# ASC Topic 405: Liabilities Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/) 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): 2026-09-10T00:13:36.711Z to 2026-09-10T00:20:28.784Z Record version: sha256:738f0bfb0dff9bab3485f2c7e030c31d50a4a68b2f4193cd008deb1b9dd5eded Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 405 is the Codification's home for general liability guidance, but it works mostly as a roadmap plus a handful of targeted rules. The Overall Subtopic (405-10) simply points to where liability recognition guidance actually resides (Topics 410, 420, 430, 440, 450, 460, 470, 480), while the substantive general rules are in 405-20 (a debtor derecognizes a liability if and only if it is extinguished — payment with relief of the obligation or legal release as primary obligor, plus breakage rules for prepaid stored-value products), 405-30 (accrual of insurance-related assessments when probable, an obligating event has occurred, and the amount is reasonably estimable), 405-40 (joint and several obligations fixed in total amount, measured at the entity's agreed share plus amounts expected to be paid for co-obligors), and 405-50 (disclosure-only rules for buyers in supplier finance programs). The remaining Subtopics are industry-specific overlays — agriculture cooperatives, broadcasters, casinos, films, music, contractors, brokers-dealers, insurers, investment companies, regulated entities, not-for-profits, health care, and depository institutions — each layering a narrow recognition, measurement, or presentation rule onto the general framework. The unifying idea is that a liability stays on the books until an obligating event ends it: derecognition requires actual extinguishment, not merely economic defeasance or an intent not to pay. Source downloaded (UTC): 2026-09-10T00:13:36.711Z to 2026-09-10T00:13:43.757Z Record version: sha256:f484b92d2086f65fe043d3851cda74cc92f241c7aeaaeed0522afec5ba335a09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-10: Liabilities — Overall ### Machine-generated study aids ```json { "summary": "ASC 405-10 is the Overall subtopic of the Liabilities Topic; it functions as a navigational \"roadmap\" rather than a source of substantive measurement rules. It lists the other Subtopics within Topic 405 (Extinguishments of Liabilities, Insurance-Related Assessments, Joint and Several Liability Arrangements, Supplier Finance Programs) and points to the Topics elsewhere in the Codification that directly address recognition of particular liabilities.", "key_points": [ "Topic 405 comprises the Overall, Extinguishments of Liabilities, Insurance-Related Assessments, Obligations Resulting from Joint and Several Liability Arrangements, and Supplier Finance Programs Subtopics (405-10-05-1).", "405-10 itself identifies where liability guidance is located in the Codification rather than establishing recognition or measurement criteria (405-10-05-2).", "Topics that directly discuss recognition of liabilities include Topic 410 (asset retirement and environmental obligations), Topic 420 (exit or disposal cost obligations), Topic 430 (deferred revenue and contract liabilities), and Topic 440 (commitments) (405-10-05-2).", "Recognition guidance also resides in Topic 450 (contingencies), Topic 460 (guarantees), Topic 470 (debt), and Topic 480 (distinguishing liabilities from equity) (405-10-05-2).", "Other Topics, including industry-specific Topics, may contain guidance for liabilities associated with those Topics (405-10-05-3)." ], "categories": [ "Recognition", "Presentation", "Contingencies and guarantees", "Debt and equity" ], "audience_level": "introductory", "student_note": "Use 405-10 as an index: when a liability question arises, it tells you which Topic (410–480) actually governs. The common mistake is trying to find substantive recognition or measurement rules here — 405-10 contains none.", "related_topics": [ "405-20", "410", "420", "450", "460", "480" ], "key_concepts": [ "liabilities", "recognition of liabilities", "codification navigation", "extinguishment of liabilities", "contingencies", "guarantees", "distinguishing liabilities from equity", "supplier finance programs" ] } ``` Source downloaded (UTC): 2026-09-10T00:13:36.711Z to 2026-09-10T00:13:36.711Z Record version: sha256:6577d4dc0436f891d774e3adf8e5a91a3debaf55d6ecc7d79455fccaebd24842 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/10/#00-status) SEC content: no ##### [405-10-00-1](https://asc.understandingaccounting.org/asc/405/10/#405-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:36.711Z to 2026-09-10T00:13:36.711Z Record version: sha256:7c7f9c3b362d404a50a0933dede7d2c6cfe87ccf6f3b526f283d01e120f28840 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
405-10-05-1AmendedAccounting Standards Update No. 2022-0409/29/2022
405-10-05-1AmendedMaintenance Update 2014-20 (PDF)09/29/2014
405-10-05-2AmendedAccounting Standards Update No. 2023-0408/03/2023
405-10-05-2AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:13:38.382Z to 2026-09-10T00:13:38.382Z Record version: sha256:c987b2b9f551f7e97fc51ebee77f9197d58634cc3dc32eb71329bf2c0d8984a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/10/#05-overview-and-background) SEC content: no ##### [405-10-05-1](https://asc.understandingaccounting.org/asc/405/10/#405-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:38.382Z to 2026-09-10T00:13:38.382Z Record version: sha256:8f24eaa56ea6c2f128269c266499f5104beceecbad300823441365a5dfd83aa2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Liabilities Topic includes the following Subtopics: 1. a Overall 2. b Extinguishments of Liabilities 3. c Insurance-Related Assessments 4. d Obligations Resulting from Joint and Several Liability Arrangements 5. e Supplier Finance Programs. ##### [405-10-05-2](https://asc.understandingaccounting.org/asc/405/10/#405-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:38.382Z to 2026-09-10T00:13:38.382Z Record version: sha256:cb8070a2c8312bd80096e642e565493da948936a383bd4767f6b156c800b66ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic identifies the locations in the Codification that provide guidance for liabilities. The following Topics directly discuss the recognition of liabilities: 1. a Asset Retirement and Environmental Obligations, see Topic 410 2. b Exit or Disposal Cost Obligations, see Topic 420 3. c Deferred Revenue and Contract Liabilities, see Topic 430 4. d Commitments, see Topic 440 5. e Contingencies, see Topic 450 6. f Guarantees, see Topic 460 7. g Debt, see Topic 470 8. h Distinguishing Liabilities from Equity, see Topic 480. ##### [405-10-05-3](https://asc.understandingaccounting.org/asc/405/10/#405-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:38.382Z to 2026-09-10T00:13:38.382Z Record version: sha256:f3040b6856654242847b4ef5a492d6b8cc6007b82bcbb54286670d35ae324975 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other Topics, including industries, may contain guidance related to specific liabilities associated with those Topics. Source downloaded (UTC): 2026-09-10T00:13:40.718Z to 2026-09-10T00:13:40.718Z Record version: sha256:fd902bdeb6a2ce7ef1b835e06bf0fc3c6c78439a2718def98f31798c22b007ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/10/#sec-00-status) SEC content: yes ##### [405-10-S00-1](https://asc.understandingaccounting.org/asc/405/10/#405-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:40.718Z to 2026-09-10T00:13:40.718Z Record version: sha256:79b878e61c0c619f6c8e2e33bdc255f6ada8887653d43cac6c10e1304bff6347 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
405-10-S99-1AmendedAccounting Standards Update No. 2025-0203/18/2025
405-10-S99-1AddedAccounting Standards Update No. 2023-0408/03/2023
Source downloaded (UTC): 2026-09-10T00:13:43.757Z to 2026-09-10T00:13:43.757Z Record version: sha256:3a1c5963298a8a678a2951f77948660083eb74986eb6a6d1686ca36a6b956bee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/405/10/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [405-10-S99-1](https://asc.understandingaccounting.org/asc/405/10/#405-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:43.757Z to 2026-09-10T00:13:43.757Z Record version: sha256:a87df6c650a530f55299aff00120759e21b02d1abd48b239491e136b8d79e119 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.FF. Removed by SAB 122. Source downloaded (UTC): 2026-09-10T00:13:46.142Z to 2026-09-10T00:14:11.157Z Record version: sha256:68d4c8b3d328191691a82bd28ea1c5137c28f4f7cc45f5a0e94ffc7d6e0a5cfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20: Liabilities — Extinguishments of Liabilities ### Machine-generated study aids ```json { "summary": "ASC 405-20 governs when a debtor may derecognize a liability because it has been extinguished. Under 405-20-40-1, extinguishment occurs if and only if the debtor pays the creditor (cash, other financial assets, goods or services, or reacquisition of its own debt securities) and is relieved of the obligation, or the debtor is legally released as primary obligor judicially or by the creditor. The Subtopic also contains special derecognition (breakage) rules for liabilities from prepaid stored-value products and excludes debt conversions and troubled debt restructurings (see 470-20 and 470-60).", "key_points": [ "A debtor shall derecognize a liability if and only if it has been extinguished, meaning either payment with relief of the obligation or legal release as primary obligor (405-20-40-1); a sale plus assumption of nonrecourse debt by a third party in conjunction with sale of the sole collateral asset effectively accomplishes a legal release.", "The Subtopic applies to all entities and to extinguishments of all financial and nonfinancial liabilities (including derivative nonfinancial liabilities such as a written commodity option) unless derecognition is addressed elsewhere, such as 924-405 gaming chips or Topic 606 breakage (405-20-15-1 through 15-2).", "If a creditor releases the debtor conditioned on a third party assuming the obligation with the original debtor secondarily liable, the original liability is extinguished but the debtor recognizes a guarantee obligation at fair value, which reduces the gain or increases the loss on extinguishment (405-20-40-2; see Topic 460).", "In-substance defeasance does not extinguish the liability because the debtor is not released, the lender is not limited to the trust assets, and the debtor retains control of the trust assets' benefits (405-20-55-3 through 55-4); a legal defeasance can extinguish the liability if 405-20-40-1(b) is met, which is a matter of law (405-20-55-9).", "For prepaid stored-value products in scope, expected breakage is derecognized in proportion to the pattern of rights expected to be exercised, only to the extent a significant reversal is probable of not occurring; if no breakage is expected, derecognize when the likelihood of exercise becomes remote (405-20-40-4), with estimate updates treated as changes in accounting estimate under 250-10-45-17 through 45-20.", "The breakage guidance does not apply to products whose breakage must be remitted under unclaimed property laws, products attached to a segregated bank account, customer loyalty programs, or transactions within other Topics such as 606 (405-20-40-3).", "Entities recognizing breakage must disclose the methodology used and significant judgments made in applying it (405-20-50-2); see also 470-50-50-1 for in-substance defeasance disclosure and 860-30-50-1A for assets set aside to satisfy a specific obligation." ], "categories": [ "Derecognition", "Financial instruments", "Debt and equity", "Disclosure" ], "audience_level": "intermediate", "student_note": "The classic trap is thinking that setting aside dedicated assets (in-substance defeasance) removes the debt from the balance sheet — it does not; only payment with relief or a legal release works. Also remember that a released debtor who becomes secondarily liable must book a fair value guarantee liability that reduces the extinguishment gain.", "related_topics": [ "470-20", "470-60", "470-50", "860-10", "460", "606" ], "key_concepts": [ "extinguishment of liabilities", "derecognition", "legal release from primary obligor", "in-substance defeasance", "legal defeasance", "prepaid stored-value products", "breakage", "guarantee obligation" ] } ``` Source downloaded (UTC): 2026-09-10T00:13:46.142Z to 2026-09-10T00:13:46.142Z Record version: sha256:dbe1690d361445d6362bdf37b4074ee8aaa1cdf6aac1d47f5d47a4368cb4679f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/20/#00-status) SEC content: no ##### [405-20-00-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:46.142Z to 2026-09-10T00:13:46.142Z Record version: sha256:45b73ae06e6f57a6c4815df0458aabcb8867769dcd760c2495c3a0829a2bbc0b 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
Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Environmental Credit ObligationAddedAccounting Standards Update No. 2026-0205/19/2026
ExchangeAddedAccounting Standards Update No. 2026-0205/19/2026
Financial AssetAddedAccounting Standards Update No. 2026-0205/19/2026
Income TaxesAddedAccounting Standards Update No. 2026-0205/19/2026
Nonfinancial AssetAddedAccounting Standards Update No. 2026-0205/19/2026
Nonreciprocal Transfer (1st def.)AddedAccounting Standards Update No. 2026-0205/19/2026
405-20-10-1SupersededAccounting Standards Update No. 2009-1612/23/2009
405-20-15-2AmendedAccounting Standards Update No. 2016-0403/08/2016
405-20-40-1AmendedAccounting Standards Update No. 2026-0205/19/2026
405-20-40-1AmendedAccounting Standards Update No. 2016-0403/08/2016
405-20-40-3AddedAccounting Standards Update No. 2016-0403/08/2016
405-20-40-4AddedAccounting Standards Update No. 2016-0403/08/2016
405-20-50-1AmendedAccounting Standards Update No. 2009-1612/23/2009
405-20-50-2AddedAccounting Standards Update No. 2016-0403/08/2016
405-20-55-2AmendedAccounting Standards Update No. 2012-0410/01/2012
405-20-55-4AmendedAccounting Standards Update No. 2015-1006/12/2015
405-20-55-4AmendedAccounting Standards Update No. 2012-0410/01/2012
405-20-55-6 through 55-8SupersededAccounting Standards Update No. 2009-1612/23/2009
405-20-65-1AddedAccounting Standards Update No. 2016-0403/08/2016
Source downloaded (UTC): 2026-09-10T00:13:49.419Z to 2026-09-10T00:13:49.419Z Record version: sha256:7c6339656ddb86a4e8928326922bf2249f4072cc40df68764ed4c81575bc847e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/20/#05-overview-and-background) SEC content: no ##### [405-20-05-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:49.419Z to 2026-09-10T00:13:49.419Z Record version: sha256:911eec93d65f0d4ba538756617fde537656aa29333fb8e10d5047a21eac8ba29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses extinguishments of liabilities. This Subtopic does not address debt conversions or troubled debt restructurings. The accounting guidance for those areas is addressed in Subtopics 470-20 and 470-60. ##### [405-20-05-2](https://asc.understandingaccounting.org/asc/405/20/#405-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:49.419Z to 2026-09-10T00:13:49.419Z Record version: sha256:b7aa508549b769af1a65f0fe01353b69659d0c287c98d40ab1a74dbea160407e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may settle a liability by transferring assets to the creditor or otherwise obtaining an unconditional release. Alternatively, an entity may enter into other arrangements designed to set aside assets dedicated to eventually settling a liability. Accounting for those arrangements has raised issues about when a liability should be considered extinguished. This Subtopic establishes standards for resolving those issues. Source downloaded (UTC): 2026-09-10T00:13:53.385Z to 2026-09-10T00:13:53.385Z Record version: sha256:8dda5d2677303335ac11132da90d356069b5abb3aa8961afae1b5ea399695838 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/405/20/#10-objectives) SEC content: no ##### [405-20-10-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:53.385Z to 2026-09-10T00:13:53.385Z Record version: sha256:37f7cf4a748a105830e80caeaf9812e314a6b4ed533798bede99c850f090dd8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). Source downloaded (UTC): 2026-09-10T00:13:55.493Z to 2026-09-10T00:13:55.493Z Record version: sha256:eb5e079e87133f032739db6575b4658dc95330799eae76747e76acf3a953438c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/20/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [405-20-15-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:55.493Z to 2026-09-10T00:13:55.493Z Record version: sha256:8f64d0ad7a418993be76b9e75bbb912925b65e00746547ff54c5e657a328c676 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities. #### Transactions ##### [405-20-15-2](https://asc.understandingaccounting.org/asc/405/20/#405-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:13:55.493Z to 2026-09-10T00:13:55.493Z Record version: sha256:ddbb66d81b7824dad3af47f26d531b1a5073980f2d4588ef0bf832dd134fa673 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to extinguishments of all liabilities, including both financial and nonfinancial liabilities, unless derecognition of a financial or nonfinancial liability is addressed in another Topic (for example, the derecognition guidance for gaming chips in Subtopic 924-405 on casinos or the breakage guidance in Topic 606 on revenue from contracts with customers). Derivative instruments that are nonfinancial liabilities (for example, a written commodity option) are included in the scope of this Subtopic. Source downloaded (UTC): 2026-09-10T00:14:00.411Z to 2026-09-10T00:14:00.411Z Record version: sha256:435b87ffdac70b126a000c2873d20f2b54103f089f0e06a9165e4316e07fd208 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/405/20/#40-derecognition) SEC content: no ##### [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:14:00.411Z to 2026-09-10T00:14:00.411Z Record version: sha256:22adfa6fd0ccbd30c5332e75963dcb8842d6abf4f020f80a1f23c8993449081e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unless addressed by other guidance (for example, paragraphs [405-20-40-3 through 40-4](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-3) or paragraphs [606-10-55-46 through 55-49](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-46) ), a debtor shall derecognize a liability if and only if it has been extinguished. A liability has been extinguished if either of the following conditions is met: 1. a The debtor pays the creditor and is relieved of its obligation for the liability. Paying the creditor includes the following: 1. 1 Delivery of cash 2. 2 Delivery of other financial assets 3. 3 Delivery of goods or services 4. 4 Reacquisition by the debtor of its outstanding debt securities whether the securities are cancelled or held as so-called treasury bonds. 2. b The debtor is legally released from being the primary obligor under the liability, either judicially or by the creditor. For purposes of applying this Subtopic, a sale and related assumption effectively accomplish a legal release if nonrecourse debt (such as certain mortgage loans) is assumed by a third party in conjunction with the sale of an asset that serves as sole collateral for that debt. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Unless addressed by other guidance (for example, paragraphs [405-20-40-3 through 40-4](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-3) or paragraphs [606-10-55-46 through 55-49](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-46) ), a debtor shall derecognize a liability if and only if it has been extinguished. A liability has been extinguished if either of the following conditions is met: 1. a The debtor pays the creditor and is relieved of its obligation for the liability. Paying the creditor includes the following: 1. 1 Delivery of cash 2. 2 Delivery of other financial assets 3. 3 Delivery of goods or services 4. 4 Reacquisition by the debtor of its outstanding debt securities whether the securities are cancelled or held as so-called treasury bonds 5. 