Chapter 4 — Initial Recognition and Measurement of Debt

4.3 Debt Subject to ASC 835-30

4.3.1 Background

ASC 835-30 provides guidance on the initial measurement of debt for which the issuer has not elected the fair value option in ASC 815-15 (see Section 8.5.6) or ASC 825-10 (see Section 4.4). Certain types of payables are exempt from the scope of this guidance (see the next section). While debt is initially measured at the present value of the debt’s contractual cash flows (see Section 4.3.3), the initial measurement guidance in ASC 835-30 on debt issued in exchange for cash (see Section 4.3.4) is different from that on debt issued in exchange for property, goods, or services (see Section 4.3.5). Section 4.3.6 describes the concepts of discount and premium.

4.3.2 Scope

ASC 835-30

15-3 With the exception of guidance in paragraphs 835-30-45-1A through 45-3 addressing the presentation of discount and premium in the financial statements, which is applicable in all circumstances, and the guidance in paragraphs 835-30-55-2 through 55-3 regarding the application of the interest method, the guidance in this Subtopic does not apply to the following:

Payables arising from transactions with suppliers in the normal course of business that are due in customary trade terms not exceeding approximately one year
Amounts that do not require repayment in the future, but rather will be applied to the purchase price of the property, goods, or service involved . . .
Amounts intended to provide security for one party to an agreement (for example, security deposits, retainages on contracts)
The customary cash lending activities and demand or savings deposit activities of financial institutions whose primary business is lending money
Transactions where interest rates are affected by the tax attributes or legal restrictions prescribed by a governmental agency (for example, industrial revenue bonds, tax exempt obligations, government guaranteed obligations, income tax settlements)
Transactions between parent and subsidiary entities and between subsidiaries of a common parent
The application of the present value measurement (valuation) technique to estimates of contractual or other obligations assumed in connection with sales of property, goods, or service, for example, a warranty for product performance
Receivables, contract assets, and contract liabilities in contracts with customers, see paragraphs 606-10-32-15 through 32-20 for guidance on identifying a significant financing component in a contract with a customer.

The initial measurement guidance in ASC 835-30 applies to both receivables and payables other than items (1) for which the entity has elected the fair value option in ASC 815-15 (see Section 8.5.6) or ASC 825-10 (see Section 4.4) or (2) that meet one or more of the scope exceptions in ASC 835-30. ASC 835-30-15-3 includes the following scope exceptions:

Payables resulting from the purchase of goods or services from suppliers in the normal course of business on customary terms not exceeding approximately one year (i.e., trade payables).
Payables to a parent, subsidiary, or entity under common control.
Debt that has an interest rate that is “affected by the tax attributes or legal restrictions prescribed by a governmental agency” such as “industrial revenue bonds, tax exempt obligations, government guaranteed obligations, [and] income tax settlements.”
Certain obligations associated with sales of property, goods, or services:
- Amounts that will be applied as a reduction to the price of property, goods, or services, such as deposits, advances, and progress payments (see Deloitte’s Roadmap Revenue Recognition for a discussion of the accounting for revenue contracts with a significant financing component).
- Warranties for product performance and other obligations assumed in connection with sales of property, goods, or services.
- Contract liabilities (i.e., under ASC 835-30-20, “[a]n entity’s obligation to transfer goods or services to a customer for which the entity has received consideration . . . from the customer”; see Deloitte’s Roadmap Revenue Recognition).
Security deposits.
Customary cash lending activities and demand or savings deposit activities of financial institutions.

4.3.3 Present Value Concepts

A key concept in ASC 835-30 is that the initial measurement of debt represents the present value of the debt’s principal and interest cash flows, discounted by using an appropriate interest rate. As discussed in Section 2.3.1.1 of Deloitte’s Roadmap Fair Value Measurements and Disclosures (Including the Fair Value Option), when a note payable (i.e., debt) is initially recognized on the basis of a present value technique under ASC 835-30, the measurement is a fair value measurement subject to the guidance in ASC 820.

