To determine the appropriate interest income recognition model, a reporting entity must first consider the nature of the financial instrument, any industry-specific guidance, and the accounting model being applied to the instrument.Many instruments are subject to the interest income guidance in ASC 310, Receivables. Although the guidance is written referencing receivables, debt securities also fall in the scope of ASC 310.
Excerpt from ASC 310-20-15-2
The guidance in this Subtopic explicitly includes the following transactions:
b. The accounting for discounts, premiums, and commitment fees associated with the purchase of loans and other debt securities such as corporate bonds, Treasury notes and bonds, groups of loans, and loan-backed securities (such as pass-through certificates, collateralized mortgage obligations, and other so-called securitized loans)
