# ASC 860-50-35: Transfers and Servicing — Servicing Assets and Liabilities — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/860/50/#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): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:cc0e3b0a0ffd28f6dc04e162a9b304d518e862b00931df864c7aa735540ef04a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 860-50-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/860/50/#35-subsequent-measurement) SEC content: no ##### [860-50-35-1](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:fcdfeba73c648dd7528db27b6f1a78e7b26ebc0d6141039bf7c069c9a4329f81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall subsequently measure each class of [servicing assets](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.") and [servicing liabilities](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.") using either of the following methods: 1. a Amortization method. Amortize servicing assets or servicing liabilities in proportion to and over the period of estimated net servicing income (if servicing revenues exceed servicing costs) or net servicing loss (if servicing costs exceed servicing revenues), and assess servicing assets or servicing liabilities for impairment or increased obligation based on fair value at each reporting date. 2. b Fair value measurement method. Measure servicing assets or servicing liabilities at fair value at each reporting date and report changes in fair value of servicing assets and servicing liabilities in earnings in the period in which the changes occur. ##### [860-50-35-1A](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:53e57c32f6df2a72f3227678dcb28dbcb0c2b0f5b8ac05873cbddefd553fce42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A servicing asset may become a servicing liability, or vice versa, if circumstances change. ##### [860-50-35-2](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:bb71724b052b71ce13fb763cae8ef85d7d63d5b9e35772d1e37f731043c8f4fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The election described in paragraphs [860-50-35-1 through 35-5](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-1) shall be made separately for each class of servicing assets and servicing liabilities. ##### [860-50-35-3](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:33d0c83d4c5990af64a52fc4b16f7c73ae8c60274b637844f75305d1b61b8524 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance applies to the election of a method for subsequent measurement of servicing assets and servicing liabilities: 1. a Once an entity elects the fair value measurement method for a class of servicing assets and servicing liabilities, that election shall not be reversed. 2. b Different elections can be made for different classes of servicing assets and servicing liabilities. 3. c Once a servicing asset or a servicing liability is reported in a class of servicing assets and servicing liabilities that an entity elects to subsequently measure at fair value, that servicing asset or servicing liability shall not be placed in a class of servicing assets and servicing liabilities that is subsequently measured using the amortization method. 4. d An entity may make an irrevocable decision to subsequently measure a class of servicing assets and servicing liabilities at fair value at the beginning of any fiscal year. 5. e Transferring servicing assets and servicing liabilities from a class subsequently measured using the amortization method to a class subsequently measured at fair value is permitted as of the beginning of any fiscal year. If an entity makes such a [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."), subsequent measurement of servicing assets and servicing liabilities at fair value shall be applied prospectively with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year to reflect the difference between the fair value and the carrying amount, net of any related valuation allowance, of the servicing assets and servicing liabilities that exist at the beginning of the fiscal year in which the entity makes the fair value election. 6. f If an entity recognizes a new class of servicing assets and servicing liabilities, and no servicing assets and servicing liabilities that would belong to this class had previously been recognized by the entity, the entity may elect to subsequently measure that new class of servicing assets and servicing liabilities at fair value at the date of initial recognition of those servicing assets and servicing liabilities. ##### [860-50-35-4](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:0c0fdc1383529bd7d182983ed88d7625cb0a89d7b26724939db13f11c96b835a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall apply the same subsequent measurement method to each servicing asset and servicing liability in a class. ##### [860-50-35-5](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:c0f065d936faa11864a3837963b7864db640ebac25827776acc664525e9ac6a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Classes of servicing assets and servicing liabilities shall be identified based on any of the following: 1. a The availability of market inputs used in determining the fair value of servicing assets or servicing liabilities 2. b An entity's method for managing the risks of its servicing assets or servicing liabilities. ##### [860-50-35-6](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:c507341b6c3aa01702531d932cc53a3a19841640ff611a31f75c0f9f3586e12a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the approach in the preceding paragraph, a servicer may or may not consider the major asset type of the underlying [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.") being serviced when identifying its classes of separately recognized servicing assets and servicing liabilities. Further, this approach for defining classes of servicing assets and servicing liabilities is not analogous to the stratification guidance for determining impairment of servicing assets or servicing liabilities that are subsequently measured using the amortization method. ##### [860-50-35-7](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:84c11f6fa5c18146e214baeadf2843b1cdc2b664acc4f891bbaf086654875252 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall first identify its classes of separately recognized servicing assets and servicing liabilities under the approach in paragraph [860-50-35-5](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-5). For any class subsequently measured using the amortization method, an entity shall then stratify that class to determine if impairment has occurred, as discussed in paragraph [860-50-35-9(a)](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-9). ##### [860-50-35-8](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:5568aab9f09e9a35ba05e812299b4aa5c63c6d36cb8b10597e88055a3d6740d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remainder of this Section discusses the following matters: 1. a Amortization method—measurement of impairment or increased obligation 2. b [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 3. c Obligation to service refinanced financial assets. #### Amortization Method—Measurement of Impairment or Increased Obligation ##### [860-50-35-9](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:f0199f2e2308c06b03d2f16e55ed604cc6fe546dcae88f3c508ea63535ac4d50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall evaluate and measure impairment of each class of separately recognized servicing assets that are subsequently measured using the amortization method described in paragraph [860-50-35-1(a)](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-1) as follows: 1. a Stratify servicing assets within a class based on one or more of the predominant risk characteristics of the underlying financial assets. Those characteristics may include financial asset type, size, interest rate, date of origination, term, and geographic location. For mortgage loans, financial asset type refers to the various conventional or government guaranteed or insured mortgage loans and adjustable-rate or fixed-rate mortgage loans. 