# ASC 860-20-35: Transfers and Servicing — Sales of Financial Assets — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/860/20/#35-subsequent-measurement) 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): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:e575a4420b1e1ae2dfb312c509cd80db8f78c30b00ba46bb3f43988402b8df68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 860-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/860/20/#35-subsequent-measurement) SEC content: no ##### [860-20-35-1](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:4d2dfa50960bb3f8665c214a26ee086a1e3fb70342e387a4b9df2d930722c8e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is organized as follows: 1. a [Financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity.") subject to prepayment 2. b [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 3. c Credit enhancements 4. d [Beneficial interests](https://asc.understandingaccounting.org/glossary/b/#beneficial-interests "Rights to receive all or portions of specified cash inflows received by a trust or other entity, including, but not limited to, all of the following: Senior and subordinated shares of interest, principal, or other cash inflows to be passed-through or paid-through Premiums due to guarantors Commercial paper obligations Residual interests, whether in the form of debt or equity.") 5. e Transaction costs. #### Financial Assets Subject to Prepayment ##### [860-20-35-2](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:350a23666ea7f2020097eecbd6301c8ba8e6b3924383975759d3326af4a6c0c9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Financial assets, except for instruments that are within the scope of Subtopic 815-10, that can contractually be prepaid or otherwise settled in such a way that the holder would not recover substantially all of its recorded investment shall be subsequently measured like investments in debt securities classified as available for sale or trading under Topic 320. Examples of such financial assets include, but are not limited to, [interest-only strips](https://asc.understandingaccounting.org/glossary/i/#interest-only-strip "A contractual right to receive some or all of the interest due on a bond, mortgage loan, collateralized mortgage obligation, or other interest-bearing financial asset."), other beneficial interests, loans, or other receivables. Interest-only strips and similar interests that meet the definition of [securities](https://asc.understandingaccounting.org/glossary/s/#security "A share, participation, or other interest in property or in an entity of the issuer or an obligation of the issuer that has all of the following characteristics: It is either represented by an instrument issued in bearer or registered form or, if not represented by an instrument, is registered in books maintained to record transfers by or on behalf of the issuer. It is of a type commonly dealt in on securities exchanges or markets or, when represented by an instrument, is commonly recognized in any area in which it is issued or dealt in as a medium for investment. It either is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations.") are included in the scope of that Topic. Therefore, all relevant provisions of that Topic (including the disclosure requirements) shall be applied. See related implementation guidance beginning in paragraph [860-20-55-33](https://asc.understandingaccounting.org/asc/860/20/#860-20-55-33). ##### [860-20-35-3](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:7b5ba859b5e1fa20c05d2fb25414594bc08730c451caee21d4113986c0916049 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest-only strips and similar interests that are not in the form of securities are not within the scope of Topic 320 but shall be measured like investments in debt securities classified as available for sale or trading. In that circumstance, all of the measurement provisions of that Topic, as well as the provisions of Topic 326 on measurement of credit losses, shall be followed. However, other provisions of Topics 320 and 326, such as those addressing disclosures, are not required to be applied. Paragraph [320-10-15-9](https://asc.understandingaccounting.org/asc/320/10/#320-10-15-9) explains that, for debt securities within its scope, Subtopic 325-40 provides incremental guidance on accounting for and reporting discount and credit losses. ##### [860-20-35-4](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:785f534dfc893f506eba690ed75c0a3936fb0dfb5d778e4178867ddd0c985f9a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The requirement in paragraph [860-20-35-2](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-2) does not apply to situations in which events that are not the result of contractual provisions, for example, borrower default or changes in the value of an instrument's denominated currency relative to the entity's functional currency, cause the holder not to recover substantially all of its recorded investment. ##### [860-20-35-5](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:5877804c1b4090b5034c3098100c66965b5e58b9e34c1b0eabac0ab2806d8f65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A financial asset that can be contractually prepaid or otherwise settled in such a way that the holder would not recover substantially all of its recorded investment shall not be classified as held-to-maturity even if the investor concludes that prepayment or other forms of settlement are remote. The probability of prepayment or other forms of settlement that would result in the holder's not recovering substantially all of its recorded investment is not relevant in deciding whether the provisions of paragraph [860-20-35-2](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-2) apply to those financial assets. ##### [860-20-35-6](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:50ced2ed1679d0cf9572a8060cec506a7e89d8eefa50503fcb2083ecdb36b4bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not specifically address the subsequent measurement of a transferor's beneficial interests that cannot be contractually prepaid or settled in such a way that the owner would not recover substantially all of its recorded investment. ##### [860-20-35-7](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:ebb757474ccb7aa324077caff7d3c1c39821d76d4c5422142ece9e422369a3ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). #### Credit Enhancements ##### [860-20-35-8](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:f2e2f5bd448937b0ce9a16c00fe3d76eb3aa58d7ca0029ffd1da63fe35d5a008 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While this Subtopic does not specifically address the subsequent measurement of credit enhancements, there are some factors to consider. Factors such as how much cash the transferor will receive from, for example, a cash reserve account, and when it will receive cash inflows depend on the performance of the transferred financial assets. Entities shall regularly review those assets for impairment because of their nature. Entities shall look to other guidance for subsequent measurement including guidance for impairment based on the nature of the credit enhancement. #### Beneficial Interests ##### [860-20-35-9](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:666cc64e21605f3c5efa286ff5bd9d4d633990dc0c4269687117227b36c2690b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Beneficial interests shall be evaluated for credit losses, including at the time paragraphs [860-20-25-8 through 25-10](https://asc.understandingaccounting.org/asc/860/20/#860-20-25-8) are applied. See Section 325-40-35 for guidance on credit losses applicable to beneficial interests in securitized financial assets. #### Transaction Costs ##### [860-20-35-10](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:06:35.142Z to 2026-09-10T02:06:35.142Z Record version: sha256:803b755d8d6666762408e0ad69daf8bc83ab8fb37b84abfe23748bd3ca9afca3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transaction costs relating to a sale of the receivables may be recognized over the initial and reinvestment periods in a rational and systematic manner unless the transaction results in a loss. Transaction costs for a past sale are not an asset and thus are part of the gain or loss on sale. In a credit card [securitization](https://asc.understandingaccounting.org/glossary/s/#securitization "The process by which financial assets are transformed into securities."), however, some of the transaction costs incurred at the outset relate to the future sales that are to occur during the revolving period, and thus can qualify as an asset.