5 Delivery of [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(P) December 16, 2027; (N) December 16, 2028818-10-65-1An enforceable right that is acquired, internally generated, granted by a regulatory agency or its designee(s), or received in a nonreciprocal transfer that is not a grant from a regulator or its designee(s) that meets all of the following criteria:Lacks physical substance and is not a financial asset.Is represented to prevent, control, reduce, or remove emissions or other pollution.Is, or previously was, separately transferable in an exchange transaction. If an item is no longer separately transferable in an exchange transaction, an entity must be able to use that item to satisfy an environmental credit obligation to meet this criterion.Is not an income tax credit that may be used to settle an entity’s income tax liability, regardless of whether the entity has a tax liability or intends to use the credit for that purpose.An environmental credit that meets the above criteria may exist in a variety of forms, including (but not limited to) credits, certificates, allowances, and offsets."). 2. b The debtor is legally released from being the primary obligor under the liability, either judicially or by the creditor. For purposes of applying this Subtopic, a sale and related assumption effectively accomplish a legal release if nonrecourse debt (such as certain mortgage loans) is assumed by a third party in conjunction with the sale of an asset that serves as sole collateral for that debt. ##### [405-20-40-2](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:00.411Z to 2026-09-10T00:14:00.411Z Record version: sha256:c6ee59aef484d22a891cc5cad915107c1c180392417f5322c61e5c7d4687b727 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a creditor releases a debtor from primary obligation on the condition that a third party assumes the obligation and that the original debtor becomes secondarily liable, that release extinguishes the original debtor's liability. However, in those circumstances, whether or not explicit consideration was paid for that guarantee, the original debtor becomes a guarantor. As a guarantor, it shall recognize a guarantee obligation in the same manner as would a guarantor that had never been primarily liable to that creditor, with due regard for the likelihood that the third party will carry out its obligations. The guarantee obligation shall be initially measured at fair value, and that amount reduces the gain or increases the loss recognized on extinguishment. See Topic 460 for accounting guidance related to guarantees. #### Prepaid Stored-Value Products ##### [405-20-40-3](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:00.411Z to 2026-09-10T00:14:00.411Z Record version: sha256:c23b8d69b3938c3116478cc5eeaf408381fe574a2c12cd1467ebc90408fe2857 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prepaid stored-value products are products in physical and digital forms with stored monetary values that are issued for the purpose of being commonly accepted as payment for goods or services. While the holder of a prepaid stored-value product also may be permitted to redeem the product for cash, prepaid stored-value products do not include products that only can be redeemed by the product holder for cash (for example, nonrecourse debt, bearer bonds, or trade payables). Examples of prepaid stored-value products include prepaid gift cards issued on a specific payment network and redeemable at network-accepting merchant locations, prepaid telecommunication cards, and traveler's checks. The derecognition guidance in paragraph [405-20-40-4](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-4) does not apply to liabilities related to either of the following: 1. a Prepaid stored-value products (or portions of those products) for which any breakage (that is, the portion of the dollar value of prepaid stored-value products that ultimately is not redeemed by product holders for cash or not used to purchase goods and/or services) must be remitted in accordance with unclaimed property laws 2. b Prepaid stored-value products that are attached to a segregated bank account like a customer depository account. The guidance also does not apply to customer loyalty programs or transactions within the scope of other Topics (for example, Topic 606 on revenue from contracts with customers). ##### [405-20-40-4](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:00.411Z to 2026-09-10T00:14:00.411Z Record version: sha256:c464eef404add3306aef69e064b3d369c0eaaa2e163152dfda37c42af3b38a74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity expects to be entitled to a breakage amount for a liability resulting from the sale of a prepaid stored-value product in the scope of paragraph [405-20-40-3](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-3), the entity shall derecognize the amount related to the expected breakage in proportion to the pattern of rights expected to be exercised by the product holder only to the extent that it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. If an entity does not expect to be entitled to a breakage amount for prepaid stored-value products in the scope of paragraph [405-20-40-3](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-3), the entity shall derecognize the amount related to breakage when the likelihood of the product holder exercising its remaining rights becomes remote. At the end of each period, an entity shall update the estimated breakage amount to represent faithfully the circumstances present at the end of the period and the changes in circumstances during the period. Changes to an entity's estimated breakage amount shall be accounted for as a change in accounting estimate in accordance with paragraphs [250-10-45-17 through 45-20](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-17) . Source downloaded (UTC): 2026-09-10T00:14:02.153Z to 2026-09-10T00:14:02.153Z Record version: sha256:5d7d35a061dc7d1052f04654bfd8726b7aace1d123fc9517cb9321269f98a247 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/20/#50-disclosure) SEC content: no ##### [405-20-50-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:02.153Z to 2026-09-10T00:14:02.153Z Record version: sha256:e763fd36172ab78893410f231faaea5b8f4ce472c30ce4b88caf0ba1c7e63792 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-50-50-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-50-1) for a disclosure requirement for debt considered to be extinguished by in-substance defeasance. In addition, see paragraph [860-30-50-1A](https://asc.understandingaccounting.org/asc/860/30/#860-30-50-1A) for disclosure requirements for assets that are set aside solely for the purpose of satisfying scheduled payments of a specific obligation. #### Prepaid Stored-Value Products ##### [405-20-50-2](https://asc.understandingaccounting.org/asc/405/20/#405-20-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:02.153Z to 2026-09-10T00:14:02.153Z Record version: sha256:33295625fa120095885fa814004e6b79e5dd4ffbe6dda3564e37e6a868732daa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that recognizes a breakage amount in accordance with paragraph [405-20-40-4](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-4) shall disclose the methodology used to recognize breakage and significant judgments made in applying the breakage methodology. Source downloaded (UTC): 2026-09-10T00:14:05.784Z to 2026-09-10T00:14:05.784Z Record version: sha256:c97cfe4c446673c744a927b65812864950471527e70941e5e65ee3b362cf9a35 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/20/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [405-20-55-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:05.784Z to 2026-09-10T00:14:05.784Z Record version: sha256:4d872f65d2e7a95778068b7eac775791aa50fffbca68fa55c8d415aefcb8daeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides implementation guidance related to the extinguishment of liabilities. ##### [405-20-55-2](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:05.784Z to 2026-09-10T00:14:05.784Z Record version: sha256:7575356a42b7e8c3128a3cb8725aaac68815207356116254b11b2bd955faa586 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following provides guidance on the application of the liability extinguishment criteria, specifically related to the following: 1. a In-substance defeasance transactions 2. b Transfers of noncash financial assets in settlement of a creditor's receivable 3. c [Subparagraph superseded by Accounting Standards Update No. 2012-04](https://asc.understandingaccounting.org/updates/asu-2012-04/). 4. d Extinguishment via legal defeasance. ##### [405-20-55-3](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:05.784Z to 2026-09-10T00:14:05.784Z Record version: sha256:6199d24cf169987fbfb760e0d239b39337f4f54d6e8045797e54a19a1f68a74e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In an in-substance defeasance transaction, a debtor transfers essentially risk-free assets to an irrevocable defeasance trust and the cash flows from those assets approximate the scheduled interest and principal payments of the debt being extinguished. ##### [405-20-55-4](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:05.784Z to 2026-09-10T00:14:05.784Z Record version: sha256:190be3c7c63c240437e4d74f96b50e081f0300552439d0ab7833cabc1771b961 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An in-substance defeasance transaction does not meet the derecognition criteria in either Section 405-20-40 for the liability or in Section 860-10-40 for the asset. The transaction does not meet the criteria because of the following: 1. a The debtor is not released from the debt by putting assets in the trust; if the assets in the trust prove insufficient, for example, because a default by the debtor accelerates its debt, the debtor must make up the difference. 2. b The lender is not limited to the cash flows from the assets in trust. 3. c The lender does not have the ability to dispose of the assets at will or to terminate the trust. 4. d If the assets in the trust exceed what is necessary to meet scheduled principal and interest payments, the transferor can remove the assets. 5. e [Subparagraph superseded by Accounting Standards Update No. 2012-04](https://asc.understandingaccounting.org/updates/asu-2012-04/). 6. f The debtor does not surrender control of the benefits of the assets because those assets are still being used for the debtor's benefit, to extinguish its debt, and because no asset can be an asset of more than one entity, those benefits must still be the debtor's assets. ##### [405-20-55-5](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:05.784Z to 2026-09-10T00:14:05.784Z Record version: sha256:230e71b1f139e4061d245c17862122042d439961b71857cb51ced34650f61cc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A cash payment or conveyance of noncash financial assets from a debtor to a creditor results in full or partial settlement of the creditor's receivable from the debtor. Whether or not that settlement is an extinguishment is governed by paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1). However, if a noncash financial asset was conveyed to the creditor in full or partial settlement of a creditor's receivable, it would be rare to conclude that debt has been extinguished if the criteria of paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) were not also met. ##### [405-20-55-6](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:05.784Z to 2026-09-10T00:14:05.784Z Record version: sha256:98a3c525cadcb24cb1c30b27d2f591822aac96fb7e66a3bb318a80f2c2a2f831 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 405-20-55-6 through 55-8 superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-6). ##### [405-20-55-9](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:05.784Z to 2026-09-10T00:14:05.784Z Record version: sha256:6ee0556ad3276c60630ebad5097b24972930b648337f0747e64c90c159cba6fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a legal defeasance, generally the creditor legally releases the debtor from being the primary obligor under the liability. Liabilities are extinguished by legal defeasances if the condition in paragraph [405-20-40-1(b)](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1) is satisfied. Whether the debtor has in fact been released and the condition in that paragraph has been met is a matter of law. Conversely, in an in-substance defeasance, the debtor is not released from the debt by putting assets in the trust. For the reasons identified in paragraph [405-20-55-4](https://asc.understandingaccounting.org/asc/405/20/#405-20-55-4), an in-substance defeasance is different from a legal defeasance and the liability is not extinguished. Source downloaded (UTC): 2026-09-10T00:14:08.518Z to 2026-09-10T00:14:08.518Z Record version: sha256:51b47c5bdd2917f593c7481e8ec070d2d180918f87600d19ef52ac49730740c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-20-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/405/20/#65-transition-and-open-effective-date-information) SEC content: no ##### [405-20-65-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:08.518Z to 2026-09-10T00:14:08.518Z Record version: sha256:982478f6f51f48e76594a86dfb4294a8ac4df8fbe96df791a0069efb30f6e75f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 08/12/2020 after the end of the transition period stated in Accounting Standards Update No. 2016-04, _Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products._ Source downloaded (UTC): 2026-09-10T00:14:14.713Z to 2026-09-10T00:14:44.711Z Record version: sha256:ba259c1644f033f5eb4b0ced62929390aee1e93231e19f8023ced225eda49eb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30: Liabilities — Insurance-Related Assessments ### Machine-generated study aids ```json { "summary": "ASC 405-30 governs when and how entities—insurers and self-insurers alike—accrue liabilities for statutory or regulatory insurance-related assessments such as state guaranty-fund assessments, insurance department administrative assessments, and workers' compensation second-injury fund assessments. A liability is recognized only when an assessment is probable, the obligating event has occurred by the balance sheet date, and the amount is reasonably estimable (405-30-25-1); the obligating event differs by assessment mechanism (retrospective vs. prospective vs. prefunded premium-based, and loss-based). Related recoveries via premium tax offsets or policy surcharges are recognized as assets when probable (405-30-25-8), but recoveries expected only through future premium rate structures are not (405-30-25-10).", "key_points": [ "A liability is accrued only when all three conditions are met: probability of assessment, occurrence of the obligating event on or before the financial statement date, and ability to reasonably estimate the amount (405-30-25-1).", "Premium-based guaranty-fund assessments (other than prefunded) are presumed probable upon a formal determination of insolvency and presumed not probable before it; prefunded and premium-based administrative assessments are probable when the underlying premiums are written, and loss-based assessments when the losses are incurred (405-30-25-2 through 25-3).", "The obligating event for premium-based assessments is generally writing (or becoming obligated to write or renew) the premiums, but is the insolvency itself where state law or regulatory practice means the entity cannot avoid the assessment by ceasing to write premiums; for loss-based assessments it is incurring the losses (405-30-25-4).", "For retrospective-premium-based assessments the entire estimated future assessment for an insolvency is accrued upon formal determination of insolvency, because the obligating premium has already been written (405-30-25-6(a)); prospective-premium-based assessments are accrued as premiums are written unless unavoidable (405-30-25-6(b)).", "If the estimate is a range with no better estimate within it, the minimum amount is accrued; if a best estimate exists, that amount is recorded (405-30-25-5; 405-30-30-8).", "An asset for premium tax offsets or policy surcharges is recognized when probable, measured on current laws and in-force policies (excluding expected renewals of short-duration contracts but reflecting persistency for long-duration contracts), subject to a valuation allowance; no asset is recorded for recovery through future premium rate structures (405-30-25-8 through 25-10; 405-30-30-11; 405-30-35-1).", "Discounting of the liability (and asset) is optional where the amount and timing of cash flows are fixed or reliably determinable; disclosure of discounted vs. undiscounted amounts, discount rate, and expected payment/realization periods is required (405-30-30-9 through 30-12; 405-30-50-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Contingencies and guarantees", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The exam trap is conflating the event that makes an assessment probable (usually the insolvency) with the event that obligates the entity (usually writing the premium)—for prospective-premium-based assessments an insurer that can stop writing business accrues only for premiums already written, whereas a retrospective assessment is accrued in full at insolvency. Also remember the recovery asymmetry: premium tax offsets and policy surcharges can be assets, but expected recovery through future premium rate structures cannot.", "related_topics": [ "450-20", "944", "720-50", "275-10", "855-10", "405-20" ], "key_concepts": [ "guaranty-fund assessment", "obligating event", "formal determination of insolvency", "retrospective-premium-based assessment", "prospective-premium-based assessment", "loss-based assessment", "premium tax offset", "second-injury fund" ] } ``` Source downloaded (UTC): 2026-09-10T00:14:14.713Z to 2026-09-10T00:14:14.713Z Record version: sha256:37c2636d34d006e413bef2cb1215c0663b939a6ea1e976c65bab24bda31ad2d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/30/#00-status) SEC content: no ##### [405-30-00-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:14.713Z to 2026-09-10T00:14:14.713Z Record version: sha256:ec36c4b6969a975bf7c5a5f949276ad84ceb50189b28bd9a7193c450a34dd4a3 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
ReinsuranceAddedAccounting Standards Update No. 2016-1912/14/2016
405-30-05-1AmendedAccounting Standards Update No. 2011-0607/21/2011
405-30-15-3AmendedAccounting Standards Update No. 2016-1912/14/2016
405-30-15-3AmendedAccounting Standards Update No. 2011-0607/21/2011
405-30-30-7AmendedAccounting Standards Update No. 2016-1912/14/2016
Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:3d3815466f5e5d5777787f745cfc24011b7336efe3d75b5d84177b28986b8fa5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/30/#05-overview-and-background) SEC content: no ##### [405-30-05-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:5f2593e713bdb5cdc70288e190dfbb2b1e6a407321fc896f9a8adaad99bc66a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance entities as well as noninsurance entities are subject to a variety of assessments related to insurance activities, including those by state guaranty funds and workers' compensation second-injury funds. Some entities may be subject to insurance-related assessments because they self-insure against loss or liability. This Subtopic provides guidance on accounting for insurance-related assessments. The annual fee imposed on health insurers by the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (the Acts) is not considered an insurance-related assessment. The accounting for the Acts' fee is addressed in Subtopic 720-50. #### State Guaranty Funds ##### [405-30-05-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:faf64a69824e3ba3c91fd51ffd4569e9ab133a707725eafdef93cbdb77be82e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. States have enacted legislation establishing guaranty funds. The state guaranty funds assess entities licensed to sell insurance in the state to provide for the payment of covered claims or to meet other insurance obligations—subject to prescribed limits—of insolvent insurance entities. The assessments are generally based on premium volume for certain covered lines of business. Most state guaranty funds assess entities for costs related to a particular insolvency after the insolvency occurs. At least one state, however, assesses entities before insolvencies. ##### [405-30-05-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:5552c32756d6ed4d94b5db52a93fa818c2498776d248e5342f39d8e32f72e6e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. State guaranty funds use a variety of methods for assessing entities. This Subtopic identifies the following four primary methods of guaranty-fund assessments: 1. a Retrospective-premium-based assessments. Guaranty funds covering benefit payments of insolvent [life, annuity, and health insurance entities](https://asc.understandingaccounting.org/glossary/l/#life-annuity-and-health-insurance-entities "An entity that may issue annuity, endowment, and accident and health insurance contracts as well as life insurance contracts. Life and health insurance entities may be either stock or mutual entities.") typically assess entities based on [premiums written](https://asc.understandingaccounting.org/glossary/p/#premiums-written "The premiums on all policies an entity has issued in a period.") or received in one or more years before the year of insolvency. Assessments in any year are generally limited to an established percentage of an entity's average premiums for the three years preceding the insolvency. Assessments for a given insolvency may take place over several years. 2. b Prospective-premium-based assessments. Guaranty funds covering claims of insolvent [property and casualty insurance entities](https://asc.understandingaccounting.org/glossary/p/#property-and-casualty-insurance-entity "An entity that issues insurance contracts providing protection against either of the following: Damage to or loss of property caused by various perils, such as fire and theft Legal liability resulting from injuries to other persons or damage to their property. Property and liability insurance entities may be either stock or mutual entities.") typically assess entities based on premiums written in one or more years after the insolvency. Assessments in any year are generally limited to an established percentage of an entity's premiums written or received for the year preceding the assessment. Assessments for a given insolvency may take place over several years. 3. c Prefunded-premium-based assessments. At least one state uses this kind of assessment to cover claims of insolvent property and casualty insurance entities. This kind of assessment is intended to prefund the costs of future insolvencies. Assessments are imposed before any particular insolvency and are based on the current level of written premiums. Rates to be applied to future premiums are adjusted as necessary. 4. d Administrative-type assessments. These assessments are typically a flat (annual) amount per entity to fund operations of the guaranty association, regardless of the existence of an insolvency. ##### [405-30-05-4](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:4c6c4576272a885575b26cac4211c183a071d9056f0b8b65486ca01e6e5fc440 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. State laws often allow for recoveries of guaranty-fund assessments by entities subject to assessments through such mechanisms as [premium tax offsets](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states."), policy surcharges, and future premium rate structures. The policy surcharges referred to in this Subtopic are those surcharges that are intended to provide an opportunity for assessed entities to recover some or all of the amounts assessed over a period of time. #### Other Insurance-Related Assessments ##### [405-30-05-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:b1304c0fdfe3029e0f73679c62ec900d36e9f6581ee04f5d00d13d13ed6cc314 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities are subject to a variety of other insurance-related assessments. Many states and a number of local governmental units have established other funds supported by assessments. The two most prevalent uses for such assessments are as follows: 1. a To fund operating expenses of state insurance regulatory bodies (for example, the state insurance department or workers' compensation board) 2. b To fund second-injury funds, which provide reimbursement to insurance carriers or employers for workers' compensation claims when the cost of a second injury combined with a prior accident or disability is greater than what the second accident alone would have produced. The employer of an injured or handicapped worker is responsible only for the workers' compensation benefit for the most recent injury; the second-injury fund would cover the cost of any additional benefits for aggravation of a prior condition or injury. The intent of the fund is to help insure that employers are not made to suffer a greater monetary loss or increased insurance costs because of hiring previously injured or handicapped employees. ##### [405-30-05-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:8b033e43f1c7bf219f5b34d705460e7077660a6194eb7b5736f7d617fa0cf098 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary methods used to assess for these other insurance-related assessments are the following: 1. a Premium-based. The assessing entity imposes the assessment based on the entity's written premiums. The assessing entity may be at the state, county, municipality, or other such level. The base year of premiums is generally either the current year or the year preceding the assessment. 2. b Loss-based. The assessing entity imposes the assessment based on the entity's [incurred losses](https://asc.understandingaccounting.org/glossary/i/#incurred-losses "Losses paid or unpaid for which the entity has become liable during a period.") or paid losses in relation to that amount for all entities subject to that assessment in the particular jurisdiction. Source downloaded (UTC): 2026-09-10T00:14:18.183Z to 2026-09-10T00:14:18.183Z Record version: sha256:16cbe4b0b6ccd7fe1ff2caee1a27482c70c84289447739f33c523b0bd89bfd08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/405/30/#10-objectives) SEC content: no ##### [405-30-10-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:18.183Z to 2026-09-10T00:14:18.183Z Record version: sha256:5edaf5588ca1e1f950ac994d8e7965bd52ddf8288e225a2401143980861819a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of this Subtopic is to establish consistent accounting and disclosures for guaranty-fund and other insurance-related assessments to improve comparability of reported information. Source downloaded (UTC): 2026-09-10T00:14:22.271Z to 2026-09-10T00:14:22.271Z Record version: sha256:a1ba8bf5f08cd30d76e2c7614179e1157585fd41bce4175238600febcef64130 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/30/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [405-30-15-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:22.271Z to 2026-09-10T00:14:22.271Z Record version: sha256:bf8ee50b34ade6d2a9c5c3dab295a689cd0b02e7c0d034662093fdf373867713 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities that are subject to guaranty-fund and other insurance-related assessments, including entities that are subject to insurance-related assessments because they self-insure against loss or liability. For example, one state specifies that self-insurers of workers' compensation should use as a base for assessment the amount of premium the self-insurer would have paid if it had insured its liability with an insurer for the previous calendar year. #### Transactions ##### [405-30-15-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:22.271Z to 2026-09-10T00:14:22.271Z Record version: sha256:06fdddf29444a58002d7a1da3253685f07a8050450bef6a5b6036d0d7e91a5f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to assessments mandated by statute or regulatory authority that are related directly or indirectly to underwriting activities (including self-insurance), except for income taxes and premium taxes. ##### [405-30-15-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:22.271Z to 2026-09-10T00:14:22.271Z Record version: sha256:8534a9037f9a4cf6688df2e3733678b892a6e0ae0d87d49938286f3d6a714d79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Amounts payable or paid as a result of [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts or arrangements that are in substance reinsurance, including assumed reinsurance activities and certain [involuntary pools](https://asc.understandingaccounting.org/glossary/i/#involuntary-pools "A residual market mechanism for insureds who cannot obtain insurance in the voluntary market.") that are covered by Topic 944. 2. b Assessments of depository institutions related to bank insurance and similar funds. 3. c The annual fee imposed on health insurers by the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (the Acts). The accounting for the Acts' fee is addressed in Subtopic 720-50. Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:35a21475052ae1f4c1556917b08ce270264b4eb9b15779a9b6584e54c3f422d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/30/#25-recognition) SEC content: no #### Reporting Liabilities ##### [405-30-25-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:4b9f7865795685db142b3431f61ebdfc632c9682124f6b8cc606a6b404a94880 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities subject to assessments shall recognize liabilities for insurance-related assessments when all of the following conditions are met: 1. a Probability of assessment. An assessment has been imposed or information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates it is probable that an assessment will be imposed. 2. b Obligating event. The event obligating an entity to pay (underlying cause of) an imposed or probable assessment has occurred on or before the date of the financial statements. 3. c Ability to reasonably estimate. The amount of the assessment can be reasonably estimated. See Examples 1 through 3 (paragraphs [405-30-55-1 through 55-15](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-1) ) for illustrations of the computation of assessment liabilities. ##### [405-30-25-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:3866355760c1e97cfdb1f84952e6666be7a8c8439703ceb5836a4f186f2edc99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premium-based guaranty-fund assessments, except those that are prefunded, are presumed probable when a formal determination of insolvency occurs, and presumed not probable before a formal determination of insolvency. For purposes of this Subtopic, a formal determination of insolvency occurs when an entity meets a state's (ordinarily the state of domicile of the insolvent insurer) statutory definition of an insolvent insurer. In most states, the entity must be declared to be financially insolvent by a court of competent jurisdiction. In some states, there must also be a final order of liquidation. ##### [405-30-25-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:65256ffce3ea46e07e2d3b55d12d7b53cac82e080deee063c4e2ea1dfba43f93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prefunded guaranty-fund assessments and premium-based administrative-type assessments, as defined in paragraph [405-30-05-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-3), are presumed probable when the premiums on which the assessments are expected to be based are written. Loss-based administrative-type and second-injury fund assessments are presumed probable when the losses on which the assessments are expected to be based are incurred. ##### [405-30-25-4](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:671d82e9e299ad2627b38300fd0d456bf5f860d401f5e8dd2393d5718a824d6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of the fundamental differences in how assessment mechanisms operate, the event that makes an assessment probable (for example, an insolvency) may not be the event that obligates an entity. The following defines the event that obligates an entity to pay an assessment for each kind of assessment identified in this Subtopic: 1. a For premium-based assessments, the event that obligates the entity is generally writing the premiums or becoming [obligated to write](https://asc.understandingaccounting.org/glossary/o/#obligated-to-write "A circumstance in which an entity has no discretion to cancel a policy because of legal obligation under state statute, contract terms, or regulatory practice and is required to offer or issue insurance policies for a period in the future.") or renew (such as multiple-year, noncancelable policies) the premiums on which the assessments are expected to be based. Some states, through law or regulatory practice, provide that an insurance entity cannot avoid paying a particular assessment even if that insurance entity reduces its premium writing in the future. In such circumstances, the event that obligates the entity is a formal determination of insolvency or similar triggering event. For example, in certain states, an insurance entity may remain liable for assessments even though the insurance entity discontinues the writing of premiums. In this circumstance, the underlying cause of the liability is not the writing of the premium, but the insolvency. Regulatory practice would be determined based on the stated intentions or prior history of the insurance regulators. 2. b For loss-based assessments, the event that obligates an entity is an entity's incurring the losses on which the assessments are expected to be based. ##### [405-30-25-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:11abafc5c6a360412796341cb3200467b396286d215b3d5d654d562c2b7f545e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. One of the conditions (see paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2)) for recognition of a liability is that the amount can be reasonably estimated. Paragraph [450-20-25-5](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-5) provides that some amount of loss can be reasonably estimated when available information indicates that the estimated amount of the loss is within a range of amounts. Paragraph [450-20-30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-30-1) explains that, if no amount within the range is a better estimate than any other amount, the minimum amount in the range should be accrued. #### Applying the Recognition Criteria ##### [405-30-25-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:b35fae3faf1e838bcbd2454ab0189caa7e285620e5b9db133e10b491236e339f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Application of the recognition criteria in paragraphs [405-30-25-1 through 25-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-1) to the methods used to address guaranty-fund assessments and other insurance-related assessments, as described in paragraphs [405-30-05-3 through 05-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-3) , is as follows: 1. a Retrospective-premium-based guaranty-fund assessments. An assessment is probable of being imposed when a formal determination of insolvency occurs. At that time, the premium that obligates the entity for the assessment liability has already been written. Accordingly, an entity that has the ability to reasonably estimate the amount of the assessment shall recognize a liability for the entire amount of future assessments related to a particular insolvency when a formal determination of insolvency is rendered. 2. b Prospective-premium-based guaranty-fund assessments. The event that obligates the entity for the assessment liability generally is the writing of, or becoming obligated to write or renew, the premiums on which the expected future assessments are to be based (for example, multiple-year contracts under which an insurance entity has no discretion to avoid writing future premiums). Therefore, the event that obligates the entity generally will not have occurred at the time of the insolvency. Law or regulatory practice affects the event that obligates the entity in either of the following ways: 1. 1 In states that, through law or regulatory practice, provide that an entity cannot avoid paying a particular assessment in the future (even if the entity reduces premium writings in the future), the event that obligates the entity is a formal determination of insolvency or a similar event. An entity that has the ability to reasonably estimate the amount of the assessment shall recognize a liability for the entire amount of future assessments that cannot be avoided related to a particular insolvency when a formal determination of insolvency occurs. 2. 2 In states without such a law or regulatory practice, the event that obligates the entity is the writing of, or becoming obligated to write, the premiums on which the expected future assessments are to be based. An entity that has the ability to reasonably estimate the amount of the assessments shall recognize a liability when the related premiums are written or when the entity becomes obligated to write the premiums. 3. c Prefunded-premium-based guaranty-fund assessments. A liability for an assessment arises when premiums are written. Accordingly, an entity that has the ability to reasonably estimate the amount of the assessment shall recognize a liability as the related premiums are written. 4. d Other premium-based assessments. Other premium-based assessments, as described in paragraph [405-30-05-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-5), would be accounted for in the same manner as prefunded-premium-based guaranty-fund assessments. 5. e Loss-based assessments. An assessment is probable of being asserted when the loss occurs. The obligating event of the assessment also has occurred when the loss occurs. Accordingly, an entity that has the ability to reasonably estimate the amount of the assessment shall recognize a liability as the related loss is incurred. ##### [405-30-25-7](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:f7fda36aa8f851f68805dcfc5bb33f3a23f01f1231d79ca13842578ea2a3081c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Administrative-type assessments are generally expensed in the period assessed. #### Asset for Premium Tax Offsets and Policy Surcharges ##### [405-30-25-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:e75b30d950d07ff81d394b7b0c70fab6ec39be603efbe4d583810c6f638bc6eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When it is probable that a paid or accrued assessment will result in an amount that is recoverable from [premium tax offsets](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states.") or policy surcharges, an asset shall be recognized for that recovery. ##### [405-30-25-9](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:782c5d372ff98c8b15dc33f61e15da646f9563eddbceed7e6c2cdf834688dda5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For retrospective-premium-based assessments, to the extent that it is probable that paid or accrued assessments will result in a recoverable amount in a future period from business currently in force considering appropriate persistency rates for long-duration contracts (see paragraph [405-30-30-11](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-11)), an asset shall be recognized at the time the liability is recorded. ##### [405-30-25-10](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:9076338f21299560ed186ae447a1ae7f2cd23ff27e809901338ef78c9b823a98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An asset shall not be established for paid or accrued assessments that are recoverable through future premium rate structures. ##### [405-30-25-11](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:457c184cb13488b747629acbd2eeeee8c282dc9d4102cddcd3360a5e65dc48bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Policy surcharges that are required as a pass-through to the state or other regulatory bodies shall be accounted for in a manner such that amounts collected or receivable are not recorded as revenues and amounts due or paid are not expensed (meaning, similar to accounting for sales tax). Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:4c411d998530b8ac9c69422ed2351a5a7220c488bf0db11fc8500834667d17fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/30/#30-initial-measurement) SEC content: no #### Estimating the Liability ##### [405-30-30-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:d77e87949b75a420f24aaac05077377788e0d5a46610c8e0a81a05dc91b6f620 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities subject to assessments may be able to obtain information to assist in estimating the total guaranty-fund cost or the following years' assessments, as appropriate, for an insolvency from entities such as the state guaranty fund associations, the National Organization of Life and Health Insurance Guaranty Associations, and the National Conference of Insurance Guaranty Funds. ##### [405-30-30-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:4161bbad6346dcf834b30b69f1cabed1b98e9cddd0815b8f1a1e6fccf9cf6066 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity need not be able to compute the exact amounts of the assessments or be formally notified of such assessments by a guaranty fund to make a reasonable estimate of its liability. Entities subject to assessments may have to make assumptions about future events, such as when the fund will incur costs and pay claims that will determine the amounts and the timing of assessments. ##### [405-30-30-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:c7209dda12210a710b3e7119365fa26325dc2cb3a3a7fd4504744a134170f5bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The best available information about market share or premiums by state and premiums by line of business shall be used to estimate the amount of an insurance entity's future assessments. ##### [405-30-30-4](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:81e352f23b3f5b692986b85e6007566ba13a660f502bd6b0b6bb897fdb4a7855 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a noninsurance entity's assessments are based on premiums, it may be necessary to consider the amount of premium the self-insurer would have paid if it had insured its liability with an insurer. If a noninsurance entity's assessments are based on losses, it shall consider the losses that have been incurred by the entity when determining the liability. Most often, assessments that have an impact on noninsurance entities that self-insure workers' compensation obligations are for second-injury funds. Second-injury funds generally assess insurance entities and self-insurers based on paid losses. ##### [405-30-30-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:d43e81158166da5c5781bbf95327770f87c6b02764bd6473e9a29dcda906a7e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A noninsurance entity may develop an accrual for its second-injury liability based on any of the following: 1. a The ratio of the entity's prior period paid workers' compensation claims to aggregate workers' compensation claims in the state that was used as a basis for previous assessments 2. b Total fund assessments in prior periods 3. c Known changes in the current period to either the number of employees self-insured by the entity or the number of workers who are the subject of recoveries from the second-injury fund that might alter total fund assessments and the entity's proportion of the total fund assessments. ##### [405-30-30-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:f46330a13319e276f14ca6a07d0986249a10170129d6b2806d9fa9d6887211d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimates of loss-based assessments shall be consistent with estimates of the underlying [incurred losses](https://asc.understandingaccounting.org/glossary/i/#incurred-losses "Losses paid or unpaid for which the entity has become liable during a period.") and shall be developed based on enacted laws or regulations and expected assessment rates. ##### [405-30-30-7](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:70d08640ac5b044e3eb8d7a83f26b058afd82b9a0c09a28c47bb3b857a62f4e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimates of some insurance-related assessment liabilities may be difficult to derive. The development or determination of estimates is particularly difficult for guaranty-fund assessments because of uncertainties about the cost of the insolvency to the guaranty fund and the portion that will be recovered through assessment. Examples of uncertainties include the following: 1. a Limitations, as provided by statute, on the amount of individual contract liabilities that the guaranty fund will assume, that cause the guaranty fund associations' liability to be less than the amount by which the entity is insolvent 2. b Contract provisions (for example, credited rates) that may be modified at the time of the insolvency or alternative payout options that may be offered to contract holders that affect the level and payout of the guaranty fund's liability 3. c The extent and timing of available [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") recoveries, which may be subject to significant uncertainties 4. d Alternative strategies for the liquidation of assets of the insolvent entity that affect the timing and level of assessments 5. e Certain liabilities of the insolvent insurer that may be particularly difficult to estimate (for example, asbestos or environmental liabilities). ##### [405-30-30-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:581d8088826f3b403a56b0c471649879e03ab317b87d5ccb1e41ae7c2c9ddd61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of the uncertainties surrounding some insurance-related assessments, the range of assessment liability may have to be reevaluated regularly during the assessment process. For some ranges, there may be amounts that appear to be better estimates than any other within the range. If this is the case, the liability recorded shall be based on the best estimate within the range. For ranges in which there is no such best estimate, the liability that should be recorded shall be based on the amount representing the minimum amount in the range. #### Present Value Measurement of the Obligation ##### [405-30-30-9](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:6613dbdfc72e2448a5d89cda8695545eb9ceecbfd16974e295d71e1c5f3689f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Current practice in the insurance industry is to allow, but not require (with limited exceptions, such as pensions and postretirement benefits), the discounting of liabilities to reflect the time value of money when the aggregate amount of the obligation and the amount and timing of the cash payments are fixed or reliably determinable for a particular liability. ##### [405-30-30-10](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:f51f0bdd8fe63073f46da5000bc8df5845fc5390671ca35568e1d07581c1d1d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, for assessments that meet those criteria, the liability may be recorded at its present value by discounting the estimated future cash flows at an appropriate interest rate. #### Asset for Premium Tax Offsets and Policy Surcharges ##### [405-30-30-11](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:108848b8b922df53ba14a09499a267972b33779d4d814b733480e9eaf3569f6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The asset recognized under paragraph [405-30-25-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-8) shall be measured based on current laws and projections of future premium collections or policy surcharges from [in-force policies](https://asc.understandingaccounting.org/glossary/i/#in-force-policies "Policies effective before a specified date that have not yet expired or been cancelled."). In determining the asset to be recorded, in-force policies do not include expected renewals of short-duration contracts but do include assumptions as to persistency rates for long-duration contracts. ##### [405-30-30-12](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:07eb4a854e63e41771cc571643e81af1a36842233c1b113c012d7caf62985c70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The time value of money need not be considered in the determination of the recorded amount of a potential recovery if the liability is not discounted. In instances in which the recovery period for an asset is substantially longer than the payout period for the liability, it may be appropriate to record the asset on a discounted basis regardless of whether the liability is discounted. ##### [405-30-30-13](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:5c81ecde68e55e7724b244782e37dcba53d967c0f02ef0a7e36834c1f2ddc018 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The recognition of such assets related to prospective-premium-based assessments is limited to the amount of premium an entity has written or is [obligated to write](https://asc.understandingaccounting.org/glossary/o/#obligated-to-write "A circumstance in which an entity has no discretion to cancel a policy because of legal obligation under state statute, contract terms, or regulatory practice and is required to offer or issue insurance policies for a period in the future.") and to the amounts recoverable over the life of the in-force policies. The expected premium tax offset or policy surcharge asset related to the accrual of prospective-premium-based assessments shall be based on and limited to the amount recoverable as a result of premiums the insurer has written or is obligated to write. Source downloaded (UTC): 2026-09-10T00:14:35.204Z to 2026-09-10T00:14:35.204Z Record version: sha256:19656d9ed34b4ace8d1e45749d2064ebb6dd8a8a5e9a90a003fe822726c1c972 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/30/#35-subsequent-measurement) SEC content: no #### Asset for Premium Tax Offsets and Policy Surcharges ##### [405-30-35-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:35.204Z to 2026-09-10T00:14:35.204Z Record version: sha256:a60dee53e81cef37d02bbdef0e171dfd8dd8f909a2327c0c54e1ed0010da993e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The asset recorded under paragraph [405-30-25-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-8) for [premium tax offsets](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states.") and policy surcharges shall be subject to a valuation allowance to reflect any portion of the asset that is no longer probable of realization. Considering expected future premiums other than on [in-force policies](https://asc.understandingaccounting.org/glossary/i/#in-force-policies "Policies effective before a specified date that have not yet expired or been cancelled.") in evaluating the recoverability of premium tax offsets or policy surcharges is not appropriate. Source downloaded (UTC): 2026-09-10T00:14:38.049Z to 2026-09-10T00:14:38.049Z Record version: sha256:a9c9316aed506364d894d118e816860c3b16a348493221c0a25188efabc312bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/30/#50-disclosure) SEC content: no ##### [405-30-50-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:38.049Z to 2026-09-10T00:14:38.049Z Record version: sha256:ac2c409f6b6c1dbf80b8aef7a4dbd6efe932e8db16b81dfd341bf0720378f962 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Sections 275-10-50 and 450-20-55 address disclosures related to loss contingencies. That guidance is applicable to assessments covered by this Subtopic. Additionally, if amounts have been discounted, the entity shall disclose in the financial statements the undiscounted amounts of the liability and any related asset for [premium tax offsets](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states.") or policy surcharges as well as the discount rate used. If amounts have not been discounted, the entity shall disclose in the financial statements the amounts of the liability, any related asset for premium tax offsets or policy surcharges, the periods over which the assessments are expected to be paid, and the period over which the recorded premium tax offsets or policy surcharges are expected to be realized. Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:d562420c8e6ae520c715ff380f46b6acd6edb724b86ffc842d0398697bf66ece Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [405-30-55-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:f1065cbc3bbdb4bdf9fc317740587fe18caa3750ff6d5e3a87584522e5e75094 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the recognition and measurement guidance in this Subtopic to a prospective-premium-based assessment. This kind of assessment is considered prospective because the assessment relates to premium written after the insolvency. As a result of insolvencies in prior years, ABC Property & Liability Insurance Company (ABC) expects to be assessed in the future by the guaranty fund in a state where it writes premiums. Any such assessments will be limited to 2 percent of premium writings in the prior year and are recoverable through [premium tax offsets](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states.") on a ratable basis over the 5-year period following the year of each assessment. ##### [405-30-55-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:b8ea4f5365ab7c12b11ce1e234f59d8051d2cf4aa38d9ed6aa7245804a1f8343 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although it does not expect to do so, ABC is free to cease writing the lines of business that are subject to the guaranty-fund assessments. ##### [405-30-55-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:a4f7799704535e13c9e3c8e05f8bbcd355acbb5b9261b6444d0a3ff9b9bd407d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of December 31, 19X0, ABC has neither paid nor received a notice of an assessment related to the insolvencies. Based on communications from the state guaranty association, ABC expects to receive an assessment in 19X1, which is allocated among entities based on 19X0 market share, for at least 1 percent of 19X0 premiums that are subject to the assessment. A best estimate cannot be determined, and no amount within the range of estimates (meaning, from 1 to 2 percent of 19X0 premiums) is a better estimate than any other amount, therefore the minimum amount in the range shall be accrued. ##### [405-30-55-4](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:6bf0ba30de2bd3cd2bec74ed2cc3adcabbfee87e216ab9e0cc582891454d1db0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of December 31, 19X0, ABC should recognize a liability equal to 1 percent of the [premiums written](https://asc.understandingaccounting.org/glossary/p/#premiums-written "The premiums on all policies an entity has issued in a period.") in 19X0 that are subject to the assessment. No additional liability should be recognized, and no asset related to the premium tax offset should be recognized. Disclosure of the loss contingency of up to an additional 1 percent of the subject premiums should be considered. ##### [405-30-55-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:5ae79943577373e60c5af65944c6a82060311712f306ebdd5a3026481fd4a2af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ABC would recognize a liability only for those future assessments it is obligated to pay as a result of the premiums written. Because ABC is not [obligated to write](https://asc.understandingaccounting.org/glossary/o/#obligated-to-write "A circumstance in which an entity has no discretion to cancel a policy because of legal obligation under state statute, contract terms, or regulatory practice and is required to offer or issue insurance policies for a period in the future.") any future premiums, its liability is limited to that related to premiums written in 19X0. Because no amount within the range of estimates is a better estimate than any other amount, the minimum amount in the range is accrued. Further, because the premium tax offset is realizable only on business that will be written in the future (that is, 19X2 and subsequent years), no asset or receivable is recognized as of December 31, 19X0. ##### [405-30-55-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:05b5b2106eeed3be8810501ff509542959a694e6c4cddcf4193e55d036e5eff8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the recognition and measurement guidance in this Subtopic to a retrospective-premium-based assessment. As a result of an insolvency that occurred during 19X0, DEF Life and Health Insurance Company (DEF) expects to be assessed in the future by the guaranty fund in a state where it has written business. Any such assessment will be based on DEF's average market share, determined based on premiums that are subject to the assessment for the three years before the insolvency, and limited to 2 percent of the average annual subject premiums for the three years before the insolvency. Further, such assessments are recoverable through premium tax offsets over the five-year period following the year of payment for each assessment. ##### [405-30-55-7](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:7a62c80adc3436aa8c44cdb392193fafeeeb2fe0394220c4b7ab51113232c258 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of December 31, 19X0, DEF has not paid or received a notice of an assessment related to the insolvency. Based on initial input from the National Organization of Life and Health Insurance Guaranty Associations and experience with other insolvencies, DEF assumes that the first assessment will not be made until 19X3 and that it will take three to five annual assessments for the guaranty fund to be able to meet its obligations. Based on the estimated nationwide cost of the insolvency and the distribution of the insolvent entity's business, DEF estimates that its assessment will be at least 1 percent of the average annual premiums that are subject to the assessment. No amount within the range of estimates (meaning, from 1 to 2 percent of the average annual premiums for 3 to 5 years) is a better estimate than any other amount, therefore the minimum amount in the range shall be accrued. ##### [405-30-55-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:d7f0735eb7db43963c26dfcd360471988bfba89bf1d8cbbe1cd291eaf55efeaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of December 31, 19X0, DEF should recognize a liability for 3 years of assessments at 1 percent of the average annual premiums that are subject to the assessment (that is, the assessments expected in 19X3, 19X4, and 19X5). Disclosure of the loss contingency for additional assessments (meaning, in 19X6 and 19X7) or assessment of greater than 1 percent of the average annual premiums that are subject to the assessment should be considered. An asset related to premium tax offsets that are available on accrued assessments would be recorded provided there were sufficient premium taxes based on business in force at December 31, 19X0 (with assumed levels of policy retention), to allow realization of the asset. ##### [405-30-55-9](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:9cc4c9a68a2044e5e01888bdf64b627eb428f895aa920907d3b5034f84cce5d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The resulting recognized liability and asset are as follows (shown on both a discounted and undiscounted basis, based on paragraphs [405-30-30-9 through 30-12](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-9) , discounting is optional), assuming average annual subject premiums of $100,000 for the 3 years before the insolvency. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-530A389B-C873-46E0-AB17-71B6016FBF4B-low.gif) Recorded at Cash Payments Assessments 12/31/19X0 19X1 19X2 19X3 19X4 19X5 19X6 19X7 19X8 19X9 20X0 19X3 Assessment " 1,000 " 19X4 Assessment " 1,000 " 19X5 Assessment " 1,000 " Total " 3,000 " " 1,000 " " 1,000 " " 1,000 " Premium tax offset 19X3 Assessment (a) 200 200 200 200 200 19X4 Assessment (a) 200 200 200 200 200 19X5 Assessment (a) 200 200 200 200 200 Total " 3,000 " 200 400 600 600 600 400 200 Present value of assessments At 12/31/19X0 (b) " 2,470 " Present value of premium Tax offset at 12/31/19X0 (b) " 2,139 " "(a) Assumed that, based upon anticipated levels of policy retention from the business in force at December 31, 19X0, there will be sufficient premium to realize the premium tax offset." "(b) Discounted at 5 percent, assuming all assessments are paid and offsets realized at the end of each year." ##### [405-30-55-10](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:f098ab1a49b36e788a7102988b470be6bcc4567bd7bbf09f49bacaf5d926f380 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. DEF would record a liability for all future assessments related to the insolvency. Because no amount within the range of estimates (meaning, from 1 to 2 percent of the average annual premiums for 3 to 5 years) is a better estimate than any other amount, the minimum amount in the range (meaning, 1 percent per year for 3 years of assessments) is accrued. ##### [405-30-55-11](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:27025bd1482058c2aa329a1bbd7e5e24864e52a4516df14f0dd708e0b41fc880 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Since it is assumed that based on the anticipated levels of policy retention from the business in force at December 31, 19X0, there will be sufficient premium to realize the premium tax offset, the premium tax offset is recorded. ##### [405-30-55-12](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:5d78bbe52798ebdf8c2408b955489947fc5cbde45abee16ac3820f1b59a77ff7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the recognition and measurement guidance in this Subtopic to a loss-based assessment. GHI Industrial Company (GHI) is self-insured for workers' compensation and therefore participates in the second injury fund in the state where it conducts operations. GHI is entitled to recover from the fund some or all of the indemnity claims for previously injured workers. GHI is also subject to annual assessments (maximum of 1 percent per year) on indemnity claims paid each year. ##### [405-30-55-13](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:51c87ac9020645eb109e2b78ca4a1457214b92bf3f729e625d84aed702702233 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assessment rates have been climbing steadily, from 0.6 percent 5 years previous to 0.75 percent in 19X0. ##### [405-30-55-14](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:fd4eee4df5abf4809d551dfebde8be2ab6a3a9237e374c95e342e2c1975f514b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of December 31, 19X0, GHI should have an assessment liability recognized for 0.75 percent of its liability for the payment of future indemnity claims, unless there was information to support the assessment rate being reduced or the assessments being eliminated in the future. Disclosure of the loss contingency of up to an additional 0.25 percent of the liability for the payment of future indemnity claims should be considered. ##### [405-30-55-15](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:c670f6e8a655df39dd75de6d111bfa86021117361147fc837d43eea36433e6e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. GHI would recognize a liability based on the current assessment rate, unless there was clear evidence that the rate would change. The liability would be based on the entire liability base that was subject to the assessment. 