If debt is issued solely for cash and no other rights or privileges are involved, there is a presumption that present value equals the cash proceeds received (see Section 4.3.4). In this circumstance, the debtor identifies the appropriate discount rate (i.e., the debt’s effective interest rate) by equating the cash proceeds received to the debt’s contractual cash flows (see Section 6.2.3.3). If debt is issued in exchange for property, goods, or services, however, the stated interest rate may not be an appropriate discount rate (see Section 4.3.5.1). Consequently, if interest is imputed at an appropriate rate (i.e., the debt’s contractual cash flows are discounted by using an appropriate imputed discount rate that differs from the stated interest rate), the debt is recognized at a discount or premium (see Section 4.3.6). The discount or premium represents the difference between the principal amount of the debt and the present value of the contractual cash flows, calculated by using a discount rate that is appropriate in the circumstances.

ASC 835-30

Example 1: Illustration of Present Value Concepts

55-4 This Example illustrates the guidance in paragraphs 835-30-05-2, 835-30-25-3 through 25-4, and 835-30-25-10 through 25-11 that the coupon or stated rate of interest and the face amount of a note or bond may not be the appropriate bases for valuation. The presumption that market values provide the evidence for valuation must be overcome before using coupon or stated rates and face or maturity amounts as the bases for accounting.

55-5 Upon issuance of a note or bond, the issuer customarily records as a liability the face or principal amount of the obligation. Ordinarily, the recorded liability also represents the amount that is to be repaid upon maturity of the obligation. The value recorded in the liability account, however, may be different from the proceeds received or the present value of the obligation at issuance if the market rate of interest differs from the coupon rate of interest. For example, consider the issuance of a $1,000, 20-year bond that bears interest at 10% annually. If we assume that 10% is an appropriate market rate of interest for such a bond, the proceeds at issuance will be $1,000. The bond payable would be recorded at $1,000, which represents the amount repayable at maturity and also the present value at issuance, which is equal to the proceeds. However, under similar circumstances, if the prevailing market rate were more (less) than 10%, a 20-year 10% bond with a face amount of $1,000 would usually have a value at issuance and provide cash proceeds of less (more) than $1,000. The significant point is that, upon issuance, a bond is valued at the present value of the future coupon interest payments plus the present value of the future principal payments (face amount). These two sets of future cash payments are discounted at the prevailing market rate of interest (for an equivalent security) at the date of issuance of the debt. As the 8% and 12% columns show, premium or discount arises when the prevailing market rate of interest differs from the coupon rate.

55-6 In the case of a $1,000 non-interest-bearing 20-year note, where the prevailing market rate for comparable credit risks is 10%, the following valuation should be made.

55-7 Comparison of the two tables shows the significant impact of interest.

4.3.4 Debt Issued in Exchange For Cash

ASC 835-30

25-4 When a note is received or issued solely for cash and no other right or privilege is exchanged, it is presumed to have a present value at issuance measured by the cash proceeds exchanged. If cash and some other rights or privileges are exchanged for a note, the value of the rights or privileges shall be given accounting recognition as described in paragraph 835-30-25-6.

25-6 A note issued solely for cash equal to its face amount is presumed to earn the stated rate of interest. However, in some cases the parties may also exchange unstated (or stated) rights or privileges, which are given accounting recognition by establishing a note discount or premium account. In such instances, the effective interest rate differs from the stated rate. For example, an entity may lend a supplier cash that is to be repaid five years hence with no stated interest. Such a non-interest-bearing loan may be partial consideration under a purchase contract for supplier products at lower than the prevailing market prices. In this circumstance, the difference between the present value of the receivable and the cash loaned to the supplier is appropriately regarded as an addition to the cost of products purchased during the contract term. The note discount shall be amortized as interest income over the five-year life of the note, as required by Section 835-30-35.

Nonauthoritative AICPA Guidance

Technical Q&As Section 5220, “Interest Expense”

.07 Imputed Interest on Note Exchanged for Cash Only

Inquiry — If an enterprise receives cash in exchange for a non-interest bearing long-term note payable with a stated amount equal to the cash received, must interest be imputed on the note in accordance with FASB ASC 835, Interest?

Reply — If there are rights or privileges other than cash attendant to the exchange, the value of such rights or privileges should be given accounting recognition pursuant to FASB ASC 835-30-25-6. If the note is issued solely for cash (that is, the cash received is equivalent to the face amount of the note) and no other right or privilege is exchanged, it is presumed to have a present value at issuance measured by the cash proceeds exchanged.

