Wiley Practitioner's Guide to GAAP 2022

34ASC 480 DISTINGUISHING LIABILITIES FROM EQUITY

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