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._ Source downloaded (UTC): 2026-09-10T00:15:18.657Z to 2026-09-10T00:15:40.809Z Record version: sha256:84bf3acfed55b4d5322f025348dee9ff5876047d96c1a089a1e4bfbce95b91d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-50: Liabilities — Liabilities—Supplier Finance Programs ### Machine-generated study aids ```json { "summary": "ASC 405-50 is a disclosure-only subtopic requiring the buyer in a supplier finance program (also called reverse factoring, payables finance, or structured payables) to disclose qualitative and quantitative information about the program. A supplier finance program exists when the buyer agrees with a finance provider or intermediary, confirms supplier invoices as valid to that party, and the supplier can request early payment from a party other than the buyer (405-50-15-2). The subtopic does not address recognition, measurement, or balance sheet presentation of the obligation, or the accounting by other parties (405-50-10-2).", "key_points": [ "Scope: applies to all buyers using arrangements with the three characteristics in 405-50-15-2 — an agreement with a finance provider/intermediary, buyer confirmation of supplier invoices as valid, and the supplier's option to request early payment from a party other than the buyer.", "An indicator (not determinative) of a supplier finance program is a commitment to pay a party other than the supplier for a confirmed invoice without offset, deduction, or other defenses to payment (405-50-15-3); all available evidence, including buyer-supplier arrangements, must be considered (405-50-15-4).", "The subtopic is disclosure-only: it does not address the buyer's recognition, measurement, or financial statement presentation of the obligation, nor accounting by other parties to the program (405-50-10-2).", "Disclosure objective is to let users understand the nature, activity during the period, changes from period to period, and potential magnitude of the programs (405-50-50-1); multiple programs may be aggregated unless aggregation obscures useful information about programs with substantially different characteristics (405-50-50-2).", "Annually, disclose key terms — payment terms including payment timing and the basis for its determination, and assets pledged as security or other forms of guarantees for the committed payment (405-50-50-3(a)).", "Annually, disclose the amount of obligations confirmed as valid and unpaid at period-end, where they are presented in the balance sheet (by line item if more than one), and a rollforward showing beginning balance, additions, settlements, and ending balance (405-50-50-3(b)).", "In each interim reporting period, disclose the amount of confirmed obligations outstanding at the end of the period (405-50-50-4)." ], "categories": [ "Disclosure", "Presentation", "Financial statement presentation", "Debt and equity" ], "audience_level": "intermediate", "student_note": "This is a transparency rule born of concerns that reverse factoring lets companies stretch payment terms while still classifying the obligation as a trade payable rather than debt; the common misunderstanding is thinking ASC 405-50 dictates that classification — it does not, it only requires the buyer to disclose where the obligation is presented and how it moved during the period.", "related_topics": [ "470", "860", "230", "270", "405-40" ], "key_concepts": [ "supplier finance program", "reverse factoring", "confirmed invoice", "finance provider or intermediary", "rollforward disclosure", "trade payables", "interim disclosure", "balance sheet presentation" ] } ``` Source downloaded (UTC): 2026-09-10T00:15:18.657Z to 2026-09-10T00:15:18.657Z Record version: sha256:cc05a60a85fb933f48887cfae91123ed99452ea50958fe145ea80f17651d74e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-50-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/50/#00-status) SEC content: no ##### [405-50-00-1](https://asc.understandingaccounting.org/asc/405/50/#405-50-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:18.657Z to 2026-09-10T00:15:18.657Z Record version: sha256:6e75694c86a661991fafb4a6af40df2a565aa83749bcc04a7eaaddf111ea1a54 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
405-50-05-1AddedAccounting Standards Update No. 2022-0409/29/2022
405-50-10-1AddedAccounting Standards Update No. 2022-0409/29/2022
405-50-10-2AddedAccounting Standards Update No. 2022-0409/29/2022
405-50-15-1 through 15-4
AddedAccounting Standards Update No. 2022-0409/29/2022
405-50-50-1 through 50-4
AddedAccounting Standards Update No. 2022-0409/29/2022
405-50-55-1 through 55-5
AddedAccounting Standards Update No. 2022-0409/29/2022
405-50-65-1AddedAccounting Standards Update No. 2022-0409/29/2022
Source downloaded (UTC): 2026-09-10T00:15:22.160Z to 2026-09-10T00:15:22.160Z Record version: sha256:6f0ecafb167b61b31b391bb492e77987581ead01d353062a6aff9cff03c822ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-50-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/50/#05-overview-and-background) SEC content: no ##### [405-50-05-1](https://asc.understandingaccounting.org/asc/405/50/#405-50-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:22.160Z to 2026-09-10T00:15:22.160Z Record version: sha256:c3bee2a551e2be7c5a6505e9e9fdc970372e20cd64df2ad83159fe8306c758bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the disclosures applicable for an entity that uses a supplier finance program in connection with the purchase of goods and services (the buyer in a supplier finance program). A supplier finance program also may be referred to as a reverse factoring, payables finance, or structured payables arrangement. Source downloaded (UTC): 2026-09-10T00:15:24.411Z to 2026-09-10T00:15:24.411Z Record version: sha256:e1fb71b49b81f01dbf2092a58c7374942aabacdd8735850d2caa6ae04564531b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-50-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/405/50/#10-objectives) SEC content: no ##### [405-50-10-1](https://asc.understandingaccounting.org/asc/405/50/#405-50-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:24.411Z to 2026-09-10T00:15:24.411Z Record version: sha256:a459802c86131739f703de60214b2efe32b9cb4dd0cc30cdb1c57a56a9673905 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of this Subtopic is to establish disclosures that enhance the transparency of a supplier finance program used by an entity in connection with the purchase of goods and services (the buyer in a supplier finance program). ##### [405-50-10-2](https://asc.understandingaccounting.org/asc/405/50/#405-50-10-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:24.411Z to 2026-09-10T00:15:24.411Z Record version: sha256:943a319230de66246bc74aedb5dc57b4b722ce16d34aab40e12a5ed484d95ced Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not address either of the following: 1. a A buyer’s recognition, measurement, or financial statement presentation of an obligation in connection with a supplier finance program 2. b The accounting and disclosure for other parties involved in a supplier finance program. Source downloaded (UTC): 2026-09-10T00:15:27.496Z to 2026-09-10T00:15:27.496Z Record version: sha256:6ce4b7a63776818b7cdee8cd0484b7b22725b5a336a119ab03c27bca928dae4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-50-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/50/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [405-50-15-1](https://asc.understandingaccounting.org/asc/405/50/#405-50-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:27.496Z to 2026-09-10T00:15:27.496Z Record version: sha256:c7c740dbe0f1d0d7d83db02807065a68ef56081d6ab75e1888d5ead448f27885 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities that use supplier finance programs in connection with the purchase of goods and services (buyers in a supplier finance program). #### Transactions ##### [405-50-15-2](https://asc.understandingaccounting.org/asc/405/50/#405-50-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:27.496Z to 2026-09-10T00:15:27.496Z Record version: sha256:2ae812d914491168ad5ebe9bd389d99ddaf08becc64170d73f85b6034ea308d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to obligations in connection with supplier finance programs. A supplier finance program is an arrangement that has all the following characteristics: 1. a An entity enters into an agreement with a finance provider or an intermediary. 2. b The entity confirms supplier invoices as valid to the finance provider or intermediary under the agreement described in (a). 3. c The entity’s supplier has the option to request early payment from a party other than the entity for invoices that the entity has confirmed as valid. ##### [405-50-15-3](https://asc.understandingaccounting.org/asc/405/50/#405-50-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:27.496Z to 2026-09-10T00:15:27.496Z Record version: sha256:4e80d3026606ca1e916391314abd92a62185b9639d590a8fc8756a7e8baa4eab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although not determinative, an indicator that an entity may have a supplier finance program is the commitment to pay a party other than the supplier for a confirmed invoice without offset, deduction, or any other defenses to payment. ##### [405-50-15-4](https://asc.understandingaccounting.org/asc/405/50/#405-50-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:27.496Z to 2026-09-10T00:15:27.496Z Record version: sha256:acde2bb918a820e2a988c677b10f430d3ef3f46a7314e8832c13f6110dc40be7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In determining whether an entity has established a supplier finance program and, therefore, is subject to the disclosures required by this Subtopic, all available evidence shall be considered, including arrangements between the entity and its finance provider or intermediary and between the entity and its suppliers whose invoices the entity has confirmed as valid to the finance provider or intermediary. Source downloaded (UTC): 2026-09-10T00:15:33.286Z to 2026-09-10T00:15:33.286Z Record version: sha256:5cd487b2ec05542f2b4678529cedb394a1515f8df9decf8e41411fb0fc24404f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-50-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/50/#50-disclosure) SEC content: no ##### [405-50-50-1](https://asc.understandingaccounting.org/asc/405/50/#405-50-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:33.286Z to 2026-09-10T00:15:33.286Z Record version: sha256:c4d63a3f6a24c0186e4409a83fbb9ed142aae4461cf4b308de31bf6c3e196fe9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the requirements in this Subtopic is for an entity to disclose sufficient information to enable users of financial statements to understand the nature, activity during the period, changes from period to period, and potential magnitude of the entity’s supplier finance programs. To achieve that objective, an entity shall disclose qualitative and quantitative information about its supplier finance programs. ##### [405-50-50-2](https://asc.understandingaccounting.org/asc/405/50/#405-50-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:33.286Z to 2026-09-10T00:15:33.286Z Record version: sha256:331101834776d17022378510f8d08d534154e7988d9b25575c4912ce176c03d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall consider the level of detail necessary to satisfy the disclosure objective. If an entity uses more than one supplier finance program, the entity may aggregate disclosures, but not to the extent that useful information is obscured by the aggregation of programs that have substantially different characteristics. ##### [405-50-50-3](https://asc.understandingaccounting.org/asc/405/50/#405-50-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:33.286Z to 2026-09-10T00:15:33.286Z Record version: sha256:1e7edcd551bb4f65aa05c9fcef4de41d451a9ba0fb0b04a0c20b09fb642e238a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In each annual reporting period, an entity shall disclose all the following information about its supplier finance programs: 1. a The key terms of the program, including, but not limited to: 1. 1 A description of the payment terms, including payment timing and the basis for its determination 2. 2 Assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary. See paragraphs [405-50-55-1 through 55-3](https://asc.understandingaccounting.org/asc/405/50/#405-50-55-1) for an illustrative example. 2. b The amount of obligations outstanding at the end of the reporting period that the entity has confirmed as valid to the finance provider or intermediary under the program (that is, the amount of obligations confirmed under the program that remains unpaid by the entity) and the following information about those obligations: 1. 1 Where those obligations are presented in the balance sheet. If those obligations are presented in more than one balance sheet line item, then the entity shall disclose the amount outstanding at the end of the reporting period in each line item. 2. 2 A rollforward of those obligations showing, at a minimum, all the following: 1. i The amount of those obligations outstanding at the beginning of the reporting period 2. ii The amount of those obligations added to the program during the reporting period 3. iii The amount of those obligations settled during the reporting period 4. iv The amount of those obligations outstanding at the end of the reporting period. ##### [405-50-50-4](https://asc.understandingaccounting.org/asc/405/50/#405-50-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:33.286Z to 2026-09-10T00:15:33.286Z Record version: sha256:5b8f19ff85cd6cfc2d86b86cfa7680210a7c227dc14dd2ce72b10d75ddb40e8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In each interim reporting period, an entity shall disclose the amount of obligations outstanding that the entity has confirmed as valid to the finance provider or intermediary under the supplier finance program at the end of the reporting period. Source downloaded (UTC): 2026-09-10T00:15:36.231Z to 2026-09-10T00:15:36.231Z Record version: sha256:531807bbdcccacf3234784d690774c988633768d7a36e41ffce89f639ae0c486 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-50-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/50/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [405-50-55-1](https://asc.understandingaccounting.org/asc/405/50/#405-50-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:36.231Z to 2026-09-10T00:15:36.231Z Record version: sha256:94ba8d2cd70e1af27ff3b9e8888f24f48c43b5322224f421e5be8b1fefe7b078 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the limited facts and hypothetical fact pattern described in paragraph [405-50-55-2](https://asc.understandingaccounting.org/asc/405/50/#405-50-55-2), this Example illustrates how an entity might apply the guidance in paragraph [405-50-50-3(a)](https://asc.understandingaccounting.org/asc/405/50/#405-50-50-3) to disclose the key terms of a supplier finance program, including a description of the payment terms (which includes payment timing and basis for its determination) and the assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary. This Example is not intended to illustrate every aspect of the key terms of a program that should be disclosed by a buyer entity. Identifying the key terms of a supplier finance program is a matter of judgment, based upon the facts of the arrangement. ##### [405-50-55-2](https://asc.understandingaccounting.org/asc/405/50/#405-50-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:36.231Z to 2026-09-10T00:15:36.231Z Record version: sha256:8f84c75659e8071cce24c7c901c46fc76d67c39f46de26a6813b086491176fc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A enters into a supplier finance program with Bank B in which Entity A agrees to pay Bank B on the invoice maturity dates the stated amount of invoices that Entity A has confirmed on Bank B’s supplier finance platform. Entity A pays Bank B an annual subscription fee for the supplier finance platform and a service fee for related support. Entity A or Bank B may terminate the agreement upon at least 90 days’ notice. The agreement with Bank B does not require that Entity A provide assets pledged as security or other forms of guarantees for the supplier finance program. Bank B does not advise Entity A of the maximum size of the program. Bank B also enters into a separate arrangement with Entity A’s suppliers and provides them with the option to request early payment from Bank B for invoices confirmed by Entity A. Entity A does not determine the terms or conditions of the arrangement between Bank B and Entity A’s suppliers. Entity A does not participate in the transactions between its suppliers and Bank B. The supplier invoices that have been confirmed as valid under the program require payment in full within 90 days of the invoice date. ##### [405-50-55-3](https://asc.understandingaccounting.org/asc/405/50/#405-50-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:36.231Z to 2026-09-10T00:15:36.231Z Record version: sha256:bfdb1582a77838e26e45fbf3b0fd72c28bc5826c4734994755cdf718a40c1169 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A determined that it should disclose the following information on the key terms of its supplier finance program: - Under a supplier finance program, Entity A agrees to pay a bank the stated amount of confirmed invoices from its designated suppliers on the original maturity dates of the invoices, an annual subscription fee for the supplier finance platform, and service fees for related support. Entity A or the bank may terminate the agreement upon at least 90 days’ notice. The supplier invoices that have been confirmed as valid under the program require payment in full within 90 days of the invoice date. ##### [405-50-55-4](https://asc.understandingaccounting.org/asc/405/50/#405-50-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:36.231Z to 2026-09-10T00:15:36.231Z Record version: sha256:62b0fa53a2cd6e32d421ce0f4e850f99f6912460f0d7a8df4d005be618cbc1b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example provides an illustration of the guidance in paragraph [405-50-50-3(b)(2)](https://asc.understandingaccounting.org/asc/405/50/#405-50-50-3) based on the assumptions that Entity A provides one comparative balance sheet and that its supplier finance program is denominated in Entity A’s reporting currency. ##### [405-50-55-5](https://asc.understandingaccounting.org/asc/405/50/#405-50-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:36.231Z to 2026-09-10T00:15:36.231Z Record version: sha256:f4f34a5a0b5dd1208481e1c24399a2ad7d211b10ceabb2d5109bc7f3869f3219 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following illustrates the disclosures in a tabular format. - The rollforwards of Entity A’s outstanding obligations confirmed as valid under its supplier finance program for years ended December 31, 20X2, and 20X1, are as follows (in thousands): - ![](https://asc.understandingaccounting.org/asc-img/GUID-31DDE6E6-37F1-47B6-AB34-CDD8218C8A06-low.gif) 20X2 20X1 Confirmed