When an entity issues debt in a cash transaction that does not include any other elements for which separate accounting recognition is required (e.g., freestanding financial instruments or other stated or unstated rights or privileges that warrant separate accounting recognition; see Section 3.3) and the entity has not elected the fair value option in ASC 815-15 (see Section 8.5.6) or ASC 825-10 (see Section 4.4), a presumption exists that the debt should be initially measured at the amount of cash proceeds received from the holder, adjusted for debt issuance costs (see Chapter 5). Any difference between the stated principal amount and the amount of the cash proceeds received, net of debt issuance costs, is presented as a discount or premium (see Section 4.3.6).

If a debt issuance includes other freestanding financial instruments or other elements that warrant separate accounting recognition (see Section 3.3), the cash proceeds should be allocated among the debt and those other units of account as follows: first to any instrument that must be measured at fair value, with changes recognized in earnings, and then to items not accounted for at fair value. If the issuer is required to recognize as an asset any freestanding financial instrument included in the transaction, the amount attributed to that asset would be added to the amount of proceeds that is allocated among the freestanding financial instruments that represent liabilities (and any equity instruments issued). See Section 3.4 for additional discussion of the allocation of proceeds and issuance costs.

Factors to consider in the determination of whether a transaction includes other elements that should be recognized separately include (1) whether the effective interest rate calculated on the basis of the proceeds allocated to the debt would be unreasonable given the general level of interest rates, (2) the issuer’s creditworthiness, and (3) the debt’s initial fair value. If the transaction conveys rights or privileges unrelated to the debt, the issuer should recognize such rights or privileges separately from the debt. If the amount attributed to such rights or privileges represents an asset or expense, such amount is added to the proceeds that are allocated to the debt and any other freestanding financial liabilities or equity instruments issued. If the transaction includes terms that meet the definition of a registration payment arrangement, the issuer should also consider whether any amount should be allocated to that arrangement. See Section 3.3.3 for additional discussion.

If the terms of a debt instrument include embedded features or other components that must be recognized separately from the debt (e.g., any bifurcated embedded derivative under ASC 815-15 or equity component under ASC 470-20), the amount attributable to such features or components is allocated from the amount of proceeds allocated to the debt after allocation to any other freestanding financial instruments.

4.3.5 Debt Issued in Exchange for Property, Goods, or Services

4.3.5.1 General

ASC 835-30

05-2 Business transactions often involve the exchange of cash or property, goods, or service for a note or similar instrument. When a note is exchanged for property, goods, or service in a bargained transaction entered into at arm’s length, there should be a general presumption that the rate of interest stipulated by the parties to the transaction represents fair and adequate compensation to the supplier for the use of the related funds. That presumption, however, must not permit the form of the transaction to prevail over its economic substance and thus would not apply if interest is not stated, the stated interest rate is unreasonable, or the stated face amount of the note is materially different from the current cash sales price for the same or similar items or from the fair value of the note at the date of the transaction. The use of an interest rate that varies from prevailing interest rates warrants evaluation of whether the face amount and the stated interest rate of a note or obligation provide reliable evidence for properly recording the exchange and subsequent related interest.

25-7 A note exchanged for property, goods, or service represents the following two elements, which may or may not be stipulated in the note:

The principal amount, equivalent to the bargained exchange price of the property, goods, or service as established between the supplier and the purchaser
An interest factor to compensate the supplier over the life of the note for the use of funds that would have been received in a cash transaction at the time of the exchange.

25-8 Notes exchanged for property, goods, or services are valued and accounted for at the present value of the consideration exchanged between the contracting parties at the date of the transaction in a manner similar to that followed for a cash transaction.

When an entity issues debt in exchange for property, goods, or services in a bargained transaction entered into at arm’s length (i.e., the debtor is the purchaser of property, goods, or services), and there are no other separate elements in the transaction, there is a general presumption that the debt’s stated rate of interest represents fair and adequate compensation for the debtor’s use of the funds. In such cases, the debt is initially measured at the present value of the contractual cash flows, discounted by using the stated interest rate (i.e., typically the stated principal amount) and adjusted for debt issuance costs (see Chapter 5), unless the issuer elects the fair value option in ASC 815-15 (see Section 8.5.6) or ASC 825-10 (see Section 4.4).

