Wiley GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles

34   ASC 480 DISTINGUISHING LIABILITIES FROM EQUITY

Perspective and Issues

Subtopic

Scope and scope exceptions

Overview

Definitions of Terms

Concepts, Rules, and Examples

Applicability of ASC 480

Initial and subsequent measurement

Gain or loss on retirement of redeemable instruments

Mandatorily Redeemable Shares and Similar Instruments

Obligations to issue shares

Obligations to repurchase shares

Application of ASC 480

Example—Obligations that require net share settlement—monetary value changes in the same direction as the fair value of the issuer's equity shares

Example—Obligations that require net share settlement—monetary value changes in opposite direction as the fair value of the issuer's equity shares

Example—Written put options that require physical settlement

Example—Forward purchase contract that requires physical or net cash settlement

Example—Written put option that require net share settlement

Example—Unconditional obligation that must be either redeemed for cash or settled by issuing shares

Example of mandatorily redeemable preferred shares

Example of shares that are mandatorily redeemable at the death of the holder

Example of mandatorily redeemable preferred shares (continued)

Example of a contract with a fixed monetary amount known at inception

Example of a written put option on a fixed number of shares

Example of a forward contract with a variable settlement date

PERSPECTIVE AND ISSUES

Subtopic

ASC 480, Distinguishing Liabilities from Equity Topic, contains one Subtopic: ...