e255cec20eec7f453905d2c81383e1e189dcc99c1fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/835/30/#50-disclosure) SEC content: no ##### [835-30-50-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:55.627Z to 2026-09-10T01:49:55.627Z Record version: sha256:5fed8e59cc6f661b5192898ed034d3116d19bac426735586b1a659b58a9ff79e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [835-30-45-1A](https://asc.understandingaccounting.org/asc/835/30/#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](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-2).) Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:72cb202ad064a54cefb9a8384fc833ffb328c82ac9051c6d501e800e197d4eef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/835/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [835-30-55-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:c71c0e93e786a85d2dcb558aec25a41a3d6fed8d37ccd5057296541e47df85c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the following paragraphs is not subject to the scope limitation in paragraph [835-30-15-3(b)](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-3). ##### [835-30-55-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:ba8bce015f46ff567a556826ffc7d972c7f5bc4c10146854ca5fcf67be6f48a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Generally accepted accounting principles (GAAP) require use of the [interest method](https://asc.understandingaccounting.org/glossary/i/#interest-method "The method used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period."). 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. ##### [835-30-55-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:34772db067ab8a33f235a43c6ae01ac7ac7fe3b5e47a45f884e9eb33e9f44d4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Illustrations ##### [835-30-55-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:a0f95e4ed7c2c3d456418a313eba998fd71b200206ae19497fa139e9b8171c1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [835-30-05-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-2), [835-30-25-3 through 25-4](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-3) , and [835-30-25-10 through 25-11](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-10) 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. ##### [835-30-55-5](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:48d24853320edb35d64a7f9b9ce06ba041c898215ccdf43d1a39a669029b94ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/p/#premium "The excess of the net proceeds, after expense, received upon issuance of debt over the amount repayable at its maturity. See Discount.") or [discount](https://asc.understandingaccounting.org/glossary/d/#discount "The difference between the net proceeds, after expense, received upon issuance of debt and the amount repayable at its maturity. See Premium.") arises when the prevailing market rate of interest differs from the coupon rate. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-82698238-A6C1-4FC9-B0D3-370198D1E2BA-low.gif) Assume prevailing market rate of 10% 8% 12% "1. Present value of annual interest payments of $100 (the coupon rate of 10% of $1,000) for 20 years" $851 $982 $747 "2. Present value of payment of the face amount of $1,000 at the end of Year 20" 149 215 104 Present value and proceeds at date of issuance " $1,000 " " $1,197 " $851 ##### [835-30-55-6](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:16c388f568dbf4f8ec3b11e728c05227d367d7a7178e59b9334d6f8170b97c88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AD0B7E2B-E536-4DE8-9E5C-B8B1485373E5-low.gif) 1\. Present value of no annual interest payments $- "2. Present value of payment of the face amount of $1,000 at the end of Year 20" 149 Present value and proceeds at date of issuance $149 ##### [835-30-55-7](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:4c5a051a1391d9847ca98e1b82e79fbb8a02abcb0cdbd4d3b35b4cc36c808b0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Comparison of the two tables shows the significant impact of interest. ##### [835-30-55-8](https://asc.understandingaccounting.org/asc/835/30/#835-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:49:57.466Z to 2026-09-10T01:49:57.466Z Record version: sha256:66467164ac39f1e2982a763252fdf7a268a7ecfb7efd1cdb22af95112e5f71f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example is an illustration of the guidance in paragraphs [835-30-45-1 through 45-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1) related to the balance sheet presentation of notes that are discounted. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-FAC497EC-C732-4090-812F-C44F78344B2D-low.gif) December 31 20X2 20X1 Presentation 1—Discount presented in caption NOTE RECEIVABLE FROM SALE OF PROPERTY: " $1,000,000 face amount, noninterest bearing, due December 31, 20X9 (less unamortized discount based on imputed interest rate of 8%—20X2, $320,000; 20X1, $370,000)" " $680,000 " " $630,000 " Presentation 2—Discount presented separately NOTE RECEIVABLE FROM SALE OF PROPERTY: "Noninterest bearing note due December 31, 20X9" " $1,000,000 " " $1,000,000 " Less unamortized discount based on imputed interest rate of 8% " 320,000 " " 370,000 " Note receivable less unamortized discount " $680,000 " " $630,000 " Presentation 3—Several notes involved LONG-TERM DEBT (Note 1): Principal amount " $24,200,000 " " $24,200,000 " Less unamortized discount and debt issuance costs " 2,680,000 " " 2,792,000 " Long-term debt less unamortized discount and debt issuance costs " $21,520,000 " " $21,408,000 " Note 1—Long-Term Debt "Long-term debt at December 31, 20X2, consisted of the following:" Principal Unamortized Discount and Debt Issuance Costs "6% subordinated debentures, due 20X9 (discount is based on imputed interest rate of 7%)" " $20,000,000 " " $2,150,000 " "6 1/2% bank loan, due 20X7" " 3,000,000 " " 120,000 " "Noninterest bearing note issued in connection with acquisition of property, due 20X9 (discount is based on imputed interest rate of 8%) " " 1,200,000 " " 410,000 " Total " $24,200,000 " " $2,680,000 " Source downloaded (UTC): 2026-09-10T01:50:00.269Z to 2026-09-10T01:50:00.269Z Record version: sha256:276587da354a01518144ea98cbca6d95a9b2c429243aa642cd57c2ab76f59793 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/835/30/#60-relationships) SEC content: no #### Income Taxes ##### [835-30-60-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:00.269Z to 2026-09-10T01:50:00.269Z Record version: sha256:b1f9710414684e0b4448e0281d539812c5ee86865e41acd761d50e87030c3f01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on accounting for differences between the recognition for financial accounting purposes and income tax purposes of [discount](https://asc.understandingaccounting.org/glossary/d/#discount "The difference between the net proceeds, after expense, received upon issuance of debt and the amount repayable at its maturity. See Premium.") or [premium](https://asc.understandingaccounting.org/glossary/p/#premium "The excess of the net proceeds, after expense, received upon issuance of debt over the amount repayable at its maturity. See Discount.") resulting from determination of the present value of a note, see Topic 740. Source downloaded (UTC): 2026-09-10T01:50:01.944Z to 2026-09-10T01:50:01.944Z Record version: sha256:e6c135ae0aad3abf6125f1c4b5455e41227f407176891822fb39dcd5d23e7522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/835/30/#65-transition-and-open-effective-date-information) SEC content: no ##### [835-30-65-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:01.944Z to 2026-09-10T01:50:01.944Z Record version: sha256:951a531a8afa9f5711212ef21f557b68930856e45deaefb1401da06aa3451f7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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_. Source downloaded (UTC): 2026-09-10T01:50:08.039Z to 2026-09-10T01:50:08.039Z Record version: sha256:9e1fedde0bd63e804d778fd43790c7ae7b7014022f63b0530bf7be1caa9a83d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/835/30/#sec-00-status) SEC content: yes ##### [835-30-S00-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:08.039Z to 2026-09-10T01:50:08.039Z Record version: sha256:5e6b622ae34c32537b147d4d4f07f303bf202f1e7af08eab63767ca4bbcd113b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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
Source downloaded (UTC): 2026-09-10T01:50:11.615Z to 2026-09-10T01:50:11.615Z Record version: sha256:4468bacf085b6e1d3f496522da324475ef4c2f7cfefef17abc63bc0e51074085 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-S35: SEC 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/30/#sec-35-subsequent-measurement) SEC content: yes #### SEC Staff Guidance ##### [835-30-S35-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-S35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:11.615Z to 2026-09-10T01:50:11.615Z Record version: sha256:2f769471d4c787534cdb43c6e824d7cf75a53c32ccf5d80824311ce3b34f162f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [835-30-S45-1](https://asc.understandingaccounting.org/asc/835/30/#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](https://asc.understandingaccounting.org/glossary/l/#line-of-credit-arrangement "A line-of-credit or revolving-debt arrangement is an agreement that provides the borrower with the option to make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and to then reborrow under the same contract. Line-of-credit and revolving-debt arrangements may include both amounts drawn by the debtor (a debt instrument) and a commitment by the creditor to make additional amounts available to the debtor under predefined terms (a loan commitment)."). Source downloaded (UTC): 2026-09-10T01:50:15.507Z to 2026-09-10T01:50:15.507Z Record version: sha256:459627147b4af3e2a58a4a111e5a81cc76daff9574dc9def5002e4e35e03fc08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-30-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/835/30/#sec-45-other-presentation-matters) SEC content: yes #### SEC Staff Guidance ##### [835-30-S45-1](https://asc.understandingaccounting.org/asc/835/30/#835-30-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:15.507Z to 2026-09-10T01:50:15.507Z Record version: sha256:abcf0be7b573f912564ef4288090528b9fa503d4a859ed57dd1c8c0cceedf802 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/835/30/#835-30-45-1A)) does not address presentation or subsequent measurement of debt issuance costs related to [line-of-credit arrangements](https://asc.understandingaccounting.org/glossary/l/#line-of-credit-arrangement "A line-of-credit or revolving-debt arrangement is an agreement that provides the borrower with the option to make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and to then reborrow under the same contract. Line-of-credit and revolving-debt arrangements may include both amounts drawn by the debtor (a debt instrument) and a commitment by the creditor to make additional amounts available to the debtor under predefined terms (a loan commitment)."). - Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. Source downloaded (UTC): 2026-09-10T01:50:19.327Z to 2026-09-10T01:50:30.147Z Record version: sha256:48e8a3711b027e68ec82198a778190cd5bee6a92bedc3a8117bd3603721b81ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-912: Interest — Contractors—Federal Government ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:50:19.327Z to 2026-09-10T01:50:19.327Z Record version: sha256:8edeffcff7102657bdd5c462d73f1318c1d1729e8307006e7d1f4cc853239f0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-912-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/835/912/#00-status) SEC content: no ##### [835-912-00-1](https://asc.understandingaccounting.org/asc/835/912/#835-912-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:19.327Z to 2026-09-10T01:50:19.327Z Record version: sha256:16fd82cbe4c289ce090540c062c5858f2be54e68ee0a48d9586e80dcd6974b68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
912-835-25-1 through 25-3
AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T01:50:22.149Z to 2026-09-10T01:50:22.149Z Record version: sha256:518f35d7b6994240451d3af14f692ca243852c421be8617757f41ed468664073 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-912-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/912/#05-overview-and-background) SEC content: no ##### [835-912-05-1](https://asc.understandingaccounting.org/asc/835/912/#835-912-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:22.149Z to 2026-09-10T01:50:22.149Z Record version: sha256:11ca1f715c16704a32a554923a53b4fec705b44ed23a117de89b95527a3b3501 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to government contractors related to capitalization of interest. Source downloaded (UTC): 2026-09-10T01:50:24.659Z to 2026-09-10T01:50:24.659Z Record version: sha256:f649cbe5e26fab2cb447e4fadc90718b783148a97a2786ae6d0bf3e883a43188 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-912-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/912/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-912-15-1](https://asc.understandingaccounting.org/asc/835/912/#835-912-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:24.659Z to 2026-09-10T01:50:24.659Z Record version: sha256:374dd2502045506c816027d3c74a82998a631a31af527a04369fb6405edf5b4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 912-10-15. Source downloaded (UTC): 2026-09-10T01:50:30.147Z to 2026-09-10T01:50:30.147Z Record version: sha256:0606f41800585da420d7daa91a2cfaa2cc768b92612a0106b1fc67f04ee5d5b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-912-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/835/912/#25-recognition) SEC content: no #### Capitalization of Interest Cost on Federal Government Contracts ##### [835-912-25-1](https://asc.understandingaccounting.org/asc/835/912/#835-912-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:30.147Z to 2026-09-10T01:50:30.147Z Record version: sha256:9303c4f306d1139261e8076a64ce492304f39425869962093ea1ef3d9b3b155c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some government [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") may appear to qualify for capitalization of interest costs (see Subtopic 835-20). However, paragraph [835-20-15-6](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-6) proscribes interest capitalization for assets employed in the earnings activities of an entity. Because many contractors recognize [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") over time in accordance with the guidance on the transfer of control in paragraphs [606-10-25-27 through 25-29](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-27) , measuring progress toward complete satisfaction of a [performance obligation](https://asc.understandingaccounting.org/glossary/p/#performance-obligation "A promise in a contract with a customer to transfer to the customer either: A good or service (or a bundle of goods or services) that is distinct A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.") in accordance with paragraphs [606-10-25-31 through 25-37](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-31) 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](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") 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](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-27) . ##### [835-912-25-2](https://asc.understandingaccounting.org/asc/835/912/#835-912-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:30.147Z to 2026-09-10T01:50:30.147Z Record version: sha256:8d9d31dd18e61b2fd60ff7f6c8b379966bc6969eba9f50feab2e0cdf827e2e30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/606/10/#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. ##### [835-912-25-3](https://asc.understandingaccounting.org/asc/835/912/#835-912-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:30.147Z to 2026-09-10T01:50:30.147Z Record version: sha256:0018e412b7c3a6f9373766ae0075eda55d0f0dee3b6e328d7f7dc5280b94523b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/606/10/#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. Source downloaded (UTC): 2026-09-10T01:50:34.120Z to 2026-09-10T01:50:42.248Z Record version: sha256:099444549da8543f0ac3d43e7ef53ab08ad2019a57ddfa925072fcc5acb3eef6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-922: Interest — Entertainment—Cable Television ### Machine-generated study aids ```json { "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 capitalization rate", "cable television system", "assets completed in parts", "accumulated expenditures" ] } ``` Source downloaded (UTC): 2026-09-10T01:50:34.120Z to 2026-09-10T01:50:34.120Z Record version: sha256:529f2acf88cd88aa1e9d80a3d63b713be5fb94ab5feceb599dc3b8f31d7f12d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-922-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/922/#05-overview-and-background) SEC content: no ##### [835-922-05-1](https://asc.understandingaccounting.org/asc/835/922/#835-922-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:34.120Z to 2026-09-10T01:50:34.120Z Record version: sha256:4b0dd684a663729b3acaae4134f97e3b6da194664b30a10b481ed92c3ce4c28a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:50:35.976Z to 2026-09-10T01:50:35.976Z Record version: sha256:6f09fecbe8dc51e8c3669fbfb0c4cde98b02673b9c8c831e3cfcd4b321e0a393 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-922-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/922/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-922-15-1](https://asc.understandingaccounting.org/asc/835/922/#835-922-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:35.976Z to 2026-09-10T01:50:35.976Z Record version: sha256:a10699d3df21282fb63182da39ee9a972349d90c20555d0a8b78d794f927da98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 922-10-15. Source downloaded (UTC): 2026-09-10T01:50:42.248Z to 2026-09-10T01:50:42.248Z Record version: sha256:393b095477f55a50168846f286a502836ef526cd3677c91418d9365f14cd7f68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-922-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/835/922/#25-recognition) SEC content: no #### Prematurity Period—Interest Cost Capitalization ##### [835-922-25-1](https://asc.understandingaccounting.org/asc/835/922/#835-922-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:42.248Z to 2026-09-10T01:50:42.248Z Record version: sha256:85a0952ed2b1ec2f77aa199b4077ff6be600e65dfc10d89fd8a627f0ffffe2d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of interest cost that is capitalized during the [prematurity period](https://asc.understandingaccounting.org/glossary/p/#prematurity-period "During the prematurity period, the cable television system is partially under construction and partially in service. The prematurity period begins when revenue from the first subscriber is recognized in accordance with Topic 606 on revenue from contracts with customers.Its end will vary with circumstances of the system but will be determined based on plans for completion of the first major construction period or achievement of a specified predetermined subscriber level at which no additional investment will be required for other than cable television plant. The construction period of a cable television system varies with the size of the franchise area, density of population, and difficulty of physical construction. The construction period is not completed until the head-end, main cable, and distribution cables are installed, and includes a reasonable time to provide for installation of subscriber drops and related hardware. During the construction period, many system operators complete installation of drops and begin to provide service to some subscribers in some parts of the system while construction continues. Providing the signal for the first time is referred to as energizing the system. The length of the prematurity period varies with the franchise development and construction plans. Such plans may consist of any of the following: Small franchise that is characterized by the absence of free television signal and a short construction period. The entire system is energized at one time near the end of the construction period. Medium-size franchise that is characterized by some direct competition from free television and by a more extensive geographical franchise area lending itself to incremental construction. Some parts of the system are energized as construction progresses. Large metropolitan franchise that is characterized by heavy direct competition from free television and fringe area signal inadequacy, high cost, and difficult construction. Many parts of the system are energized as construction progresses. Except in the smallest systems, programming is usually delivered to portions of the system and some revenues are obtained before construction of the entire system is complete. Thus, virtually every cable television system experiences a prematurity period during which it is receiving some revenue while continuing to incur substantial costs related to the establishment of the total system.") 