2. b Recognize impairment through a valuation allowance for an individual stratum. The amount of impairment recognized separately shall be the amount by which the carrying amount of servicing assets for a stratum exceeds their fair value. The fair value of servicing assets that have not been recognized shall not be used in the evaluation of impairment. 3. c Adjust the valuation allowance to reflect changes in the measurement of impairment after the initial measurement of impairment. Fair value in excess of the carrying amount of servicing assets for that stratum, however, shall not be recognized. ##### [860-50-35-10](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:ac8239e50f5faf5f29290f151a6e908f59582d0d04784238312ccacf0bdccdc4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not address when an entity should record a direct write-down of recognized servicing assets. ##### [860-50-35-11](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:38c4439cf70f630233876871fb54bb0eb96855cd788722badc2bcbadf3fd105f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For servicing liabilities subsequently measured using the amortization method, if subsequent events have increased the fair value of the liability above the carrying amount, for example, because of significant changes in the amount or timing of actual or expected future cash flows relative to the cash flows previously projected, the servicer shall revise its earlier estimates and recognize the increased obligation as a loss in earnings. That is, if subsequent events increase the fair value of a stratum of servicing liabilities within a class that an entity has elected to subsequently measure using the amortization method, that increase shall be recognized in earnings as a loss. Similar to the accounting for changes in a valuation allowance for an impaired asset, increases in the servicing obligation may be recovered, but the obligation shall not be reduced below the amortized measurement of the initially recognized servicing liability. ##### [860-50-35-12](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:6394775ac27a3a6cad1722b5cbf91dce229e62bc3469c6109d978df2655c0634 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The impairment provisions of paragraphs [860-50-35-9](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-9) and [860-50-35-11](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-11) for classes of servicing assets and servicing liabilities subsequently measured using the amortization method are based on the fair value of the contract rather than the gain or loss from subsequently carrying out the terms of the contract. ##### [860-50-35-13](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:568d951273768333d1e20180e010dd5ddd67089436fb126a6de3ed6d80abe885 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity is not required to use either the most predominant risk characteristic or more than one predominant risk characteristic to stratify the servicing assets for purposes of evaluating and measuring impairment. An entity must exercise judgment when determining how to stratify servicing assets (that is, when selecting the most appropriate characteristic\[s\] for stratification). An entity may use different stratification criteria for the purposes of impairment testing under this Subtopic and for the purposes of grouping similar assets to be designated as a hedged portfolio in a fair value hedge under Subtopic 815-20. If an entity chooses not to restratify servicing assets for impairment testing under this Subtopic consistent with any restratification done for compliance with hedging criteria under Subtopic 815-20, the entity shall record any adjustments resulting from a fair value hedge to the risk strata used for impairment testing under paragraph [860-50-35-9](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-9). ##### [860-50-35-14](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:0ddb681984ffc14ac0713dd14c2e266fa4a9a5be6c9c0ff2ee552ed499f98635 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Once an entity has determined the predominant risk characteristics to be used in identifying the resulting stratums within each class of servicing assets subsequently measured using the amortization method, that decision shall be applied consistently unless significant changes in economic facts and circumstances clearly indicate that the predominant risk characteristics and resulting stratums should be changed. If a significant change in economic facts and circumstances occurs, that change shall be accounted for prospectively as a change in accounting estimate in accordance with paragraphs [250-10-45-17 through 45-19](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-17) and [250-10-50-4](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-4). ##### [860-50-35-15](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:547579ba42972eb71f29864f815c736edf3ec01f9376be3c92e79ff12557eb69 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/). ##### [860-50-35-16](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:b2016dad68c703ee3f322ce5ff74bd65c635fe6a9f8d0e704803afab2d0f5173 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/). #### Obligation to Service Refinanced Mortgage Loans ##### [860-50-35-17](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:d98846a94f70284cd7c56d2404ace44541dddbef85224ff561ed51857a01f1ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When an entity that is servicing mortgage loans refinances a mortgage loan that is being serviced (resulting in prepayment of the old mortgage loan and origination of a new mortgage loan), the entity shall not consider the estimated future net servicing income (that is, servicing revenue in excess of servicing costs) from the new mortgage loan in determining how to amortize any capitalized cost related to acquiring the mortgage servicing asset for the old mortgage loan. The mortgage servicing asset represents a contractual relationship between the servicer and the investor in the mortgage loan, not between the servicer and the borrower. ##### [860-50-35-18](https://asc.understandingaccounting.org/asc/860/50/#860-50-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:18.331Z to 2026-09-10T02:08:18.331Z Record version: sha256:c8c53a45c9dfa10ebdfa88178a0cf38cba83dc04cf2e24a5b7a0aee23f7e41d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cost of a mortgage servicing asset that is subsequently measured using the amortization method may require adjustment as a result of the refinancing transaction depending on the servicer's assumptions in recording the servicing asset. If the refinancing transaction represents prepayment activity anticipated by the servicer when the servicing asset was recorded, an adjustment would not be necessary. However, if actual prepayments differ from anticipated prepayments, an adjustment to the servicing asset would be required. If the servicing assets or liabilities are subsequently measured using the fair value measurement method, the entity shall recognize any adjustment as a result of the refinancing transaction directly in earnings.