obligations outstanding at the beginning of the year $ 733 $ 712 Invoices confirmed during the year "2,435 " "2,278 " Confirmed invoices paid during the year "(2,315)" "(2,257)" Confirmed obligations outstanding at the end of the year $ 853 Source downloaded (UTC): 2026-09-10T00:15:38.064Z to 2026-09-10T00:15:38.064Z Record version: sha256:b90753a0cb58c9448a222972cf68df9d21467918ded2c3ac16c1d0a887e9cc0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-50-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/405/50/#65-transition-and-open-effective-date-information) SEC content: no ##### [405-50-65-1](https://asc.understandingaccounting.org/asc/405/50/#405-50-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:38.064Z to 2026-09-10T00:15:38.064Z Record version: sha256:93a8b45ca22108289a7439c1033513ee4e81657de5bc923ce4b53198d6406235 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/02/2026 after the end of the transition period stated in Accounting Standards Update No. 2022-04, _Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations_. Source downloaded (UTC): 2026-09-10T00:15:44.426Z to 2026-09-10T00:16:03.076Z Record version: sha256:be12a2d8b6222b506ebeb6bd44f6c4dfd39882b08de5b1301e350fb07c537b82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905: Liabilities — Agriculture ### Machine-generated study aids ```json { "summary": "ASC 405-905 governs liabilities of agricultural entities, with Cooperatives Subsections addressing how agricultural cooperatives account for product deliveries from patrons. When a pooling marketing cooperative's board assigns amounts to unprocessed products received from patrons, those assigned amounts must approximate estimated net realizable value and are credited to amounts due patrons, creating a short-term liability. Excess of pool revenues over assigned amounts and operating costs is paid or allocated to patrons pro rata, and retained allocated equities may be mandatorily redeemable instruments requiring liability classification under Subtopic 480-10.", "key_points": [ "Pooling cooperatives (marketing cooperatives operating on a pooling basis with no obligation to pay patrons fixed prices) that assign amounts to unprocessed products received from patrons must credit those assigned amounts to amounts due patrons, and the assigned amounts should approximate estimated net realizable value (405-905-25-1).", "The cooperative estimates a liability to patrons equal to the assigned amount for delivered product and usually pays it on a short-term basis (405-905-25-2).", "At the end of a pool period (a week, month, year, or longer), the excess of revenues over assigned amounts and operating costs is paid or allocated to patrons, and assets equal to that excess may be distributed or retained by the cooperative (405-905-25-2).", "Where patrons' fungible products are commingled in pools, the excess of revenues over costs for each pool is allocated to patrons pro rata based on units delivered, volume delivered, or another equitable method (405-905-30-1).", "Per-unit retains, deducted from estimated proceeds due producers and based on quantity delivered, are a financing method for the cooperative; patron-side treatment is in the Cooperatives—Patrons Subsection of Section 905-325-30 (405-905-30-2).", "Retained allocated equities, usually repaid to patrons over a specified number of years, may meet the definition of mandatorily redeemable financial instruments under Subtopic 480-10 and may have to be classified as liabilities (405-905-30-3).", "Scope follows the General and Cooperatives Subsections of Section 905-10-15 (405-905-15-1 and 15-2)." ], "categories": [ "Recognition", "Initial measurement", "Industry-specific", "Debt and equity" ], "audience_level": "intermediate", "student_note": "Tested rarely but a clean illustration of substance-over-form: a cooperative's obligation to its patron-owners is a liability measured at assigned amounts approximating NRV, not equity. The common misunderstanding is assuming all patron equities are equity — retained allocated equities repayable over a set number of years may be mandatorily redeemable and thus liabilities under ASC 480-10.", "related_topics": [ "905-10", "905-330", "905-325", "480-10", "905-505" ], "key_concepts": [ "agricultural cooperative", "pooling cooperative", "amounts due patrons", "assigned amounts", "estimated net realizable value", "per-unit retains", "retained allocated equities", "mandatorily redeemable financial instruments" ] } ``` Source downloaded (UTC): 2026-09-10T00:15:44.426Z to 2026-09-10T00:15:44.426Z Record version: sha256:89cbba220ea8e4fa73ee5d81a0326b1404e8737630a67bd07cc69bc286757175 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/905/#00-status) SEC content: no ##### [405-905-00-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:44.426Z to 2026-09-10T00:15:44.426Z Record version: sha256:ed944bee768284b52ec8cbc98595b53714afcd2463eaedbb3af2457de5b32712 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
Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
CooperativesSupersededAccounting Standards Update No. 2014-0603/14/2014
Member of an Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
Net Realizable ValueAddedAccounting Standards Update No. 2015-1107/22/2015
Nonmember of an Agricultural CooperativeAddedAccounting Standards Update No. 2014-0603/14/2014
PatronsAmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-05-1AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-05-2AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-15-2AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-25-1AmendedAccounting Standards Update No. 2015-1107/22/2015
905-405-25-1AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-30-1AmendedAccounting Standards Update No. 2014-0603/14/2014
905-405-30-3AmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T00:15:48.487Z to 2026-09-10T00:15:48.487Z Record version: sha256:e031e8af48ed8a4d43540421eaf659fbf02c3423e0a6aafcd4c84004e40bfb05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/905/#05-overview-and-background) SEC content: no ##### [405-905-05-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:48.487Z to 2026-09-10T00:15:48.487Z Record version: sha256:352a6e7e9bfab7366a47d7c4b8024e9d091b585ae78f90f91ea200489fb2bd55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses liabilities for entities in the agricultural industry. The guidance for accounting by [agricultural cooperatives](https://asc.understandingaccounting.org/glossary/a/#agricultural-cooperative "The Agricultural Marketing Act of 1929 defines a cooperative association as any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services. Provided, however, that such associations are operated for producers or purchasers and conform to one or both of the following requirements: No member of an agricultural cooperative association is allowed more than one vote because of the amount of stock or membership capital he may own therein. The association does not pay dividends on stock or membership capital in excess of 8 percent per year. In addition to meeting either of the requirements in this paragraph, the association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers of an agricultural cooperative in an amount greater in value than the total amount of such business transacted by it with or for members. All business transacted by any cooperative association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association.") is presented in the Cooperatives Subsections. ### Cooperatives ##### [405-905-05-2](https://asc.understandingaccounting.org/asc/405/905/#405-905-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:48.487Z to 2026-09-10T00:15:48.487Z Record version: sha256:631219c7c4cfa55af328348629dd333dd86a43efdff151f4699bca96ad5f5996 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cooperatives Subsections provide guidance for [agricultural cooperatives](https://asc.understandingaccounting.org/glossary/a/#agricultural-cooperative "The Agricultural Marketing Act of 1929 defines a cooperative association as any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services. Provided, however, that such associations are operated for producers or purchasers and conform to one or both of the following requirements: No member of an agricultural cooperative association is allowed more than one vote because of the amount of stock or membership capital he may own therein. The association does not pay dividends on stock or membership capital in excess of 8 percent per year. In addition to meeting either of the requirements in this paragraph, the association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers of an agricultural cooperative in an amount greater in value than the total amount of such business transacted by it with or for members. All business transacted by any cooperative association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association.") accounting for product deliveries from [patrons](https://asc.understandingaccounting.org/glossary/p/#patrons "Any individual, trust, estate, partnership, corporation, or agricultural cooperative with or for whom a cooperative does business on a cooperative basis, whether a member of an agricultural cooperative or nonmember of an agricultural cooperative."). Source downloaded (UTC): 2026-09-10T00:15:52.537Z to 2026-09-10T00:15:52.537Z Record version: sha256:2bf9b84c9ff1cdab0367ec016e29ba2a6e66c9da47b9b98ddaeab2835411e35a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/905/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-905-15-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:52.537Z to 2026-09-10T00:15:52.537Z Record version: sha256:324ab2388b9011d318bbf394a689f40b16a4fd06554c0de93a5ab91863189406 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see the [General Subsection](https://asc.understandingaccounting.org/asc/905/10/#15-scope-and-scope-exceptions) of Section 905-10-15. ### Cooperatives ##### [405-905-15-2](https://asc.understandingaccounting.org/asc/405/905/#405-905-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:52.537Z to 2026-09-10T00:15:52.537Z Record version: sha256:b9f52696c82dc7ecbd6b27733419a1a499eee0e85ea227e70393c006b1fda984 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cooperatives Subsections follow the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see the [Cooperatives Subsection](https://asc.understandingaccounting.org/asc/905/10/#15-scope-and-scope-exceptions) of Section 905-10-15. Source downloaded (UTC): 2026-09-10T00:15:59.322Z to 2026-09-10T00:15:59.322Z Record version: sha256:0e131a9efd3086750bfdf265ab7c352919d1ca5ff46a1c928f235e37ac54f3e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/905/#25-recognition) SEC content: no ### Cooperatives #### Pooling Cooperatives ##### [405-905-25-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:59.322Z to 2026-09-10T00:15:59.322Z Record version: sha256:ba7664809340d0d7aa2a12f25e351fe55378fcf655f0034ef98cceb90bf8f014 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the boards of directors of agricultural marketing cooperatives operating on a pooling basis with no obligation to pay [patrons](https://asc.understandingaccounting.org/glossary/p/#patrons "Any individual, trust, estate, partnership, corporation, or agricultural cooperative with or for whom a cooperative does business on a cooperative basis, whether a member of an agricultural cooperative or nonmember of an agricultural cooperative.") fixed prices (pooling cooperatives) assign amounts that approximate estimated [net realizable value](https://asc.understandingaccounting.org/glossary/n/#net-realizable-value "Estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.") to unprocessed products received from patrons, the [assigned amounts](https://asc.understandingaccounting.org/glossary/a/#assigned-amounts "Amounts used to record products delivered by patrons of a marketing cooperative operating on a pooling basis, and the related liability to patrons if the ultimate amounts to be paid to patrons are determined when the pool is closed. These amounts may be established on the basis of current prices paid by other buyers (sometimes referred to as field prices), or they may be established by the cooperative's board of directors. The assigned amounts are sometimes referred to as established values.") shall be credited to amounts due patrons. When assigned amounts are used, they should approximate estimated net realizable value of unprocessed products delivered by patrons (an example of inventories at lower of cost and net realizable value is provided in Example 1 (see paragraph [905-330-55-1](https://asc.understandingaccounting.org/asc/330/905/#330-905-55-1))). #### Marketing Cooperatives ##### [405-905-25-2](https://asc.understandingaccounting.org/asc/405/905/#405-905-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:15:59.322Z to 2026-09-10T00:15:59.322Z Record version: sha256:3a56870ab6cafa53ad699f5b43c5841b293a2bf5b5c41863ac673b2af1583f33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cooperative estimates a liability to patrons equal to the assigned amount for the delivered product, and it usually pays this liability on a short-term basis. The excess of revenues over the assigned amounts and operating costs at the end of a pool period, which may be a week, a month, a year, or longer, is paid or allocated to patrons. Assets equal to that excess may be distributed to the patrons or retained by the cooperative. Source downloaded (UTC): 2026-09-10T00:16:03.076Z to 2026-09-10T00:16:03.076Z Record version: sha256:a314f60d1bf2c3c6f28883f7a06999ffa6fce6981d195669f7beaab9c654aec3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-905-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/905/#30-initial-measurement) SEC content: no ### Cooperatives ##### [405-905-30-1](https://asc.understandingaccounting.org/asc/405/905/#405-905-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:03.076Z to 2026-09-10T00:16:03.076Z Record version: sha256:6dd67bd28b7c8f646e38019ca9940ca9a6c72849992d06fcc71ae341f003bb49 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many marketing cooperatives commingle patrons' fungible products in [pools](https://asc.understandingaccounting.org/glossary/p/#pools "Pools are accounting control centers used for determining earnings and patronage refunds due to particular patrons, including the following: An open pool is an accounting control center that is not closed at the end of each accounting period. Open pools are sometimes used by marketing cooperatives for crops that may not be sold for two or more years after their receipt from patrons. A single pool cooperative determines net proceeds or patronage refunds on the basis of overall operating results for all commodities marketed during an accounting period. A multiple pool cooperative determines net proceeds or patronage refunds on the basis of separate commodities, departments, or accounting periods."). The excess of revenues over costs for each pool is allocated to [patrons](https://asc.understandingaccounting.org/glossary/p/#patrons "Any individual, trust, estate, partnership, corporation, or agricultural cooperative with or for whom a cooperative does business on a cooperative basis, whether a member of an agricultural cooperative or nonmember of an agricultural cooperative.") on the basis of their pro rata contributions to the pool, which may be determined by the number of units delivered, the volume of product delivered, or another equitable method. #### Retains ##### [405-905-30-2](https://asc.understandingaccounting.org/asc/405/905/#405-905-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:03.076Z to 2026-09-10T00:16:03.076Z Record version: sha256:11c8be9c0d3e86cab402d4a39f0b39654fc92285e9a9983570f616f6ea84947a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Marketing cooperatives often deduct per-unit [retains](https://asc.understandingaccounting.org/glossary/r/#retains "Amounts determined on a per-unit basis or as a percentage of patronage earnings that are withheld by cooperatives from distributions and allocated to patrons' capital accounts.") from the estimated proceeds due producers. Per-unit retains are based on the quantity of product delivered by the producer and are a method of financing for the cooperative. See the [Cooperatives—Patrons Subsection](https://asc.understandingaccounting.org/updates/page-2147482381/) of Section 905-325-30 for treatment of retains by cooperative patrons. ##### [405-905-30-3](https://asc.understandingaccounting.org/asc/405/905/#405-905-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:03.076Z to 2026-09-10T00:16:03.076Z Record version: sha256:9db89eeca1cd7c9a369843f4b45e8ee5328340e856a0e5856ac728644aee825b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When [agricultural cooperatives](https://asc.understandingaccounting.org/glossary/a/#agricultural-cooperative "The Agricultural Marketing Act of 1929 defines a cooperative association as any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services. Provided, however, that such associations are operated for producers or purchasers and conform to one or both of the following requirements: No member of an agricultural cooperative association is allowed more than one vote because of the amount of stock or membership capital he may own therein. The association does not pay dividends on stock or membership capital in excess of 8 percent per year. In addition to meeting either of the requirements in this paragraph, the association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers of an agricultural cooperative in an amount greater in value than the total amount of such business transacted by it with or for members. All business transacted by any cooperative association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association.") have retained allocated equities, they are usually repaid to cooperative patrons over a specific number of years. These retained allocated equities may meet the definition of mandatorily redeemable financial instruments under Subtopic 480-10 and as such may have to be classified as liabilities. Source downloaded (UTC): 2026-09-10T00:16:06.424Z to 2026-09-10T00:16:15.597Z Record version: sha256:db21e4661c6322e0d3b578927353e8c9e49b9cac6bce6270105189b017462c4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-910: Liabilities — Contractors—Construction ### Machine-generated study aids ```json { "summary": "ASC 405-910 formerly provided liability guidance (offsetting/presentation and disclosure of advances, billings, and related contractor obligations) for construction contractors. Every paragraph in the subtopic — Sections 05, 15, 45, and 50 — was superseded by ASU 2014-09 (Revenue from Contracts with Customers). As a result, the subtopic contains no operative guidance; contract liabilities of construction contractors are now addressed under ASC 606 (and contract costs under ASC 340-40).", "key_points": [ "All content of ASC 405-910 was superseded by Accounting Standards Update No. 2014-09, including 405-910-05-1, 405-910-15-1, 405-910-45-1 and 45-2, and 405-910-50-1 and 50-2.", "Because Sections 05 (Overview and Background), 15 (Scope), 45 (Other Presentation Matters), and 50 (Disclosure) are all superseded, the subtopic imposes no current recognition, presentation, or disclosure requirements.", "Contractor obligations arising from customer contracts (for example, amounts billed or consideration received in advance of performance) are now accounted for as contract liabilities under ASC 606, with presentation guidance in 606-10-45-1 through 45-5.", "Legacy construction-contractor liability guidance formerly linked to ASC 605-35 should not be applied for periods after the adoption of ASU 2014-09.", "Researchers encountering citations to 405-910 in pre-2014-09 literature must map them to the corresponding ASC 606 (revenue) or ASC 340-40 (contract cost) guidance." ], "categories": [ "Presentation", "Disclosure", "Revenue", "Transition and effective dates" ], "audience_level": "intermediate", "student_note": "The only thing to know here is that this subtopic is entirely empty post-ASU 2014-09 — a common exam trap is citing legacy construction-contractor liability rules that no longer exist; go to ASC 606 for contract liabilities and ASC 340-40 for contract costs instead.", "related_topics": [ "606", "340-40", "605-35", "606-10", "405-20" ], "key_concepts": [ "superseded guidance", "construction contractors", "contract liability", "billings in excess of costs", "revenue from contracts with customers", "codification research" ] } ``` Source downloaded (UTC): 2026-09-10T00:16:06.424Z to 2026-09-10T00:16:06.424Z Record version: sha256:aede065a64c44b6af13b8ae2ce66d8dc6581f4e54c36089a342456c9828f6fee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-910-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/910/#00-status) SEC content: no ##### [405-910-00-1](https://asc.understandingaccounting.org/asc/405/910/#405-910-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:06.424Z to 2026-09-10T00:16:06.424Z Record version: sha256:66553a9cd0aaeb95584ad2fd3bc5b8b29c01f84926f4fc7c0385b84246c25d11 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