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](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-3) 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](https://asc.understandingaccounting.org/asc/835/20/#835-20-30-5) and [835-20-25-5](https://asc.understandingaccounting.org/asc/835/20/#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](https://asc.understandingaccounting.org/asc/360/922/#360-922-35-3) of the total estimated cost of the system at the end of the prematurity period. ##### [835-922-25-2](https://asc.understandingaccounting.org/asc/835/922/#835-922-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:42.248Z to 2026-09-10T01:50:42.248Z Record version: sha256:820daa6a5a2ee83b7b4690a73d948db21d615640e8fd39c9c74cf692b940b795 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [835-20-25-5](https://asc.understandingaccounting.org/asc/835/20/#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. Source downloaded (UTC): 2026-09-10T01:50:45.748Z to 2026-09-10T01:50:51.672Z Record version: sha256:c432d18bddb6faeaf217c0a8c7ce6d0725ed1e4e920f5d34645f3c426dd20af3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-926: Interest — Entertainment—Films ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:50:45.748Z to 2026-09-10T01:50:45.748Z Record version: sha256:5f7ebff8369b25ba9beaf2ca1537b3208b4ec42df3ba617b8ed649771e7ea033 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-926-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/926/#05-overview-and-background) SEC content: no ##### [835-926-05-1](https://asc.understandingaccounting.org/asc/835/926/#835-926-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:45.748Z to 2026-09-10T01:50:45.748Z Record version: sha256:113becdf9c60ac266b6b399c2d3b9050a72740dce18dee2292638ba0b65f6304 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:50:47.974Z to 2026-09-10T01:50:47.974Z Record version: sha256:2455d8f005e6dde2923d0ba34186f561d3f797536c837eb450578c2a72b5f330 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-926-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/926/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-926-15-1](https://asc.understandingaccounting.org/asc/835/926/#835-926-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:47.974Z to 2026-09-10T01:50:47.974Z Record version: sha256:8fe78dac7914cef4689bd1ebb3c415152e3e267b763663ca75e84bb0bdf47ec1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-10-15. Source downloaded (UTC): 2026-09-10T01:50:51.672Z to 2026-09-10T01:50:51.672Z Record version: sha256:3d7d40c8cf1dc8ac8936ec90d0cb898544cc99fe782d877f1fda74f2c5be4829 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-926-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/835/926/#25-recognition) SEC content: no #### Film Production Interest Costs ##### [835-926-25-1](https://asc.understandingaccounting.org/asc/835/926/#835-926-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:51.672Z to 2026-09-10T01:50:51.672Z Record version: sha256:5da8a5b142119f031eb04a54381e84532e8f838ac9bdc65cca4710d3c5619770 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall account for interest costs related to the production of a film in accordance with Subtopic 835-20. Source downloaded (UTC): 2026-09-10T01:50:54.044Z to 2026-09-10T01:51:06.744Z Record version: sha256:37dd30dcdac6d34899f7fe3fac3e58cb092394eed495cbf572d2d783777b1aab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-932: Interest — Extractive Activities—Oil and Gas ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:50:54.044Z to 2026-09-10T01:50:54.044Z Record version: sha256:e7633d72eda56c683260bfdb3a22c25995a1e61334a87c1d074d991c2d221619 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-932-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/835/932/#00-status) SEC content: no ##### [835-932-00-1](https://asc.understandingaccounting.org/asc/835/932/#835-932-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:54.044Z to 2026-09-10T01:50:54.044Z Record version: sha256:f726010ede73f2c711f47128d740c0a8a9180167fae40b3dc543fa70d8f65806 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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
Source downloaded (UTC): 2026-09-10T01:50:56.472Z to 2026-09-10T01:50:56.472Z Record version: sha256:941e6ff37d86dc6465682ed21509e80f2d2c0b472156992d0cdae5884a58602a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-932-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/932/#05-overview-and-background) SEC content: no ##### [835-932-05-1](https://asc.understandingaccounting.org/asc/835/932/#835-932-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:56.472Z to 2026-09-10T01:50:56.472Z Record version: sha256:88cf7237e1e55cc17247f0a65af0a897d3b5a84b4c656ef432a8678e2252cc57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses interest capitalization under the full cost method of accounting in the oil and gas industry. Source downloaded (UTC): 2026-09-10T01:50:58.535Z to 2026-09-10T01:50:58.535Z Record version: sha256:55d23220a007e8ae58998dd92347c8202ea03ac7f090f3ad1dcdb919bc54c598 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-932-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/932/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-932-15-1](https://asc.understandingaccounting.org/asc/835/932/#835-932-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:50:58.535Z to 2026-09-10T01:50:58.535Z Record version: sha256:c4da5f6637c8f8053d512bb41561850e21025ad9ce3d0f40d60d1c165f05eff1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 932-10-15. Source downloaded (UTC): 2026-09-10T01:51:04.953Z to 2026-09-10T01:51:04.953Z Record version: sha256:ae2ba662655d8f241a5058a06b02e491423617c45f13ca8f92150239f1a690b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-932-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/835/932/#25-recognition) SEC content: no #### Assets Qualifying for Interest