PERSPECTIVE AND ISSUES
ASC 450, Contingencies, contains guidance for reporting and disclosure of gain and loss contingencies and has three subtopics:
- ASC 450-10, Overall, which, along with ASC 450-20450-30, provides guidance on accounting and disclosures for contingencies.
- ASC 450-20, Loss Contingencies, which describes accounting for potential liabilities in circumstances involving uncertainties.
- ASC 450-30, Gain Contingencies, which describes accounting and disclosure requirements for gain contingencies.
Scope and Scope Exceptions
ASC 450-10 applies to all entities. Not all uncertainties are contingencies. ASC 450-10-55 points out several common estimates that do not fall under the contingency guidance:
- Estimates used in accruals
- Changes in tax law.
ASC 450 guidance does not apply to the recognition and initial measurement of:
- Assets or liabilities arising from contingencies that are measured at fair value or
- Assets arising from contingencies measured at an amount other than fair value on the acquisition date in a business combination or
- An acquisition by a not-for-profit entity under the requirements of Subtopic 805-20 or 958-805.
- ASC 450-10-15-2A
The following transactions are excluded from the guidance in ASC 450-20 because their guidance is elsewhere in the Codification:
- Stock issued to employees. (ASC 718)
- Employment-related costs, including deferred compensation contracts. (ASC 710, ...