Wiley GAAP 2019

36ASC 505 EQUITY

PERSPECTIVE AND ISSUES

Subtopics

ASC 505 consists of five subtopics:

• ASC 505-10, Overall, provides guidance on issues not addressed in the other ASC 505 subtopics
• ASC 505-20, Stock Dividends and Stock Splits, provides guidance for the recipient and the issuer
• ASC 505-30, Treasury Stock, provides guidance on an entity’s repurchase of its own shares of outstanding common stock and the subsequent retirement of those shares
• ASC 505-50, Equity-based Payments to Nonemployees, provides guidance for the issuer and the recipient
• ASC 505-60, Spin-offs and Reverse Spin-offs, provides guidance on the distribution of nonmonetary assets in spin-off transactions

Scope and Scope Exceptions

Guidance in ASC 505 generally applies to all entities unless more specific guidance is provided in other topics. (ASC 505-10-15-1) Specific exceptions follow.

ASC 505-20 applies to corporations and their stock dividends and stock splits, except it does not apply to:

• Distribution or issuance of shares of another corporation,
• Shares of a different class,
• Rights to subscribe for additional shares, and
• Shares of the same class where each shareholder is given an election to receive cash or shares.

• (ASC 505-20-15-1 through 3)

ASC 505-50 does not apply to share-based payment transactions in exchange for goods or services and modifications of existing arrangements. The guidance does not apply to transactions:

• With employees,
• With ESOPs, and
• Involving equity instruments issued to a lender ...