This presumption does not apply if (1) the debt has no stated interest; (2) the stated interest rate is unreasonable (e.g., it does not reflect the general level of interest rates or the issuer’s creditworthiness); (3) the debt’s stated amount is materially different from the current cash sales price for the same or similar items of property, goods, or services; or (4) the debt’s stated amount is materially different from the debt’s fair value on the date of the transaction. If the presumption is inapplicable, the issuer must use other methods to determine the debt’s initial measurement (see Section 4.3.5.2).

If the terms of a debt instrument include embedded features or components that must be recognized separately from the debt (e.g., any bifurcated embedded derivative under ASC 815-15), the amount attributed to such features or components is allocated out of the initial measurement amount.

4.3.5.2 Circumstances in Which the Presumption Does Not Apply

ASC 835-30

05-3 This Subtopic provides guidance for the appropriate accounting when the face amount of a note does not reasonably represent the present value of the consideration given or received in the exchange. This circumstance may arise if the note is non-interest-bearing or has a stated interest rate that is different from the rate of interest appropriate for the debt at the date of the transaction. Unless the note is recorded at its present value in this circumstance, the sales price and profit to a seller in the year of the transaction and the purchase price and cost to the buyer are misstated, and interest income and interest expense in subsequent periods are also misstated.

25-2 If determinable, the established exchange price (which, presumably, is the same as the price for a cash sale) of property, goods, or service acquired or sold in consideration for a note may be used to establish the present value of the note. When notes are traded in an open market, the market rate of interest and quoted prices of the notes provide the evidence of the present value. These methods are preferable means of establishing the present value of the note.

25-10 In circumstances where interest is not stated, the stated amount is unreasonable, or the stated face amount of the note is materially different from the current cash sales price for the same or similar items or from the fair value of the note at the date of the transaction, the note, the sales price, and the cost of the property, goods, or service exchanged for the note shall be recorded at the fair value of the property, goods, or service or at an amount that reasonably approximates the fair value of the note, whichever is the more clearly determinable. That amount may or may not be the same as its face amount, and any resulting discount or premium shall be accounted for as an element of interest over the life of the note.

If the stated rate of interest on debt issued in exchange for property, goods, or services does not represent fair and adequate compensation for the debtor’s use of funds, the issuer should determine whether price information is available for the property, goods, services, or debt. Such information would include current cash sales prices for the same or similar items of property, goods, or services or, if the debt is traded in an open market, the debt’s quoted price or market rate of interest. Paragraph 28 of FASB Concepts Statement 7 states, in part:

In the absence of a cash transaction, accountants turn to other techniques for the initial measurement of an asset or liability, but the measurement objective remains the same. The process begins by determining whether others have bought or sold the same or similar items in recent cash transactions.

If price information exists, the debt is initially measured at whichever amount more clearly represents the fair value of the property, goods, services, or debt. Any difference between the stated principal amount and the initial measurement amount is presented as a discount or premium (see Section 4.3.6). If there is no price information, the debt is initially measured at the present value of its principal and interest payments, discounted by using an imputed interest rate (see the next section).

4.3.5.3 Imputed Interest Rate

ASC Master Glossary

Imputed Interest Rate

The interest rate that results from a process of approximation (or imputation) required when the present value of a note must be estimated because an established exchange price is not determinable and the note has no ready market.

ASC 835-30

10-1 The objective of the guidance in this Subtopic is to approximate the rate for a note that would have resulted if an independent borrower and an independent lender had negotiated a similar transaction under comparable terms and conditions with the option to pay the cash price upon purchase or to give a note for the amount of the purchase that bears the prevailing rate of interest to maturity.

25-3 If an established exchange price is not determinable and if the note has no ready market, the problem of determining present value is more difficult. To estimate the present value of a note under such circumstances, an applicable interest rate is approximated that may differ from the stated or coupon rate. This process of approximation is called imputation, and the resulting rate is called an imputed interest rate. Nonrecognition of an apparently small difference between the stated rate of interest and the applicable current rate may have a material effect on the financial statements if the face amount of the note is large and its term is relatively long.

25-11 In the absence of established exchange prices for the related property, goods, or service or evidence of the fair value of the note (as described in paragraph 835-30-25-2), the present value of a note that stipulates either no interest or a rate of interest that is clearly unreasonable shall be determined by discounting all future payments on the notes using an imputed rate of interest. This determination shall be made at the time the note is issued, assumed, or acquired; any subsequent changes in prevailing interest rates shall be ignored.