910-405-05-1SupersededAccounting Standards Update No. 2014-0905/28/2014
910-405-15-1SupersededAccounting Standards Update No. 2014-0905/28/2014
910-405-45-1SupersededAccounting Standards Update No. 2014-0905/28/2014
910-405-45-2SupersededAccounting Standards Update No. 2014-0905/28/2014
910-405-50-1SupersededAccounting Standards Update No. 2014-0905/28/2014
910-405-50-2SupersededAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:16:08.618Z to 2026-09-10T00:16:08.618Z Record version: sha256:fc0ed5ab1da3edb7fbd97379ccffc8bb768630c1a106ae8e57bcff12987763b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-910-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/910/#05-overview-and-background) SEC content: no ##### [405-910-05-1](https://asc.understandingaccounting.org/asc/405/910/#405-910-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:08.618Z to 2026-09-10T00:16:08.618Z Record version: sha256:5d8864679b9057d606c7dec3b1186777f760a9d88de2019e6b5e2fdce0604c82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:16:10.342Z to 2026-09-10T00:16:10.342Z Record version: sha256:361ce4a271a03c257ad7dd5cfd1f027a38c4829c1b5fcec2728a5806c75d7c63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-910-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/910/#15-scope-and-scope-exceptions) SEC content: no ##### [405-910-15-1](https://asc.understandingaccounting.org/asc/405/910/#405-910-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:10.342Z to 2026-09-10T00:16:10.342Z Record version: sha256:c36a317a028c6cfe026920d4e219e92b9344d19bfa92683254f826cf2908924c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:16:12.355Z to 2026-09-10T00:16:12.355Z Record version: sha256:baa9f9ee8b6c4a3c3ba47e75d1d66ff127bf3d23757f354f4c411e1102969524 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-910-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/405/910/#45-other-presentation-matters) SEC content: no ##### [405-910-45-1](https://asc.understandingaccounting.org/asc/405/910/#405-910-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:12.355Z to 2026-09-10T00:16:12.355Z Record version: sha256:ceca80f484916bed70d65af4b24401696ada3b0e908f79f6c1d304219a5d2a8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [405-910-45-2](https://asc.understandingaccounting.org/asc/405/910/#405-910-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:12.355Z to 2026-09-10T00:16:12.355Z Record version: sha256:a6e0167fe9dc0da51e03ee821d6f002aebef73e7724753b09d2801e870c494f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:16:15.597Z to 2026-09-10T00:16:15.597Z Record version: sha256:8a4be55775b3b13c63b87d6b823d6dfcfa6e5d5d8f684c85e34a140f46d83ebc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-910-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/910/#50-disclosure) SEC content: no ##### [405-910-50-1](https://asc.understandingaccounting.org/asc/405/910/#405-910-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:15.597Z to 2026-09-10T00:16:15.597Z Record version: sha256:970fc892b7265f0267ac03a6989bc5258342919e63613b5512cd3e5328745c67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [405-910-50-2](https://asc.understandingaccounting.org/asc/405/910/#405-910-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:15.597Z to 2026-09-10T00:16:15.597Z Record version: sha256:a46d62c142e48b686e3d60a26728ef6da83754eeafecfbafd8acc73c569ad342 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:16:17.263Z to 2026-09-10T00:16:37.609Z Record version: sha256:7bfe9de6a52d2707e7286ed9d6bef51f8780241fca3b0a6b71bc18b7df96c487 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-912: Liabilities — Contractors—Federal Government ### Machine-generated study aids ```json { "summary": "ASC 405-912 tells federal government contractors how to present and disclose liabilities arising from terminated contracts and from progress/advance payments. Termination loans (even if government-guaranteed) are third-party liabilities shown as current liabilities with cross-reference to the related claim; unliquidated advance payments on a terminated contract are deducted from the claim receivable. Progress and advance payments accounted for as borrowings under 912-310-25-7 are reported as cash received from financing activities.", "key_points": [ "The Subtopic addresses liabilities from subcontractors' claims on cost-plus-fixed-fee contracts and from progress payments (405-912-05-1), and follows the scope of Subtopic 912-10 (405-912-15-1).", "Whether progress payments received are accounted for as a financing transaction is determined under paragraph 912-310-25-7 (405-912-25-3).", "Loans negotiated on the security of a termination claim are presented as current liabilities (405-912-45-3).", "Termination loans are liabilities to third parties even when guaranteed in whole or in part by the government, and are presented as balance sheet liabilities cross-referenced to the related claim (405-912-45-4).", "Advance payments previously received on a terminated contract are reflected as deductions from the claim receivable in statements issued before final collection (405-912-45-5).", "Progress and advance payments accounted for as borrowings are reported as cash received from financing activities (405-912-45-7).", "Disclosure is required of the relationship of advance payment or guaranteed loan liabilities to a possible termination claim receivable (405-912-50-2) and of subcontractors' claims whose amounts are not reasonably determinable (405-912-50-3)." ], "categories": [ "Presentation", "Disclosure", "Cash flows", "Industry-specific" ], "audience_level": "intermediate", "student_note": "Most of the old recognition and classification guidance here was superseded by ASU 2014-09 (ASC 606), so what remains is essentially balance sheet presentation, cash flow classification, and disclosure. The common trap is assuming a government guarantee makes a termination loan something other than a liability, or netting the loan against the claim receivable — only prior advance payments are deducted from the claim.", "related_topics": [ "912-310", "912-10", "606", "912-605", "230", "405-20" ], "key_concepts": [ "termination claim", "termination loans", "advance payments", "progress payments as financing", "cost-plus-fixed-fee contract", "subcontractors' claims", "government contractor", "financing activities" ] } ``` Source downloaded (UTC): 2026-09-10T00:16:17.263Z to 2026-09-10T00:16:17.263Z Record version: sha256:d16c3893e1f9e570a735822a0628d6a6b772050ae8c16ad313a00d034035dd22 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-912-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/912/#00-status) SEC content: no ##### [405-912-00-1](https://asc.understandingaccounting.org/asc/405/912/#405-912-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:17.263Z to 2026-09-10T00:16:17.263Z Record version: sha256:3479d1c00d43a7054346ced66f5931e5135149746cf10239ee88ad01207bdfb2 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
912-405-05-1AmendedAccounting Standards Update No. 2014-0905/28/2014
912-405-25-1SupersededAccounting Standards Update No. 2014-0905/28/2014
912-405-25-2SupersededAccounting Standards Update No. 2014-0905/28/2014
912-405-45-1SupersededAccounting Standards Update No. 2014-0905/28/2014
912-405-45-2SupersededAccounting Standards Update No. 2014-0905/28/2014
912-405-45-6SupersededAccounting Standards Update No. 2014-0905/28/2014
912-405-50-1SupersededAccounting Standards Update No. 2014-0905/28/2014
912-405-50-2AmendedMaintenance Update 2016-11 (PDF)06/27/2016
912-405-50-3AmendedMaintenance Update 2016-11 (PDF)06/27/2016
Source downloaded (UTC): 2026-09-10T00:16:19.836Z to 2026-09-10T00:16:19.836Z Record version: sha256:dc725013349b1df9e9f7d5db7c906244600bec70ca6eca5dbeb7fe905265dab6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-912-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/912/#05-overview-and-background) SEC content: no ##### [405-912-05-1](https://asc.understandingaccounting.org/asc/405/912/#405-912-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:19.836Z to 2026-09-10T00:16:19.836Z Record version: sha256:a7f33c56bbc5aef84a241cd6cf950c6469c1416c37e3ecb6eec167fbceff0bf8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to government contractors on accounting for liabilities associated with claims of subcontractors on [cost-plus-fixed-fee contracts](https://asc.understandingaccounting.org/glossary/c/#cost-plus-fixed-fee-contract "A contract under which the contractor is reimbursed for costs plus the provision for a fixed fee.") and progress payments. Source downloaded (UTC): 2026-09-10T00:16:23.843Z to 2026-09-10T00:16:23.843Z Record version: sha256:ca7c804f379340b4fdf6668924cbdcc63e1a556792a1497275b597887e1edf33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-912-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/912/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-912-15-1](https://asc.understandingaccounting.org/asc/405/912/#405-912-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:23.843Z to 2026-09-10T00:16:23.843Z Record version: sha256:62032086ad6870499f28f8292452a7007b244f3dcfa70ce69cc8e3450a78c26c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 912-10-15. Source downloaded (UTC): 2026-09-10T00:16:29.229Z to 2026-09-10T00:16:29.229Z Record version: sha256:be3c65dccdce90bd29a4e13b6c8c037e7e8ff2dfd872b0c3c1a8ced12d3e6d36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-912-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/912/#25-recognition) SEC content: no ##### [405-912-25-1](https://asc.understandingaccounting.org/asc/405/912/#405-912-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:29.229Z to 2026-09-10T00:16:29.229Z Record version: sha256:6df33341be533b9a4a19171da1815a021c7ce24d8d1aecdf56b83eb593f5bab9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [405-912-25-2](https://asc.understandingaccounting.org/asc/405/912/#405-912-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:29.229Z to 2026-09-10T00:16:29.229Z Record version: sha256:f5095deb8c15edef9e8e5495df0b218960dd5ab8abd7657977356e44a1bd30f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Progress Payments ##### [405-912-25-3](https://asc.understandingaccounting.org/asc/405/912/#405-912-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:29.229Z to 2026-09-10T00:16:29.229Z Record version: sha256:c9e0643f0c1b3d7b762fb79b15c5bc73a52ea7c4df6e10f1dcdec9121e55cf8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [912-310-25-7](https://asc.understandingaccounting.org/asc/310/912/#310-912-25-7) provides guidance on the circumstances in which progress payments received shall be accounted for as a financing transaction. Source downloaded (UTC): 2026-09-10T00:16:31.923Z to 2026-09-10T00:16:31.923Z Record version: sha256:13ecd38dda51757b4e03c21f497662f632536241a41d98ce651c3abfc4afcdf8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-912-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/405/912/#45-other-presentation-matters) SEC content: no ##### [405-912-45-1](https://asc.understandingaccounting.org/asc/405/912/#405-912-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:31.923Z to 2026-09-10T00:16:31.923Z Record version: sha256:4459dd799c6ba1ddf5c3c40b8c4b3fce2a35c4cb4a7495398a832a3c32eb0ecd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [405-912-45-2](https://asc.understandingaccounting.org/asc/405/912/#405-912-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:31.923Z to 2026-09-10T00:16:31.923Z Record version: sha256:05c8452742351510dc361ca6a6de79408ca38a44cae820a299eff5d88d95d945 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Balance Sheet ##### [405-912-45-3](https://asc.understandingaccounting.org/asc/405/912/#405-912-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:31.923Z to 2026-09-10T00:16:31.923Z Record version: sha256:ece33863e4b8ea8d9463c3c873c881e2f6aec0bb7afb88a9f88c1258cf043b8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Loans negotiated on the security of the termination claim shall be shown as current liabilities. ##### [405-912-45-4](https://asc.understandingaccounting.org/asc/405/912/#405-912-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:31.923Z to 2026-09-10T00:16:31.923Z Record version: sha256:4a14bb7df2752bed9236a7a13a9cefaba2236df1ef67229012f25bbb6a6d1278 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Termination loans are liabilities to third parties, even though guaranteed in whole or in part by the government, and shall be presented in the balance sheet as liabilities, with appropriate cross-reference to the related claim or claims. ##### [405-912-45-5](https://asc.understandingaccounting.org/asc/405/912/#405-912-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:31.923Z to 2026-09-10T00:16:31.923Z Record version: sha256:7957ae42184833dcad86ad0ddc47bbd119466856ad79730e6523a6d3f9695256 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a terminated contract is one on which [advance payments](https://asc.understandingaccounting.org/glossary/a/#advance-payments "Government advances of cash as a revolving fund or against the final payment due under an agreement.") had previously been received, the financial statements of the contractor issued before final collection of the claim shall reflect any balance of those advances as deductions from the claim receivable. ##### [405-912-45-6](https://asc.understandingaccounting.org/asc/405/912/#405-912-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:31.923Z to 2026-09-10T00:16:31.923Z Record version: sha256:1f9a2ad076a79736cfbd7357bdc5756e70c972dc497711fbf5d4a12756e17dc4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Cash Flow Statement—Progress and Advance Payments ##### [405-912-45-7](https://asc.understandingaccounting.org/asc/405/912/#405-912-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:31.923Z to 2026-09-10T00:16:31.923Z Record version: sha256:195316c6b64541703c9feab2c17a6a216218729f0dc52b5a077d7733044d3da2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If progress and advance payments are accounted for as borrowings, such amounts shall be reported as cash received from financing activities. Source downloaded (UTC): 2026-09-10T00:16:35.093Z to 2026-09-10T00:16:35.093Z Record version: sha256:a506b52650ee99f3e8a473f5086b19cc61e29c07113d495873d0f7106690de21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-912-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/912/#50-disclosure) SEC content: no ##### [405-912-50-1](https://asc.understandingaccounting.org/asc/405/912/#405-912-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:35.093Z to 2026-09-10T00:16:35.093Z Record version: sha256:7febb119ae53bfc0769a2fb27de30188d21d65d144dfb4cf62de3da00f21ae18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Termination Claims ##### [405-912-50-2](https://asc.understandingaccounting.org/asc/405/912/#405-912-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:35.093Z to 2026-09-10T00:16:35.093Z Record version: sha256:c65798a0ba9473ca03d60ecd7532595aedd410bfc19de0589cbd4ad8fd9c6790 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Financial statements issued before the termination claim is recorded shall disclose, by note or otherwise, the relationship of advance payment or guaranteed loan liabilities to a possible termination claim receivable. ##### [405-912-50-3](https://asc.understandingaccounting.org/asc/405/912/#405-912-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:35.093Z to 2026-09-10T00:16:35.093Z Record version: sha256:70fdd534be048513071bc2b4271cf0a54a2524efa285652cc099b04b209688c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To the extent that the amounts of subcontractors' claims are not reasonably determinable, disclosure shall be made by note or otherwise in the financial statements. Source downloaded (UTC): 2026-09-10T00:16:39.447Z to 2026-09-10T00:17:01.205Z Record version: sha256:8055befa6be1eb03d8eefd501299e5532e4db8d375dff936e38446c6c5e7e5c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-920: Liabilities — Entertainment—Broadcasters ### Machine-generated study aids ```json { "summary": "This Subtopic governs how broadcasters account for the liabilities they incur under license agreements for program material. A broadcaster recognizes both an asset (the program rights) and a liability when the license period begins and the conditions in 920-350-25-2 are met, measuring both at either the fair value or the gross amount of the liability, with any discount accreted as interest under Topic 835. The liability is then split between current and noncurrent on the balance sheet according to the payment terms.", "key_points": [ "A broadcaster recognizes an asset and a liability for rights acquired and obligations incurred under a program license agreement when the license period begins and the conditions of 920-350-25-2 are met (405-920-25-1).", "The licensee reports the asset and liability at either the fair value of the liability or the gross amount of the liability (405-920-30-1).", "If a present value technique is used to measure fair value, the difference between the gross and net liability is accounted for as interest under Topic 835 (405-920-30-1).", "The recorded liability must be segregated between current and noncurrent based on the payment terms of the license agreement (405-920-45-1).", "The Subtopic uses the same scope as the Overall Broadcasters Subtopic, Section 920-10-15 (405-920-15-1).", "Example 1 at 920-350-55-1 through 55-7 illustrates the accounting for a television program license agreement (405-920-55-1)." ], "categories": [ "Recognition", "Initial measurement", "Presentation", "Industry-specific" ], "audience_level": "intermediate", "student_note": "This is a rare instance where GAAP permits a policy choice between gross and fair (discounted) value for a liability — students often wrongly assume discounting is mandatory. Remember recognition is triggered by the start of the license period, not by contract signing or payment.", "related_topics": [ "920-350", "920-10", "835", "405-10", "920-405" ], "key_concepts": [ "broadcast license agreement", "program material rights", "license period", "gross versus present value measurement", "imputed interest", "current and noncurrent classification", "broadcaster liabilities" ] } ``` Source downloaded (UTC): 2026-09-10T00:16:39.447Z to 2026-09-10T00:16:39.447Z Record version: sha256:b9a2e3350ace33edbaad727b8fa132c8a086469957a64df50154419c091f99ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-920-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/920/#00-status) SEC content: no ##### [405-920-00-1](https://asc.understandingaccounting.org/asc/405/920/#405-920-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:39.447Z to 2026-09-10T00:16:39.447Z Record version: sha256:55403fd554eb3706e76e53cd4157d09ebd0bfdda12dd00a93d52563f6450c206 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
BarterSupersededAccounting Standards Update No. 2014-0905/28/2014