Capitalization ##### [835-932-25-1](https://asc.understandingaccounting.org/asc/835/932/#835-932-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:04.953Z to 2026-09-10T01:51:04.953Z Record version: sha256:bbec8b4fae35792e632478438d375c7e3d7f2c8c11a170eb93fe218b98269a0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/835/20/#835-20-15-5). Unusually significant investments in [unproved properties](https://asc.understandingaccounting.org/glossary/u/#unproved-properties "Unproved properties are properties with no proved reserves.") and major development projects that are not being currently depreciated, depleted, or amortized and on which [exploration](https://asc.understandingaccounting.org/glossary/e/#exploration "Exploration involves both of the following: Identifying areas that may warrant examination Examining specific areas that are considered to have prospects of containing oil and gas reserves, including drilling exploratory wells and exploratory-type stratigraphic test wells.") or development activities are in progress are assets qualifying for capitalization of interest cost. Similarly, in a cost center with no [production](https://asc.understandingaccounting.org/glossary/p/#production "Production involves lifting the crude oil and natural gas to the surface, extracting saleable hydrocarbons, in the solid, liquid, or gaseous state from oil sands, shale, coalbeds, or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas, gathering, treating, field processing (as in the case of processing gas to extract liquid hydrocarbons), and field storage. The oil and gas production function shall be regarded as ending at a terminal point, which is the outlet valve on the lease or field storage tank. If unusual physical or operational circumstances exist, it may be appropriate to regard the terminal point for the production function as: The first point at which oil, gas, or gas liquids, natural or synthetic, are delivered to a main pipeline, a common carrier, a refinery, or a marine terminal In the case of natural resources that are intended to be upgraded into synthetic oil or gas, if those natural resources are delivered to a purchaser before upgrading, the first point at which the natural resources are delivered to a main pipeline, a common carrier, a refinery, a marine terminal, or a facility that upgrades such natural resources into synthetic oil or gas."), significant [properties](https://asc.understandingaccounting.org/glossary/p/#properties "Mineral interests in properties (hereinafter referred to as properties), which include all of the following: Fee ownership or a lease Concession Other interest representing the legal right to produce or a revenue interest in the production of oil or gas subject to such terms as may be imposed by the conveyance of that interest. Properties also include: Royalty interests Production payments payable in oil or gas Other nonoperating interests in properties operated by others. Properties include those agreements with foreign governments or authorities under which an entity participates in the operation of the related properties or otherwise serves as producer of the underlying reserves (see paragraph 932-235-50-7); but properties do not include other supply agreements or contracts that represent the right to purchase (as opposed to extract) oil and gas. Properties are classified as proved properties or unproved properties.") and projects on which exploration or development activities are in progress are assets qualifying for capitalization of interest cost. #### Advances Satisfied by Delivery of Future Production ##### [835-932-25-2](https://asc.understandingaccounting.org/asc/835/932/#835-932-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:04.953Z to 2026-09-10T01:51:04.953Z Record version: sha256:3f9b3c63e3145f8e62a4df00884d2a55ed8ce9e6118c31aa2b3aac14e58c4d95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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)](https://asc.understandingaccounting.org/asc/835/30/#835-30-15-3) 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](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with a [customer](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") within the scope of Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from contracts with customers, the guidance in Topic 606shall be applied. Source downloaded (UTC): 2026-09-10T01:51:09.700Z to 2026-09-10T01:51:14.848Z Record version: sha256:7f87bff1e556a6f12ec5f0d462b74eedcaf0fd5f95161dd52e539fe4ebab380b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-970: Interest — Real Estate—General ### Machine-generated study aids ```json { "summary": "This Subtopic governs when an investor-lender may recognize interest income on loans or advances made to a real estate venture (e.g., a joint venture in which the investor holds an equity interest). The core rule is that interest income must be deferred where collectibility is doubtful or other investors may not bear their share of losses; it is recognized in full only where the venture has expensed the interest (or the investor adjusts its equity pickup as if it had); otherwise a portion is deferred in proportion to the investor's interest in the venture's profits and losses (835-970-35-1).", "key_points": [ "The guidance applies to an investor-lender that does not capitalize interest on its own real estate construction and development projects, and only to loans or advances that are not in substance capital contributions (835-970-35-1).", "All interest income must be deferred if collectibility of principal or interest is in doubt — which may be indicated by the absence of adequate collateral or other terms an independent lender would require (835-970-35-1(a)(1)).", "All interest income must also be deferred if there is a reasonable expectation that the other investors will not bear their shares of losses, creating uncertainty about the lender's share of the venture's interest expense (835-970-35-1(a)(2)).", "Full interest income is recorded as earned if neither deferral condition exists and the venture has expensed the interest, or the venture capitalized it but the investor records its equity in venture income or loss as if the interest had been expensed (835-970-35-1(b)).", "Otherwise, interest income is deferred in proportion to the investor's percentage interest in the profits and losses of the venture (835-970-35-1(c)).", "Even under the partial-deferral approach, the investor must perform an evaluation like that in 970-323-35-8 through 35-10 to avoid recognizing interest income on amounts it will ultimately bear as losses (835-970-35-1(c)).", "Certain interest amounts may have to be accounted for as distributions rather than interest income (see 