# ASC 405-40-25: Liabilities — Obligations Resulting from Joint and Several Liability Arrangements — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/405/40/#25-recognition)

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## ASC 405-40-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/405/40/#25-recognition)

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##### [405-40-25-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-25-1)

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An entity shall recognize obligations resulting from joint and several liability arrangements when the arrangement is included in the scope of this Subtopic. In some circumstances, the arrangement is included in the scope of this Subtopic at the inception of the arrangement (for example, a debt arrangement); in other circumstances, the arrangement is included in the scope of this Subtopic after the inception of the arrangement (for example, when the total amount of the obligation becomes fixed, consistent with paragraph [405-40-15-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-15-1)).

##### [405-40-25-2](https://asc.understandingaccounting.org/asc/405/40/#405-40-25-2)

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The corresponding entry or entries shall depend on facts and circumstances of the obligation. Examples of corresponding entries include the following:

1.  a
    
    Cash for proceeds from a debt arrangement
    
2.  b
    
    An expense for a legal settlement
    
3.  c
    
    A receivable (that is assessed for impairment) for a contractual right
    
4.  d
    
    An equity transaction with an entity under common control.