# ASC 405-40: Liabilities — Obligations Resulting from Joint and Several Liability Arrangements Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/40/) 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): 2026-09-10T00:14:46.909Z to 2026-09-10T00:15:14.537Z Record version: sha256:67eb03e66f32ef81003873160da986f5b10ab557b17074f49b3acc9059697c11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40: Liabilities — Obligations Resulting from Joint and Several Liability Arrangements ### Machine-generated study aids ```json { "summary": "ASC 405-40 governs how an entity recognizes, measures, and discloses obligations arising from joint and several liability arrangements when the total amount of the obligation is fixed at the reporting date (e.g., debt with co-obligors, settled litigation shared with other defendants). The core measurement rule is that the reporting entity records the amount it agreed to pay under its arrangement with co-obligors plus any additional amount it expects to pay on behalf of those co-obligors. Scope excludes obligations already covered by Topics 410, 450, 460, 715, and 740.", "key_points": [ "The Subtopic applies only when the total amount of the obligation is fixed at the reporting date, meaning no measurement uncertainty exists as to the total, though the total may later change for reasons unrelated to measurement uncertainty such as additional borrowings or interest rate changes (405-40-15-1).", "Obligations accounted for under Topic 410 (asset retirement/environmental), Topic 450 (contingencies), Topic 460 (guarantees), Topic 715 (retirement benefits), and Topic 740 (income taxes) are scoped out (405-40-15-1).", "The amount the entity expects to pay on behalf of co-obligors may be uncertain even though the total obligation is fixed (405-40-15-2).", "Recognition occurs when the arrangement enters the Subtopic's scope, which may be at inception (e.g., a debt arrangement) or later, when the total obligation becomes fixed (405-40-25-1).", "Initial measurement equals the amount the entity agreed to pay under the co-obligor arrangement plus any additional amount it expects to pay on behalf of co-obligors; within a range, use the best estimate, or the minimum of the range if no amount is a better estimate (405-40-30-1).", "The corresponding entry depends on facts and circumstances — examples include cash for debt proceeds, an expense for a legal settlement, a receivable assessed for impairment for a contractual right, or an equity transaction with a common-control entity (405-40-25-2).", "Required disclosures include the nature of the arrangement, the total outstanding amount not reduced by amounts recoverable from others, carrying amounts of the liability and any receivable, recourse provisions, and the corresponding entry and where it was recorded in the period of initial recognition or significant remeasurement (405-40-50-1); these are incremental to Topic 850 related-party disclosures (405-40-50-2)." ], "categories": [ "Recognition", "Initial measurement", "Subsequent measurement", "Disclosure" ], "audience_level": "intermediate", "student_note": "This Subtopic filled a gap where entities inconsistently reported only their allocated share of jointly owed debt or settlements; the common misunderstanding is thinking the entity records only its agreed share \\u2014 it must add amounts it expects to pay for co-obligors and must disclose the full outstanding amount without offsetting expected recoveries.", "related_topics": [ "410", "450", "460", "715", "740", "850" ], "key_concepts": [ "joint and several liability", "co-obligors", "fixed total obligation", "measurement uncertainty", "expected additional amount", "recourse provisions", "corresponding entry", "range of estimates" ] } ``` Source downloaded (UTC): 2026-09-10T00:14:46.909Z to 2026-09-10T00:14:46.909Z Record version: sha256:e29df78b7620bca80d91132c93ae4bfe5f1e02e8e9adea4a500be3b0ac3cdc5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/40/#00-status) SEC content: no ##### [405-40-00-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:46.909Z to 2026-09-10T00:14:46.909Z Record version: sha256:e7142e80d5732a46b7b150e992160e2df69e4023239831c81ff14766f43727b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Conduit Debt SecurityAddedMaintenance Update 2014-20 (PDF)09/29/2014
Nonpublic Entity (Def. 1)AmendedMaintenance Update 2014-20 (PDF)09/29/2014
Nonpublic EntityAddedAccounting Standards Update No. 2013-0402/28/2013
405-40-05-1AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-15-1AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-15-2AddedAccounting Standards Update No. 2016-1912/14/2016
