Wiley GAAP 2021, 2nd Edition

34ASC 480 DISTINGUISHING LIABILITIES FROM EQUITY

1. Perspective and Issues
   1. Subtopic
   2. Scope and Scope Exceptions
      1. ASC 480
   3. Overview
2. Definitions of Terms
3. Concepts, Rules, and Examples
   1. Initial Recognition and Measurement
      1. Mandatorily Redeemable Financial Instruments
      2. Obligations to Repurchase Shares
      3. Obligations to Issue a Variable Number of Shares
   2. Subsequent Measurement
      1. Certain Physically Settled Forward Purchase Contracts and Mandatorily Redeemable Financial Instruments
      2. Example of Mandatorily Redeemable Stock (Ref.: ASC 480‐10‐55‐10 and 25‐7)
      3. Contingent Consideration in a Business Combination
      4. All Other Financial Instruments
      5. Freestanding Instrument Involving Multiple Components That May Be Settled in a Variable Number of Shares
   3. Application of ASC 480
      1. Example—Obligations That Require Net Share Settlement: Monetary Value Changes in the Same Direction as the Fair Value of the Issuer’s Equity Shares
      2. Example—Obligations That Require Net Share Settlement: Monetary Value Changes in Opposite Direction as the Fair Value of the Issuer’s Equity Shares (Ref.: ASC 480‐10‐55‐26 and 25‐14(c))
      3. Example—Written Put Options That Require Physical Settlement (Ref.: ASC 480‐10‐55‐27)
      4. Example—Forward Purchase Contract That Requires Physical or Net Cash Settlement (Ref.: ASC 480‐10‐55‐14 and 25‐8 through 25‐12)
      5. Example—Written Put Options That Require Net Share Settlement
      6. Example—Unconditional Obligation That Must Be Either Redeemed for Cash or Settled by Issuing Shares (ASC 480‐10‐55‐27 and 28 and ...