970-323-35-22); Subtopic 835-20 governs interest capitalization." ], "categories": [ "Recognition", "Subsequent measurement", "Industry-specific", "Financial instruments" ], "audience_level": "intermediate", "student_note": "The point is to stop an equity investor from booking interest income on money it is effectively lending to itself; the common mistake is treating a loan to a venture like any third-party receivable and accruing 100% of the interest, when the codification requires deferral of the investor's proportionate share unless the venture has expensed the interest. Also watch for advances that are \"in substance capital contributions,\" which fall outside this guidance entirely.", "related_topics": [ "835-20", "970-323", "970-10", "323-10", "310-10" ], "key_concepts": [ "interest income deferral", "investor-lender", "real estate venture", "loans and advances", "in substance capital contribution", "equity method", "collectibility", "interest capitalization" ] } ``` Source downloaded (UTC): 2026-09-10T01:51:09.700Z to 2026-09-10T01:51:09.700Z Record version: sha256:221ca107304046ac9012c35156686fe1bee888275fe10121f32816a86dc0031a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-970-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/970/#05-overview-and-background) SEC content: no ##### [835-970-05-1](https://asc.understandingaccounting.org/asc/835/970/#835-970-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:09.700Z to 2026-09-10T01:51:09.700Z Record version: sha256:1df5aaefb178101b8090b4a9a60061f05146699eba392ca236d699a021fdc4da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance concerning the recognition of interest income on investor loans or advances to real estate ventures. ##### [835-970-05-2](https://asc.understandingaccounting.org/asc/835/970/#835-970-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:09.700Z to 2026-09-10T01:51:09.700Z Record version: sha256:e61d0573a110e335a8abb231166162aadb85cc52830f12e0f0fcd383541faf21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See also Subtopic 835-20. Source downloaded (UTC): 2026-09-10T01:51:11.695Z to 2026-09-10T01:51:11.695Z Record version: sha256:f71d95aafd80c88e0b299268d3e97963c0432dfb81cbf9343b224ee0df253ecb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-970-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/970/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-970-15-1](https://asc.understandingaccounting.org/asc/835/970/#835-970-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:11.695Z to 2026-09-10T01:51:11.695Z Record version: sha256:4a42de1c33d96b741021d6d846d3e5afc58e572e83fc46faea1721d38f5c3de0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 970-10-15. Source downloaded (UTC): 2026-09-10T01:51:14.848Z to 2026-09-10T01:51:14.848Z Record version: sha256:682670151a781962db8aab68cfc37d4f636770d75453e0258ab397129de229c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-970-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/970/#35-subsequent-measurement) SEC content: no #### Income from Loans or Advances to a Venture ##### [835-970-35-1](https://asc.understandingaccounting.org/asc/835/970/#835-970-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:14.848Z to 2026-09-10T01:51:14.848Z Record version: sha256:00df75a0b0eccbf7c279cfbaf0de40d9a9ae976b3022fe4499d6b3b2ee5e7459 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investor-lender that does not capitalize interest on its own real estate construction and development projects (see Subtopic 835-20) shall account for interest on loans and advances that are not in substance capital contributions in accordance with the following recommendations: 1. a All interest income on the investor's loans or advances to the venture shall be deferred if either of the following conditions is present: 1. 1 Collectibility of the principal or interest is in doubt. This condition may exist if adequate collateral and other terms normally required by an independent lender are not present. 2. 2 There is a reasonable expectation that the other investors will not bear their shares of losses, resulting in uncertainty as to the lender's share of the venture's related interest expense. 2. b If neither of the conditions in (a) is present and either the venture has recorded interest as an expense or the venture has capitalized the interest but in order to conform to the investor's accounting policies, the investor has recorded its equity in the income or loss of the venture as if the venture had charged the interest to expense, the entire interest income accrued on loans or advances to a venture shall be recorded as earned. 3. c If the conditions in (a) or (b) are not present, a portion of interest income from loans and advances to a venture shall be deferred based on the investor's percentage interest in the profits and losses of the venture. However, an evaluation similar to that discussed in paragraphs [970-323-35-8 through 35-10](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-8) for recording the investor's share of losses should be made to avoid recording as interest income amounts that may ultimately be borne as losses by the investor making the loan. See paragraph [970-323-35-22](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-22) regarding situations where certain amounts of interest are accounted for as distributions rather than as interest income. Source downloaded (UTC): 2026-09-10T01:51:18.569Z to 2026-09-10T01:51:26.169Z Record version: sha256:897c83f9490a5f5ac6b1e0059fc398e7c528b47d35b3c2e8bef48f0ddf91edd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-974: Interest — Real Estate—Real Estate Investment Trusts ### Machine-generated study aids ```json { "summary": "This Subtopic governs when a real estate investment trust must stop recognizing interest revenue on loans it holds. Interest recognition must be discontinued when it is no longer reasonable to expect the revenue will be received, and certain conditions (past-due payments, default, foreclosure, borrower creditworthiness doubts, construction cost overruns/delays, renegotiation) create a rebuttable presumption that recognition should stop (835-974-35-1). Once discontinued, recognition may not resume and unrecorded interest may not be recognized until it is evident that principal and interest will be collected (835-974-35-2).", "key_points": [ "Recognition of interest revenue on REIT loans shall be discontinued when it is not reasonable to expect that the revenue will be received (835-974-35-1).", "Any of six listed conditions establishes a presumption that interest recording should be discontinued: past-due principal or interest, borrower default, actual or expected foreclosure proceedings, doubtful creditworthiness (bankruptcy, liens), cost overruns or construction delays casting doubt on project viability, or loan renegotiation (835-974-35-1).", "The presumption is rebuttable and may be overcome if other facts clearly refute it (835-974-35-1).", "The same conditions may also indicate that an allowance for losses should be provided (835-974-35-1).", "Because discontinuance is a realization question, interest recognition shall not resume and unrecorded interest shall not be recognized until it is evident that principal and interest will be collected (835-974-35-2).", "Including doubtful amounts in interest revenue is inappropriate because such presentation contradicts economic reality (835-974-35-3).", "Scope follows Section 974-10-15 (835-974-15-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Impairment", "Industry-specific" ], "audience_level": "intermediate", "student_note": "This is the classic \"nonaccrual\" rule applied to REIT mortgage loans: the trigger is doubtful realization, not a fixed number of days past due. The common mistake is thinking accrual can restart once a borrower makes one payment—recognition resumes only when it is evident that both principal and interest will be collected.", "related_topics": [ "974-10", "310-10", "326-20", "835-30", "310-40" ], "key_concepts": [ "interest revenue recognition", "nonaccrual loans", "realization", "rebuttable presumption", "real estate investment trust", "allowance for loan losses", "loan renegotiation", "foreclosure" ] } ``` Source downloaded (UTC): 2026-09-10T01:51:18.569Z to 2026-09-10T01:51:18.569Z Record version: sha256:767f73afbdc5b90f662cdbfc3f2e7d4431c1be5174329ed729f9134ddef48832 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-974-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/974/#05-overview-and-background) SEC content: no ##### [835-974-05-1](https://asc.understandingaccounting.org/asc/835/974/#835-974-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:18.569Z to 2026-09-10T01:51:18.569Z Record version: sha256:f494dc3b80f775323f1fa70c6d61679f3921de78289ea0de66649f08fd777ed3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses measurement issues related to interest revenue on loans held by [real estate investment trusts](https://asc.understandingaccounting.org/glossary/r/#real-estate-investment-trust "Real estate investment trusts generally are formed as trusts, associations, or corporations. They employ equity capital, coupled with substantial amounts of debt financing, in making real estate loans and investments. Real estate investment trusts must distribute substantially all of their taxable income to their shareholders annually in order to retain their favorable tax status (that is, dividends paid are treated as deductions in arriving at taxable income)."). Source downloaded (UTC): 2026-09-10T01:51:20.383Z to 2026-09-10T01:51:20.383Z Record version: sha256:a6d1cbcb0b16f7331e30ebaf9f26409cd90e0abc2dd5e45f3c2a1da34b53a7a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-974-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/974/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-974-15-1](https://asc.understandingaccounting.org/asc/835/974/#835-974-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:20.383Z to 2026-09-10T01:51:20.383Z Record version: sha256:cd3d8d89e2500c85b4f19252941ad5cd626a714d2df2045c89e295fc8c71b019 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 974-10-15. Source downloaded (UTC): 2026-09-10T01:51:26.169Z to 2026-09-10T01:51:26.169Z Record version: sha256:d4aa69aeaf36f0e5933f34cd879c96f42fe0fc2ee414c596f220ced4256ad6da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-974-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/974/#35-subsequent-measurement) SEC content: no #### Discontinuance of Interest Revenue Recognition ##### [835-974-35-1](https://asc.understandingaccounting.org/asc/835/974/#835-974-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:26.169Z to 2026-09-10T01:51:26.169Z Record version: sha256:d3f5f7512db433ae47d7663cd06663a4370c08d12188289c9b14e15cebde6e81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The recognition of interest revenue on loans made by [real estate investment trusts](https://asc.understandingaccounting.org/glossary/r/#real-estate-investment-trust "Real estate investment trusts generally are formed as trusts, associations, or corporations. They employ equity capital, coupled with substantial amounts of debt financing, in making real estate loans and investments. Real estate investment trusts must distribute substantially all of their taxable income to their shareholders annually in order to retain their favorable tax status (that is, dividends paid are treated as deductions in arriving at taxable income).") shall be discontinued when it is not reasonable to expect that the revenue will be received. Also, certain conditions should be regarded as establishing a presumption (which may be overcome if other facts clearly refute the presumption) that the recording of interest shall be discontinued, including any of the following: 1. a Payments of principal or interest are past due. 2. b The borrower is in default under the terms of the loan agreement. 3. c Foreclosure proceedings have been or are expected to be initiated. 4. d The credit-worthiness of the borrower is in doubt because of pending or actual bankruptcy proceedings, the filing of liens against his assets, and so forth. 5. e Cost overruns or delays in construction cast doubt on the economic viability of the project. 6. f The loan has been renegotiated. These conditions may also be an indication that an allowance for losses should be provided. ##### [835-974-35-2](https://asc.understandingaccounting.org/asc/835/974/#835-974-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:26.169Z to 2026-09-10T01:51:26.169Z Record version: sha256:ac90bcd5e1d38160a5e7e3808e64bb86c6979b54e291445cd771474930b2661b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The discontinuance of interest revenue recognition is related to the question of realization and, consequently, such recognition shall not be resumed, nor shall unrecorded interest be recognized, until it is evident that the principal and interest will be collected. ##### [835-974-35-3](https://asc.understandingaccounting.org/asc/835/974/#835-974-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:26.169Z to 2026-09-10T01:51:26.169Z Record version: sha256:9423af79b6760899da58bbadc869f00303f8f9256ab2e8e83db393e2606abf1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Since interest recognition is discontinued because realization is doubtful, it is not appropriate to include such amounts in interest revenue in the financial statements because such a presentation contradicts