405-40-25-1AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-25-2AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-30-1AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-30-2AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-35-1AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-50-1AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-50-2AddedAccounting Standards Update No. 2013-0402/28/2013
405-40-65-1AddedAccounting Standards Update No. 2013-0402/28/2013
Source downloaded (UTC): 2026-09-10T00:14:50.279Z to 2026-09-10T00:14:50.279Z Record version: sha256:e55cb078c4f64c0098a55664c93a6691ade6e005e99179fd7c74951e49169d85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/40/#05-overview-and-background) SEC content: no #### Overall Guidance ##### [405-40-05-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:50.279Z to 2026-09-10T00:14:50.279Z Record version: sha256:95303ce2a7edbae960e427ec33ee13fbde3cb28c2b1ea1c96bdb6a4f06d12cda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements. Source downloaded (UTC): 2026-09-10T00:14:53.557Z to 2026-09-10T00:14:53.557Z Record version: sha256:143f8d838c85fd9eb53c67d1e272142dca4be0495b4e97b027e31605f15e52bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/40/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-40-15-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:53.557Z to 2026-09-10T00:14:53.557Z Record version: sha256:0cd5fe5459139d6efcd999d73950137d04ac239cdc174514db099f91d35ecb76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to obligations resulting from joint and several liability arrangements for which the total amount under the arrangement is fixed at the reporting date, except for obligations otherwise accounted for under the following Topics: 1. a Asset Retirement and Environmental Obligations, see Topic 410 2. b Contingencies, see Topic 450 3. c Guarantees, see Topic 460 4. d Compensation—Retirement Benefits, see Topic 715 5. e Income Taxes, see Topic 740. For the total amount of an obligation under an arrangement to be considered fixed at the reporting date there can be no measurement uncertainty at the reporting date relating to the total amount of the obligation within the scope of this Subtopic. However, the total amount of the obligation may change subsequently because of factors that are unrelated to measurement uncertainty. For example, the amount may be fixed at the reporting date but change in future periods because an additional amount was borrowed under a line of credit for which an entity is jointly and severally liable or because the interest rate on a joint and several liability arrangement changed. ##### [405-40-15-2](https://asc.understandingaccounting.org/asc/405/40/#405-40-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:53.557Z to 2026-09-10T00:14:53.557Z Record version: sha256:a6a2b4252569f7864a4be77675fc5610b7323fd4ea717c38baa7a4c37332d11a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although the total amount of the obligation of the entity and its co-obligors must be fixed at the reporting date to be within the scope of this Subtopic, the amount that the entity expects to pay on behalf of its co-obligors may be uncertain at the reporting date. Source downloaded (UTC): 2026-09-10T00:14:59.218Z to 2026-09-10T00:14:59.218Z Record version: sha256:ecb72b5a25001777c2fbd507bbd11690fe756feb0d1683f6bd0526cacf52c326 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/40/#25-recognition) SEC content: no ##### [405-40-25-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:59.218Z to 2026-09-10T00:14:59.218Z Record version: sha256:973760e90aecca74dec623ba11e2e62c8633777a9347242f3a27afb35c1ca602 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:59.218Z to 2026-09-10T00:14:59.218Z Record version: sha256:43837b7d03e3358d1246cfdfabb0c651f67986c939f77180c76d044061362606 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T00:15:01.041Z to 2026-09-10T00:15:01.041Z Record version: sha256:81eaaedd0b6deb6119cb3805207302a8799d0734d516ea38a724ffe5e7166912 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/40/#30-initial-measurement) SEC content: no ##### [405-40-30-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:01.041Z to 2026-09-10T00:15:01.041Z Record version: sha256:cae52a089f7b2fb69a313b27eaff0d3227460c70c09366e836ab27916c1d51bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Obligations resulting from joint and several liability arrangements included in the scope of this