25-12 Paragraph 835-30-10-1 identifies the objective of the guidance in this Subtopic for approximating an interest rate. The variety of transactions encountered precludes any specific interest rate from being applicable in all circumstances. However, this paragraph provides the following general guidelines:

The choice of a rate may be affected by the credit standing of the issuer, restrictive covenants, the collateral, payment and other terms pertaining to the debt, and, if appropriate, the tax consequences to the buyer and seller.
The prevailing rates for similar instruments of issuers with similar credit ratings will normally help determine the appropriate interest rate for determining the present value of a specific note at its date of issuance.
In any event, the rate used for valuation purposes shall be the rate at which the debtor can obtain financing of a similar nature from other sources at the date of the transaction.

25-13 The selection of a rate may be affected by many considerations. For instance, where applicable, the choice of a rate may be influenced by the following:

An approximation of the prevailing market rates for the source of credit that would provide a market for sale or assignment of the note
The prime or higher rate for notes that are discounted with banks, giving due weight to the credit standing of the maker
Published market rates for similar-quality bonds
Current rates for debentures with substantially identical terms and risks that are traded in open markets
The current rate charged by investors for first or second mortgage loans on similar property.

In determining the initial measurement of debt, an entity uses an imputed interest rate if all of the following conditions are met:

The debt was issued in exchange for property, goods, or services and does not represent a trade payable or other obligation that is exempt from ASC 835-30 (see Section 4.3.2).
Any of the following apply: (1) the debt has no stated interest; (2) the stated interest rate is unreasonable (e.g., it does not reflect the general level of interest rates or the issuer’s creditworthiness); (3) the debt’s stated amount is materially different from the current cash sales price for the same or similar items of property, goods, or services; or (4) the debt’s stated amount is materially different from the debt’s fair value on the date of the transaction.
There are no established exchange prices for the property, goods, or services.
The debt is not quoted in the open market.

The imputed rate represents an estimate of the interest rate at which the issuer could obtain financing of a similar nature from other sources. In other words, it is the rate that an independent borrower and lender would negotiate on the issuance date in a cash transaction under comparable terms and conditions.

Although ASC 835-30 does not explicitly describe how an entity uses an imputed rate to determine the debt’s present value as a fair value measurement, the FASB has affirmed that the fair value measurement guidance in ASC 820 related to the application of present value techniques applies to such measurements.

In estimating the imputed rate, the issuer would consider information about observed rates of interest for comparable debt as of the transaction date. Whether debt for which observable data are available can be compared depends on the debt’s characteristics such as the amount and timing of the contractual cash flows, the issuer’s creditworthiness (e.g., published credit rating), the seniority or subordination of the debt, collateral and other credit enhancements, restrictive covenants, tax treatment for the issuer and the holder, and any embedded features (e.g., put or call options).

If there is no debt instrument with substantially the same characteristics as the debt, the issuer might determine the imputed rate by using a build-up method that takes into account observable data related to the risk-free yield curve and credit spreads for similar debt, adjusted as appropriate for differences in the debt’s characteristics. In a manner similar to the objective of a fair value measurement, the issuer should maximize the use of observable inputs (e.g., quoted prices or rates in active markets for similar debt and inputs that are derived principally or corroborated by observable market data) and minimize the use of unobservable inputs.

Entities that determine the present value of debt by using an imputed rate may need to apply the guidance in ASC 820 related to discount rate adjustment techniques (ASC 820-10-55-10 through 55-12), the build-up method (ASC 820-10-55-33 and 55-34), the effect of an entity’s credit standing (ASC 820-10-55-57 and 55-57A), and the application of present value techniques to debt obligations (ASC 820-10-55-85 through 55-89). For additional discussion of the application of fair value measurement techniques, see Deloitte’s Roadmap Fair Value Measurements and Disclosures (Including the Fair Value Option).

Once the imputed rate has been determined, the issuer discounts the debt’s contractual cash flows by using that rate and recognizes the debt at its present value. Any difference between the debt’s present value and stated amount is presented as a discount or premium (see the next section).