economic reality. Source downloaded (UTC): 2026-09-10T01:51:29.287Z to 2026-09-10T01:51:51.446Z Record version: sha256:8d7ad5f8db757c349e9b0c567f069433cd0748e916e25d0669d53d93331725f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-980: Interest — Regulated Operations ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:51:29.287Z to 2026-09-10T01:51:29.287Z Record version: sha256:c683342fc4f63ae058526eb1251456a71488d6e4aa8051ca17e9334cd881bfad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-980-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/835/980/#05-overview-and-background) SEC content: no ##### [835-980-05-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:29.287Z to 2026-09-10T01:51:29.287Z Record version: sha256:1aae365ba31bcb3e404b7bdb67f9d65c2c1d0a8146a8c8c64672f5d853e94d8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on accounting for interest for entities with regulated operations. Source downloaded (UTC): 2026-09-10T01:51:31.337Z to 2026-09-10T01:51:31.337Z Record version: sha256:538eb13bfa49c4afaae61fd8ca1e581eecb3dc9062658b4841964ea2d0684a0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-980-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/835/980/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [835-980-15-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:31.337Z to 2026-09-10T01:51:31.337Z Record version: sha256:f0eb1428e429e4d667780fdaf23a4a3d8b045f5c32c14110df7002126545de40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 980-10-15. Source downloaded (UTC): 2026-09-10T01:51:37.091Z to 2026-09-10T01:51:37.091Z Record version: sha256:89df4a4b352501eff6d170f515caabd97b9cfb81666f37671c867ca99be88c76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-980-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/835/980/#25-recognition) SEC content: no #### Construction Financing Cost Capitalization ##### [835-980-25-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:37.091Z to 2026-09-10T01:51:37.091Z Record version: sha256:470a2ed7d472b990a23bed876e9158f53f8e59fa8c9609f9cca755af571eaec1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some cases, a regulator requires an entity subject to its authority to [capitalize](https://asc.understandingaccounting.org/glossary/c/#capitalize "Capitalize is used to indicate that the cost would be recorded as the cost of an asset. That procedure is often referred to as deferring a cost, and the resulting asset is sometimes described as a deferred cost."), 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](https://asc.understandingaccounting.org/glossary/a/#allowance-for-funds-used-during-construction "The cost of financing construction as financed partially by borrowings and partially by equity, capitalized as part of the cost of plant and equipment pursuant to requirements of the regulator."). ##### [835-980-25-2](https://asc.understandingaccounting.org/asc/835/980/#835-980-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:37.091Z to 2026-09-10T01:51:37.091Z Record version: sha256:78c79135be615b94bd860ccf8a094353e5ef2ad4e7541ae6669f6d7b7ac07242 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the specific criteria in paragraph [980-835-35-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-35-1) 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. ##### [835-980-25-3](https://asc.understandingaccounting.org/asc/835/980/#835-980-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:37.091Z to 2026-09-10T01:51:37.091Z Record version: sha256:d0cbc739d9148015a256afab92ceea9d994b87aad3515a5ae24d640ab89b7d23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [835-980-25-4](https://asc.understandingaccounting.org/asc/835/980/#835-980-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:37.091Z to 2026-09-10T01:51:37.091Z Record version: sha256:320ce1c789f27e350788d148016026267a5caf7136058435fa7f05239163ebfd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:51:40.838Z to 2026-09-10T01:51:40.838Z Record version: sha256:7150cb2dbcea1e679c012b7e4e1b829bf4abc281563dbdfb9fb68e1fcc93e79c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-980-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/835/980/#30-initial-measurement) SEC content: no ##### [835-980-30-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:40.838Z to 2026-09-10T01:51:40.838Z Record version: sha256:d25cc761618ee5b689bb7267fefa426336980f3cadba162f02692beccad221a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a regulator requires an entity to capitalize certain costs as discussed in paragraph [980-835-25-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-25-1), 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](https://asc.understandingaccounting.org/glossary/a/#allowable-costs "All costs for which revenue is intended to provide recovery. Those costs can be actual or estimated. In that context, allowable costs include interest cost and amounts provided for earnings on shareholders' investments.") for rate-making purposes is probable. Source downloaded (UTC): 2026-09-10T01:51:43.899Z to 2026-09-10T01:51:43.899Z Record version: sha256:807323e67f296da4f7352b53ef7631b238f03d79352471842f2807303ac8a83a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-980-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/835/980/#35-subsequent-measurement) SEC content: no ##### [835-980-35-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:43.899Z to 2026-09-10T01:51:43.899Z Record version: sha256:f69794400b5151cce3b5946aa07a968dbc6689d021929882d4a77ebd5d6680fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After construction is completed, the resulting capitalized cost, including the [allowance for funds used during construction](https://asc.understandingaccounting.org/glossary/a/#allowance-for-funds-used-during-construction "The cost of financing construction as financed partially by borrowings and partially by equity, capitalized as part of the cost of plant and equipment pursuant to requirements of the regulator."), is the basis for depreciation and unrecovered investment for rate-making purposes. Source downloaded (UTC): 2026-09-10T01:51:47.374Z to 2026-09-10T01:51:47.374Z Record version: sha256:a3208a65260264333570a134da69dbeb0fef97558ddb4675cc199c2fbb1a5512 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 835-980-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/835/980/#45-other-presentation-matters) SEC content: no ##### [835-980-45-1](https://asc.understandingaccounting.org/asc/835/980/#835-980-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:51:47.374Z to 2026-09-10T01:51:47.374Z Record version: sha256:ee2fe40b1b192ea78984b913d6a4cd9f9148c4542b0104dec96bcdba32d1f06f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/835/980/#835-980-25-1).