# ASC 860-50-25: Transfers and Servicing — Servicing Assets and Liabilities — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/860/50/#25-recognition) 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): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:d779cb4178b0dde2be09340e525bb9fd5a373e8f8f754129bf2c3d3ccb7ee426 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 860-50-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/860/50/#25-recognition) SEC content: no ##### [860-50-25-1](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:d4ce43cbc2f8775ed58fc0c98db664981a598bab95453bf62d6b66b7f876d8fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall recognize a [servicing asset](https://asc.understandingaccounting.org/glossary/s/#servicing-assets "A contract to service financial assets under which the benefits of servicing are expected to more than adequately compensate the servicer for performing the servicing. A servicing contract is either: Undertaken in conjunction with selling or securitizing the financial assets being serviced Purchased or assumed separately.") or [servicing liability](https://asc.understandingaccounting.org/glossary/s/#servicing-liabilities "A contract to service financial assets under which the estimated future revenues from contractually specified servicing fees, late charges, and other ancillary revenues (benefits of servicing) are not expected to adequately compensate the servicer for performing the servicing.") each time it undertakes an obligation to service a [financial asset](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.") by entering into a servicing contract in any of the following situations: 1. a A servicer's [transfer](https://asc.understandingaccounting.org/glossary/t/#transfer "The conveyance of a noncash financial asset by and to someone other than the issuer of that financial asset. A transfer includes the following: Selling a receivable Putting a receivable into a securitization trust Posting a receivable as collateral. A transfer excludes the following: The origination of a receivable Settlement of a receivable The restructuring of a receivable into a security in a troubled debt restructuring.") of any of the following, if that transfer meets the requirements for sale accounting: 1. 1 An entire financial asset 2. 2 A group of entire financial assets 3. 3 A participating interest in an entire financial asset, in which circumstance the transferor shall recognize a servicing asset or a servicing liability only related to the participating interest sold. 2. b [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 3. c An acquisition or assumption of a servicing obligation that does not relate to financial assets of the servicer or its [consolidated affiliates](https://asc.understandingaccounting.org/glossary/c/#consolidated-affiliate "An entity whose assets and liabilities are included in the consolidated, combined, or other financial statements being presented.") included in the financial statements being presented. Example 1 (see paragraph [860-50-55-20](https://asc.understandingaccounting.org/asc/860/50/#860-50-55-20)) illustrates accounting for a sale of receivables with servicing obtained by the transferor. ##### [860-50-25-2](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:46048b4a716d7d9c5c7ed72ad57ffefbc58cd80c40458b5d3597f3c5a2bcb835 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A servicer that transfers or securitizes financial assets in a transaction that does not meet the requirements for sale accounting and is accounted for as a secured borrowing with the underlying financial assets remaining on the transferor's balance sheet shall not recognize a servicing asset or a servicing liability. ##### [860-50-25-3](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:9f3a47553a008f343f86cab60c6935dee01a7b701167e77b4feb80664822f481 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A servicer that recognizes a servicing asset or servicing liability shall account for the contract to service financial assets separately from those financial assets. ##### [860-50-25-4](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:92d49fa84faf7d25869fb90e62e9b2dd76cc5ffdeb1d9e35ef10710d8b20f03d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that transfers its financial assets to an unconsolidated entity in a transfer that qualifies as a sale in which the transferor obtains the resulting securities and classifies them as debt securities held to maturity in accordance with Topic 320 may either separately recognize its servicing assets or servicing liabilities or report those servicing assets or servicing liabilities together with the asset being serviced. ##### [860-50-25-5](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:20e2bdd9e6e22a8a1393eaec093aa87e18d9311b3d3f2099a7835a65253a8c62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Section is organized as follows: 1. a Distinguishing servicing from an [interest-only strip](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.") 2. b [Revolving-period securitizations](https://asc.understandingaccounting.org/glossary/r/#revolving-period-securitizations "Securitizations in which receivables are transferred at the inception and also periodically (daily or monthly) thereafter for a defined period (commonly three to eight years), referred to as the revolving period. During the revolving period, the special-purpose entity uses most of the cash collections to purchase additional receivables from the transferor on prearranged terms.") 3. c Regaining control of previously transferred assets. #### Distinguishing Servicing from an Interest-Only Strip ##### [860-50-25-6](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:7464b8ccfa9d66cbf4c40ec58cd3c2b22f3ae2ee09b6a53a3c0faaeb36b4c5f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A servicer shall account separately for rights to future interest income from the serviced assets that exceed [contractually specified servicing fees](https://asc.understandingaccounting.org/glossary/c/#contractually-specified-servicing-fees "All amounts that, per contract, are due to the servicer in exchange for servicing the financial asset and would no longer be received by a servicer if the beneficial owners of the serviced assets (or their trustees or agents) were to exercise their actual or potential authority under the contract to shift the servicing to another servicer. Depending on the servicing contract, those fees may include some or all of the difference between the interest rate collectible on the financial asset being serviced and the rate to be paid to the beneficial owners of those financial assets."). Those rights are not servicing assets; they are financial assets, effectively interest-only strips to be accounted for in accordance with paragraph [860-20-35-2](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-2). ##### [860-50-25-7](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:2bd1b72d28b7e47841046030e045c9292462e494a85efea90f97acfb5e350b0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether a right to future interest income from serviced assets should be accounted for as an interest-only strip, a servicing asset, or a combination thereof, depends on whether a servicer would continue to receive that amount (that is, the value of the right to future interest income) if a substitute servicer began servicing the assets. Therefore, any portion of the right to future interest income from the serviced assets that would continue to be received even if the servicing were shifted to another servicer would be reported separately as a financial asset in accordance with paragraph [860-20-35-2](https://asc.understandingaccounting.org/asc/860/20/#860-20-35-2). For guidance on why an interest-only strip precludes a portion of a financial asset from meeting the definition of a participating interest, see paragraph [860-10-55-17K](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17K). ##### [860-50-25-8](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:3a8f36c7f722fe71acd03db9ca3e910497e59b969b8a9541e467fec261b681be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The value of the right to receive future cash flows from ancillary sources such as late fees shall be included in the measurement of the servicing asset, not the interest-only strip, if retention of the right to receive the cash flows from those fees depends on servicing being performed satisfactorily, as is generally the case. #### Revolving-Period Securitizations ##### [860-50-25-9](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:393e7cebc45202a029270ccb981fec27a82e67431cd1aa4c6e420ae0c10bffb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Recognition of servicing assets or servicing liabilities for revolving-period receivables shall be limited to the servicing for the receivables that exist and have been sold. As new receivables are sold, rights to service them may become assets or liabilities that are recognized. Therefore, additional transfers under revolving-period securitizations (for example, home equity loans or credit card receivables) may result in the recognition of additional servicing assets or servicing liabilities. #### Regaining Control of Financial Assets Sold ##### [860-50-25-10](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:13.201Z to 2026-09-10T02:08:13.201Z Record version: sha256:613e337275e24e63fe47566795964d03a3b7a2f9b41218dbee00703cad241296 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [860-20-25-10(b)](https://asc.understandingaccounting.org/asc/860/20/#860-20-25-10) explains that, after a paragraph [860-10-40-41](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-41) change, the transferor shall not change, the accounting for the servicing asset related to the previously sold financial assets and provides related guidance.