foreclosure

ASC 310-40 formerly contained the creditor's accounting for troubled debt restructurings (TDRs) — the definition of a TDR, measurement of impairment on restructured loans, accounting for assets or equity interests received in satisfaction of a receivable, and TDR-specific disclosures. Every operative paragraph has been superseded, principally by ASU 2022-02 (which eliminated the TDR model for creditors that have adopted ASC 326), with earlier deletions by ASU 2016-13 and ASU 2014-09. The subtopic is now an empty shell: creditors account for modifications to borrowers experiencing financial difficulty under ASC 326 and ASC 310-10 instead.

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).