# ASC 205-30-25: Presentation of Financial Statements — Liquidation Basis of Accounting — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/205/30/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T22:53:46.857Z to 2026-09-09T22:53:46.857Z Record version: sha256:aa9b2a033f0d52a444a67d7b8b83b45d75fdf931e95f9a068ef1c3d25ecf1075 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 205-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/205/30/#25-recognition) SEC content: no ##### [205-30-25-1](https://asc.understandingaccounting.org/asc/205/30/#205-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-09T22:53:46.857Z to 2026-09-09T22:53:46.857Z Record version: sha256:df76e8ce820b92fbe26d5f2e01ec9035653351736cfe1f21550962900fc19139 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall prepare financial statements in accordance with the requirements of this Subtopic when [liquidation](https://asc.understandingaccounting.org/glossary/l/#liquidation "The process by which an entity converts its assets to cash or other assets and settles its obligations with creditors in anticipation of the entity ceasing all activities. Upon cessation of the entity's activities, any remaining cash or other assets are distributed to the entity's investors or other claimants (albeit sometimes indirectly). Liquidation may be compulsory or voluntary. Dissolution of an entity as a result of that entity being acquired by another entity or merged into another entity in its entirety and with the expectation of continuing its business does not qualify as liquidation.") is imminent unless the liquidation follows a plan for liquidation that was specified in the entity's governing documents at the entity's inception. ##### [205-30-25-2](https://asc.understandingaccounting.org/asc/205/30/#205-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-09T22:53:46.857Z to 2026-09-09T22:53:46.857Z Record version: sha256:60183de97b9c58d6da80481125d4a2c6cc1f4d61a5fff7c2fb6b3a28eb640f20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Liquidation is imminent when either of the following occurs: 1. a A plan for liquidation has been approved by the person or persons with the authority to make such a plan effective, and the likelihood is [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight.") that any of the following will occur: 1. 1 Execution of the plan will be blocked by other parties (for example, those with shareholder rights) 2. 2 The entity will return from liquidation. 2. b A plan for liquidation is imposed by other forces (for example, involuntary bankruptcy), and the likelihood is remote that the entity will return from liquidation. ##### [205-30-25-3](https://asc.understandingaccounting.org/asc/205/30/#205-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-09T22:53:46.857Z to 2026-09-09T22:53:46.857Z Record version: sha256:1649e19e4c1e8305c270db306f9e5fd91d94b5543dc7b7ad7e0a27393041e20d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall presume that its plan of liquidation does not follow a plan that was specified in the entity's governing documents at its inception if the entity is forced to dispose of its assets in exchange for consideration that is not commensurate with the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of those assets. Other aspects of the entity's plan of liquidation also might differ from a plan that was specified in the entity's governing documents at its inception (for example, the date at which liquidation shall commence). However, those factors should be considered in determining whether to apply the liquidation basis of accounting only to the extent that they affect whether the entity expects to receive consideration in exchange for its assets that is not commensurate with fair value. ##### [205-30-25-4](https://asc.understandingaccounting.org/asc/205/30/#205-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-09T22:53:46.857Z to 2026-09-09T22:53:46.857Z Record version: sha256:7210a749d6d7956a1391ba39560391eb54005b660240e219a6c51c286941ee23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When using the liquidation basis of accounting, an entity shall recognize other items that it previously had not recognized (for example, trademarks) but that it expects to either sell in liquidation or use to settle liabilities. Those items may be recognized in the aggregate. ##### [205-30-25-5](https://asc.understandingaccounting.org/asc/205/30/#205-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-09T22:53:46.857Z to 2026-09-09T22:53:46.857Z Record version: sha256:969734df2547bb6b596b31b62d82528c05af224bf7facf3f6719839795e7243a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall recognize liabilities in accordance with the recognition provisions of other Topics that otherwise would apply to those liabilities, including paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1). ##### [205-30-25-6](https://asc.understandingaccounting.org/asc/205/30/#205-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-09T22:53:46.857Z to 2026-09-09T22:53:46.857Z Record version: sha256:6e7b217d478049d96c29bf3d9e63f0ccc73c3c73098dcd001c1569a6e8ea74c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall accrue estimated costs to dispose of assets or other items that it expects to sell in liquidation and present those costs in the aggregate separately from those assets or items. ##### [205-30-25-7](https://asc.understandingaccounting.org/asc/205/30/#205-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-09T22:53:46.857Z to 2026-09-09T22:53:46.857Z Record version: sha256:bdc9b9025c27d98bcd79dd5288f8f7eb453df64a259693a5ffd0704c6fab7be8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall accrue costs and income that it expects to incur or earn (for example, payroll costs or income from preexisting orders that the entity expects to fulfill during liquidation) through the end of its liquidation if and when it has a reasonable basis for estimation.