Wiley GAAP 2019

33ASC 460 GUARANTEES

PERSPECTIVE AND ISSUES

Subtopic

ASC 460, Guarantees, consists of one subtopic:

• ASC 460-10, Overall, which provides requirements to be met by a guarantor for certain guarantees issued and outstanding.

ASC 460-10 has two subsections:

1. General, which discusses the guarantor’s recognition and disclosure of a liability at the inception of a guarantee
2. Product Warranties

Additional sources of guidance are listed in the “Other Sources” section at the end of this chapter.

Scope and Scope Exceptions

ASC 460 applies to all entities. ASC 460 applies to guarantee contracts that contingently require the guarantor to make payments (either in cash, financial instruments, shares of its stock, other assets, or in services) to the guaranteed party based on any of the following circumstances:

• Another entity’s failure to perform under an obligating agreement. For example, the provisions apply to a performance standby letter of credit, which obligates the guarantor to make a payment if the specified entity fails to perform its nonfinancial obligation.
• Changes in a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or any other variable, including the occurrence or nonoccurrence of a specified event that is related to an asset or liability of the guaranteed party.
• The occurrence of a specified event or circumstance in an indemnification agreement that requires the indemnifying party to pay an indemnified party based ...