Subtopic initially shall be measured as the sum of the following: 1. a The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors. 2. b Any additional amount the reporting entity expects to pay on behalf of its co-obligors. If some amount within a range of the additional amount the reporting entity expects to pay is a better estimate than any other amount within the range, that amount shall be the additional amount included in the measurement of the obligation. If no amount within the range is a better estimate than any other amount, then the minimum amount in the range shall be the additional amount included in the measurement of the obligation. ##### [405-40-30-2](https://asc.understandingaccounting.org/asc/405/40/#405-40-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:01.041Z to 2026-09-10T00:15:01.041Z Record version: sha256:9c965fed66541ae54351b87b8fdca10870f879e8f28d9b268b03b24368c9c018 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The corresponding entry or entries shall depend on the facts and circumstances of the obligation. Source downloaded (UTC): 2026-09-10T00:15:05.063Z to 2026-09-10T00:15:05.063Z Record version: sha256:52d3f5afb57f3073b134d0f2a63f684f768958f5aff65388bc43fe08da3711b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/40/#35-subsequent-measurement) SEC content: no ##### [405-40-35-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:05.063Z to 2026-09-10T00:15:05.063Z Record version: sha256:18ad428b952efa373d8231e5fe85a04f7b1574773d18c2d50c72314a7c249eed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Obligations resulting from joint and several liability arrangements included in the scope of this Subtopic subsequently shall be measured using the guidance in Section 405-40-30. Source downloaded (UTC): 2026-09-10T00:15:09.160Z to 2026-09-10T00:15:09.160Z Record version: sha256:65abfe92278c79200cd16fd66a47b221cc51684ed3ae231eef41eaf6d65ae8bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/40/#50-disclosure) SEC content: no ##### [405-40-50-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:09.160Z to 2026-09-10T00:15:09.160Z Record version: sha256:d870a44c7c86c7fe185448d46c678b439788e8060a7c36f1e8a5fe661b00fb2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the following information about each obligation, or each group of similar obligations, resulting from joint and several liability arrangements included in the scope of this Subtopic: 1. a The nature of the arrangement, including: 1. 1 How the liability arose 2. 2 The relationship with other co-obligors 3. 3 The terms and conditions of the arrangement. 2. b The total outstanding amount under the arrangement, which shall not be reduced by the effect of any amounts that may be recoverable from other entities 3. c The carrying amount, if any, of an entity's liability and the carrying amount of a receivable recognized, if any 4. d The nature of any recourse provisions that would enable recovery from other entities of the amounts paid, including any limitations on the amounts that might be recovered 5. e In the period the liability is initially recognized and measured or in a period the measurement changes significantly: 1. 1 The corresponding entry 2. 2 Where the entry was recorded in the financial statements. ##### [405-40-50-2](https://asc.understandingaccounting.org/asc/405/40/#405-40-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:09.160Z to 2026-09-10T00:15:09.160Z Record version: sha256:cb130c6039680222634e3893a4c4df7df5fd42f05bd69b7caa07d90c03303f3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosures required by this Section do not affect the related-party disclosure requirements in Topic 850. The disclosure requirements in this Section are incremental to those requirements. Source downloaded (UTC): 2026-09-10T00:15:11.947Z to 2026-09-10T00:15:11.947Z Record version: sha256:58e2b0fc864c9534ccee9910749d0b8196977fc70eea8f3bad2d08070fa764d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-40-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/405/40/#65-transition-and-open-effective-date-information) SEC content: no ##### [405-40-65-1](https://asc.understandingaccounting.org/asc/405/40/#405-40-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:11.947Z to 2026-09-10T00:15:11.947Z Record version: sha256:d56802dd7457e6394cd232e442c0597c5299b7a3693c0048f5704f572b017ef0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/08/2016 after the end of the transition period stated in Accounting Standards Update No. 2013-04, _Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date._