# ASC 321-958-05: Investments—Equity Securities — Not-for-Profit Entities — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/321/958/#05-overview-and-background)

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## ASC 321-958-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/321/958/#05-overview-and-background)

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##### [321-958-05-1](https://asc.understandingaccounting.org/asc/321/958/#321-958-05-1)

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The Not-for-Profit Entities Topic contains several Subtopics for investments held by [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs) because the guidance differs by form of the investment. The Subtopics are:

1.  a
    
    Financially Interrelated Entities
    
2.  b
    
    Investments—Debt Securities
    
3.  c
    
    Investments—Equity Securities
    
4.  d
    
    Investments—Other
    
5.  e
    
    Consolidation.

##### [321-958-05-2](https://asc.understandingaccounting.org/asc/321/958/#321-958-05-2)

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This Subtopic establishes incremental standards of financial accounting and reporting for investments in [equity securities](https://asc.understandingaccounting.org/glossary/e/#equity-security "Any security representing an ownership interest in an entity (for example, common, preferred, or other capital stock) or the right to acquire (for example, warrants, rights, forward purchase contracts, and call options) or dispose of (for example, put options and forward sale contracts) an ownership interest in an entity at fixed or determinable prices. The term equity security does not include any of the following: Written equity options (because they represent obligations of the writer, not investments) Cash-settled options on equity securities or options on equity-based indexes (because those instruments do not represent ownership interests in an entity) Convertible debt or preferred stock that by its terms either must be redeemed by the issuing entity or is redeemable at the option of the investor.") held by NFPs. Topic 321 establishes standards of financial accounting and reporting for investments in equity securities and other ownership interests in an entity.