4.3.6 Discounts and Premiums

ASC Master Glossary

Discount

The difference between the net proceeds, after expense, received upon issuance of debt and the amount repayable at its maturity. See Premium.

Premium

The excess of the net proceeds, after expense, received upon issuance of debt over the amount repayable at its maturity. See Discount.

ASC 835-30

25-5 . . . The difference between the face amount and the proceeds upon issuance is shown as either discount or premium. For example, if a bond is issued at a discount or premium, such discount or premium is recognized in accounting for the original issue. The coupon or stated interest rate is not regarded as the effective yield or market rate. Moreover, if a long-term non-interest-bearing note or bond is issued, its net proceeds are less than face amount and an effective interest rate is based on its fair value upon issuance.

25-9 The difference between the face amount and the present value upon issuance is shown as either discount or premium.

45-1A The discount or premium resulting from the determination of present value in cash or noncash transactions is not an asset or liability separable from the note that gives rise to it. Therefore, the discount or premium shall be reported in the balance sheet as a direct deduction from or addition to the face amount of the note. Similarly, debt issuance costs related to a note shall be reported in the balance sheet as a direct deduction from the face amount of that note. The discount, premium, or debt issuance costs shall not be classified as a deferred charge or deferred credit.

When the stated principal or face amount of a debt instrument differs from its initial carrying amount, a discount or premium arises. Under the interest method, a discount or premium is amortized over the debt’s life, typically to interest expense (see Sections 6.2 and 14.2.4).

Example 4-1

Issuance of Debt at a Discount

Entity D issues long-term debt with a principal amount of $100 million at a 2 percent discount to par for cash proceeds of $98 million. It makes the following entries:

Premiums and discounts are valuation accounts that do not exist separately from the related debt (i.e., they are not separate units of account). Therefore, an entity is not permitted to present premiums and discounts as assets or liabilities that are separate from the debt. Instead, debt discounts are treated as deductions from, and debt premiums are treated as additions to, the carrying amount of the debt to which they are related.

Economically, reasons for the existence of a discount or premium may include the following:

The debt’s stated interest rate differs from the market rate of interest for the instrument upon issuance. For example, if debt with a coupon rate of 6 percent is issued when the market rate of interest for similar debt is 5 percent, issuance of the debt at a premium to par would be expected since investors would be willing to invest an amount in excess of the principal amount to compensate for the above-market coupon rate. Conversely, if the market rate of interest exceeds the stated coupon rate upon issuance, issuance of the debt at a discount to par would be expected.
The debt is a zero-coupon instrument that pays no interest during its life. Zero-coupon instruments are generally issued at a discount to par; the discount represents compensation for the time value of money over the debt’s life.
The debt was issued with other freestanding financial instruments. For instance, ASC 470-20 requires the proceeds received for debt issued with detachable warrants (see Section 3.4.3.2) to be allocated between the debt and the warrants, resulting in a discount on the debt even if the transaction proceeds were equal to the principal amount of the debt.
The debt contains an embedded component that must be separated, such as an embedded derivative under ASC 815-15 (e.g., a bifurcated put, call, or conversion feature; see Chapter 8). For example, if debt was issued at par and contains an embedded redemption feature that must be bifurcated as a derivative liability under ASC 815-15, a debt discount would arise for accounting purposes.
The debt contains an embedded feature that is not accounted for separately from the debt. For instance, if the stated interest rate equals the market rate of interest for nonconvertible debt, but the debt contains a conversion feature that is not required to be accounted for separately from the debt, an investor should be willing to purchase the debt at a premium to par. (Note, however, that a substantial premium to par may need to be recognized in equity under ASC 470-20-25-13; see Section 7.6.)
The debtor paid a fee to the creditor as part of the debt issuance.
The debt is designated as a hedged item in a fair value hedging relationship under ASC 815-25, and the carrying amount has been adjusted for changes in fair value as a result of the application of fair value hedge accounting (see Section 14.2.1.2).

If the stated interest rate on a debt instrument is fixed at different levels during the life of the debt or includes an interest-free period, a discount or premium to the principal amount could arise after the initial recognition of the debt even if the debt was issued at par. For example, if a debt instrument has an increasing interest rate (or an initial interest-free period), the application of the interest method (see Chapter 6) by using a constant effective interest rate would be expected to result in the creation of a premium during the term of the debt.

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.