realization

ASC 450-30 governs gain contingencies — existing conditions or situations involving uncertainty that may result in a future gain to the entity. The core rule is asymmetric to loss contingencies: a gain contingency usually should not be reflected in the financial statements, because doing so might recognize revenue before it is realized (450-30-25-1). Instead, adequate disclosure is required, worded carefully so as not to imply that realization is more likely than it is (450-30-50-1).

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).