920-405-25-2SupersededAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:16:42.776Z to 2026-09-10T00:16:42.776Z Record version: sha256:be27ea764cf8505d21dcb379bd32d3cec59355428720760f5efc60ea114219e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-920-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/920/#05-overview-and-background) SEC content: no ##### [405-920-05-1](https://asc.understandingaccounting.org/asc/405/920/#405-920-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:42.776Z to 2026-09-10T00:16:42.776Z Record version: sha256:611480c3bf59e4e5a6e3a0a0933638cf6b9e8bc424d697bea1ada936715fd8f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the accounting and reporting by [broadcasters](https://asc.understandingaccounting.org/glossary/b/#broadcaster "An entity or an affiliated group of entities that transmits radio or television program material.") for obligations incurred under broadcast [license agreements](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee."). Source downloaded (UTC): 2026-09-10T00:16:44.901Z to 2026-09-10T00:16:44.901Z Record version: sha256:cf52de99b00c9b42cb563a0eccd32b2985132597ddad72452b3f64845cb3a45c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-920-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/920/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-920-15-1](https://asc.understandingaccounting.org/asc/405/920/#405-920-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:44.901Z to 2026-09-10T00:16:44.901Z Record version: sha256:e12fafa2327dfa2838bb01041b26ccaac19c96a007c22e13f7ea83ce6a904434 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 920-10-15. Source downloaded (UTC): 2026-09-10T00:16:50.984Z to 2026-09-10T00:16:50.984Z Record version: sha256:1fc736613441c50239f6d864f50e3a1cefa7bd66317a46642b8993ebda24de9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-920-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/920/#25-recognition) SEC content: no #### License Agreement for Program Material ##### [405-920-25-1](https://asc.understandingaccounting.org/asc/405/920/#405-920-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:50.984Z to 2026-09-10T00:16:50.984Z Record version: sha256:3f3eb3d77e8502b818aa3370048c22dc877361570cc55bf8ef288370bcda8aee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [920-350-25-2](https://asc.understandingaccounting.org/asc/350/920/#350-920-25-2) requires that a [broadcaster](https://asc.understandingaccounting.org/glossary/b/#broadcaster "An entity or an affiliated group of entities that transmits radio or television program material.") shall recognize an asset and a liability for the rights acquired and obligations incurred under a [license agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee.") for program material when the license period begins and certain conditions specified in that paragraph are met. ##### [405-920-25-2](https://asc.understandingaccounting.org/asc/405/920/#405-920-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:50.984Z to 2026-09-10T00:16:50.984Z Record version: sha256:cf87903b8beedbbe9d70d64968d988cf47b2132c98181fafce5ba79e1f028c80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:16:52.935Z to 2026-09-10T00:16:52.935Z Record version: sha256:7d2a7eb2c40f491f054799d49dcc02d4d9e26aa1b2eff161efcc96d5e1893561 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-920-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/920/#30-initial-measurement) SEC content: no #### License Agreement for Program Material ##### [405-920-30-1](https://asc.understandingaccounting.org/asc/405/920/#405-920-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:52.935Z to 2026-09-10T00:16:52.935Z Record version: sha256:a0d0a6bfe6301b9a0aa232ede1d73e06874c28a3046e370fad04d2f5b72a0d5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A licensee shall report the asset and liability for a broadcast [license agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee.") at either of the following: 1. a The fair value of the liability 2. b The gross amount of the liability. If a present value technique is used to measure fair value, the difference between the gross and net liability shall be accounted for as interest in accordance with Topic 835. Source downloaded (UTC): 2026-09-10T00:16:55.184Z to 2026-09-10T00:16:55.184Z Record version: sha256:377cae65dc25acff183a29da3346a72e266bd5e2bfcc10ebd7d78a1a065b319a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-920-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/405/920/#45-other-presentation-matters) SEC content: no #### License Agreement for Program Material ##### [405-920-45-1](https://asc.understandingaccounting.org/asc/405/920/#405-920-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:55.184Z to 2026-09-10T00:16:55.184Z Record version: sha256:ebd4ed3da1a02b3a621c5ec7b51ea2dc8a4c79937def8a57b699d1a981a0d012 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability recorded for the obligation incurred under a [license agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee.") for program material shall be segregated between current and noncurrent based on the payment terms. Source downloaded (UTC): 2026-09-10T00:16:57.671Z to 2026-09-10T00:16:57.671Z Record version: sha256:0bac087fa65008cd6000cdb3974b991887b512d73653a436ab94e1690e4bcd27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-920-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/920/#55-implementation-guidance-and-illustrations) SEC content: no #### License Agreement for Program Material ##### [405-920-55-1](https://asc.understandingaccounting.org/asc/405/920/#405-920-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:16:57.671Z to 2026-09-10T00:16:57.671Z Record version: sha256:21a9b3748dc97881c4dca37bf44cd0dc27340d55266c359ff7cf77301378c8b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraphs [920-350-55-1 through 55-7](https://asc.understandingaccounting.org/asc/350/920/#350-920-55-1) ) for an Example illustrating the accounting for a [license agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee.") for television program material in accordance with this Topic. Source downloaded (UTC): 2026-09-10T00:17:03.163Z to 2026-09-10T00:17:19.253Z Record version: sha256:2469fa574a4e223bbe7caffdcdda69ae56a8c36c6bd3600c61c0cd6b3c848cbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-924: Liabilities — Entertainment—Casinos ### Machine-generated study aids ```json { "summary": "This Subtopic governs two casino-specific liabilities: outstanding gaming chips and jackpot obligations. A casino recognizes a chip liability equal to the difference between chips placed in service and chips in its own custody/control, adjusted periodically for chips that will never be redeemed. Jackpot liabilities are accrued only when the casino has an obligation to pay — base jackpots that can be avoided (e.g., by pulling the machine) are not accrued, while the customer-funded incremental portion of a progressive jackpot is accrued as play occurs.", "key_points": [ "Gaming chips are accounted for from the time the casino receives them, even if held in reserve rather than issued immediately (405-924-25-1).", "When a customer exchanges cash for chips, the casino has a liability until the chips are redeemed or won by the house; the liability equals chips placed in service less the chip inventory in the casino's custody or control (405-924-25-1).", "The chip liability shall be adjusted periodically to estimate chips that will never be redeemed, such as chips lost or kept as souvenirs (405-924-35-1).", "A liability for a jackpot is accrued at the time the entity has the obligation to pay it (or the applicable portion), regardless of the manner of payment (405-924-25-2).", "No liability is recognized for a base jackpot the entity can avoid paying (for example, by removing the machine from play), even if it has no intention of removing the machine and expects the jackpot to be won (405-924-55-1).", "Where regulators treat the incremental portion of a progressive jackpot as customer-funded and require payout, that incremental portion is accrued as a liability at the time of funding (play) by customers (405-924-55-2).", "Scope follows the Overall Casinos Subtopic, Section 924-10-15 (405-924-15-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Industry-specific", "Contingencies and guarantees" ], "audience_level": "intermediate", "student_note": "The tested distinction is base vs. progressive jackpots: an avoidable base jackpot creates no liability no matter how likely a payout is, while the customer-funded incremental progressive amount accrues with play. Students often wrongly assume expected payment alone triggers accrual — the trigger is a present obligation the casino cannot avoid.", "related_topics": [ "924-10", "924-405", "405-20", "450-20", "606-10" ], "key_concepts": [ "gaming chip liability", "chips placed in service", "unredeemed chips", "base jackpot", "progressive jackpot", "obligation to pay", "customer-funded jackpot increment", "breakage estimate" ] } ``` Source downloaded (UTC): 2026-09-10T00:17:03.163Z to 2026-09-10T00:17:03.163Z Record version: sha256:d3d4abab19ad0fdc633383fa5e9ca6e427b78338bec79ffff5572619663d0ec5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-924-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/924/#00-status) SEC content: no ##### [405-924-00-1](https://asc.understandingaccounting.org/asc/405/924/#405-924-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:03.163Z to 2026-09-10T00:17:03.163Z Record version: sha256:fa2f137fa0355415046ef14c0bab4b85c67488388499ea6e13dbd67f759a5e4d 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
Base JackpotAddedAccounting Standards Update No. 2014-0905/28/2014
Slot MachineAddedAccounting Standards Update No. 2014-0905/28/2014
924-405-05-1AmendedAccounting Standards Update No. 2014-0905/28/2014
924-405-25-2AddedAccounting Standards Update No. 2014-0905/28/2014
924-405-55-1AddedAccounting Standards Update No. 2014-0905/28/2014
924-405-55-2AddedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:17:07.155Z to 2026-09-10T00:17:07.155Z Record version: sha256:4a71a193e27cea936ec7516ea6ec5f24c68f4b200ca28ecd44c0dfbf49665026 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-924-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/924/#05-overview-and-background) SEC content: no ##### [405-924-05-1](https://asc.understandingaccounting.org/asc/405/924/#405-924-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:07.155Z to 2026-09-10T00:17:07.155Z Record version: sha256:e95bb76881cebb89a90154a6e8f309c7af362d79ba6a62e8b39c2ce276de0158 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the following: 1. a The accounting for gaming [chips](https://asc.understandingaccounting.org/glossary/c/#chips "Money substitutes, in various denominations, issued by a gaming entity and used for wagering.") held in inventory by casino entities and for gaming chips distributed to casino customers. 2. b The accounting for jackpot liabilities. Source downloaded (UTC): 2026-09-10T00:17:10.978Z to 2026-09-10T00:17:10.978Z Record version: sha256:e0b927bf3c44a2b971500066db3ac3b0b11efd72e7bb3b3b32399bfb35ab7b2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-924-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/924/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-924-15-1](https://asc.understandingaccounting.org/asc/405/924/#405-924-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:10.978Z to 2026-09-10T00:17:10.978Z Record version: sha256:2bf161adf6df887c65f9c8a38ce567005da0d5d8b10c90f5688445d943367280 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 924-10-15. Source downloaded (UTC): 2026-09-10T00:17:15.787Z to 2026-09-10T00:17:15.787Z Record version: sha256:a4846cbdfc815939bb1852067bac1adf3fb3dd6ecd74a47632234afe31effdd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-924-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/924/#25-recognition) SEC content: no #### Gaming Chips ##### [405-924-25-1](https://asc.understandingaccounting.org/asc/405/924/#405-924-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:15.787Z to 2026-09-10T00:17:15.787Z Record version: sha256:0d914ca3341b2fa12e68c5d6370c4af9f500aafa5a878e722ca85d844ef2525d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Gaming [chips](https://asc.understandingaccounting.org/glossary/c/#chips "Money substitutes, in various denominations, issued by a gaming entity and used for wagering.") are accounted for from the time the casino receives them even though the casino may not issue them immediately, but, instead, hold them in reserve. When a customer exchanges cash for gaming chips, the casino has a liability as long as those chips are not redeemed or won by the house. That liability is established by determining the difference between the total chips placed in service and the actual inventory of chips in custody or under the control of the casino. #### Jackpot Liabilities ##### [405-924-25-2](https://asc.understandingaccounting.org/asc/405/924/#405-924-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:15.787Z to 2026-09-10T00:17:15.787Z Record version: sha256:5bc96e822ac5a2cb3ea0637c3283d09ce6da5e03fe957fb2e2840caa89dd8baf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall accrue a liability at the time the entity has the obligation to pay the jackpot (or a portion thereof as applicable), regardless of the manner of payment. See paragraphs [924-405-55-1 through 55-2](https://asc.understandingaccounting.org/asc/405/924/#405-924-55-1) for implementation guidance. Source downloaded (UTC): 2026-09-10T00:17:17.599Z to 2026-09-10T00:17:17.599Z Record version: sha256:9d761d0f852b8961e07598c8a1f8bb1ae8f45c260f1c8076c45f8f463600a3e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-924-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/924/#35-subsequent-measurement) SEC content: no #### Unredeemable Gaming Chips ##### [405-924-35-1](https://asc.understandingaccounting.org/asc/405/924/#405-924-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:17.599Z to 2026-09-10T00:17:17.599Z Record version: sha256:a1d72e0b1afa223bbe1798ec33452d0c876051f87767d5eb456acea14018a56c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The chip liability shall be adjusted periodically to reflect an estimate of [chips](https://asc.understandingaccounting.org/glossary/c/#chips "Money substitutes, in various denominations, issued by a gaming entity and used for wagering.") that will never be redeemed (for example, chips that have been lost, taken as souvenirs, and so on). Source downloaded (UTC): 2026-09-10T00:17:19.253Z to 2026-09-10T00:17:19.253Z Record version: sha256:06de499b6c712b1cd07c9fc34bcde9662bac1175c4dc88358a672a433d62251e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-924-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/924/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [405-924-55-1](https://asc.understandingaccounting.org/asc/405/924/#405-924-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:19.253Z to 2026-09-10T00:17:19.253Z Record version: sha256:4324365b1585eb47208e1456ab8330689a07adbfe927cb2af42ca6589c4eca51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The implementation guidance in this paragraph and the following paragraph addresses the application of paragraph [924-405-25-2](https://asc.understandingaccounting.org/asc/405/924/#405-924-25-2). Some [slot machines](https://asc.understandingaccounting.org/glossary/s/#slot-machine "A type of mechanical or electrical apparatus used in connection with gaming.") or other games may contain [base jackpots](https://asc.understandingaccounting.org/glossary/b/#base-jackpot "The fixed, minimum amount of a slot machine payout for a specific combination."). Depending on the applicable gaming regulations, an entity may be able to avoid the payment of a base jackpot, for example, by removing the machine from play. In accordance with the guidance in paragraph [924-405-25-2](https://asc.understandingaccounting.org/asc/405/924/#405-924-25-2), no liability associated with the base jackpot is recognized in such cases until the entity has the obligation to pay the base jackpot. That is the case even if the entity has no intention of removing the machine from play and expects the base jackpot to ultimately be won. ##### [405-924-55-2](https://asc.understandingaccounting.org/asc/405/924/#405-924-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:19.253Z to 2026-09-10T00:17:19.253Z Record version: sha256:6f26a4982221d9d615fff483191667701f035ac47fe5a6c03a4d2bfcfbfd8e0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the application of paragraph [924-405-25-2](https://asc.understandingaccounting.org/asc/405/924/#405-924-25-2). Some slot machines or other gaming machines include progressive jackpots. Entities in many gaming jurisdictions cannot avoid payment of the portion of the progressive jackpot that is incremental to the base jackpot because the gaming regulators consider the incremental portion of the jackpot to be funded by customers and required to be paid out (whether as a jackpot or through other means, such as a raffle). Paragraph [924-405-25-2](https://asc.understandingaccounting.org/asc/405/924/#405-924-25-2) requires that, in such cases, the incremental portion of the jackpot be accrued as a liability at the time of funding (play) by its customers. Source downloaded (UTC): 2026-09-10T00:17:22.936Z to 2026-09-10T00:17:44.605Z Record version: sha256:9b3fb6efddb8c1cabb677250cb432404d3317b8c449cf881b91ab8b1ff39706c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926: Liabilities — Entertainment—Films ### Machine-generated study aids ```json { "summary": "ASC 405-926 governs how film production and distribution entities accrue participation costs — amounts owed to third parties such as actors and writers — and costs of insignificant post-release changes to a film. Participation costs are accrued using the individual-film-forecast-computation method (current period actual revenue over estimated remaining unrecognized ultimate revenue at the beginning of the fiscal year), but only when it is probable an entity will sacrifice assets to settle the obligation, and never for less than amounts currently payable. If the recorded participation liability exceeds estimated unpaid ultimate participation costs, the excess reduces unamortized film costs first, then goes to income.", "key_points": [ "Participation costs are accrued using the individual-film-forecast-computation method, applying the fraction of current period actual revenue over estimated remaining unrecognized ultimate revenue as of the beginning of the fiscal year to unaccrued ultimate participation costs (405-926-25-1).", "A participation liability is accrued only if it is probable there will be a sacrifice of assets to settle the obligation, and accrued participation costs at each balance sheet date shall not be less than amounts the entity is obligated to pay as of that date (405-926-25-2).", "Accrual begins when the film is released and the entity begins recognizing revenue from that film, and continues on fully amortized films as revenue is recognized (405-926-25-3; 405-926-25-5).", "Estimates of unaccrued ultimate participation costs must use assumptions consistent with the entity's estimates of film costs, exploitation costs, and ultimate revenue, as limited by 926-20-35-5 and 926-20-35-11 (405-926-25-4).", "Costs expected for changes to a film that are not significant under a licensing arrangement are accrued and charged to expense if revenue recognition begins before the costs are incurred (405-926-25-6).", "Any recognized participation liability in excess of estimated unpaid ultimate participation costs is reduced with an offsetting credit to unamortized film costs, and only the remainder beyond unamortized film costs is credited to income (405-926-35-1; Example 1 at 926-405-55-1).", "Disclose the amount of accrued participation liabilities expected to be paid during the upcoming operating cycle and the methods of accounting for participation costs (405-926-50-1; 405-926-50-2)." ], "categories": [ "Recognition", "Subsequent measurement", "Disclosure", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The classic trap is treating participation costs as ratably expensed or as payable-based; instead they follow the same revenue-based forecast ratio as film cost amortization, floored at amounts currently due. Also remember the excess-liability reversal cascades to unamortized film costs first — income only after film costs are exhausted.", "related_topics": [ "926-20", "926-10", "926-405", "450-20", "606" ], "key_concepts": [ "participation costs", "individual-film-forecast-computation method", "ultimate revenue", "unamortized film costs", "probable sacrifice of assets", "film cost amortization", "insignificant changes to a film", "accrued participation liability" ] } ``` Source downloaded (UTC): 2026-09-10T00:17:22.936Z to 2026-09-10T00:17:22.936Z Record version: sha256:ebfc208af5cad6bde09080d689f3b18efe5ce83fb6103af78229ac1772f8c670 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/926/#00-status) SEC content: no ##### [405-926-00-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:22.936Z to 2026-09-10T00:17:22.936Z Record version: sha256:8d8d88682e70b13a9d02d978721b1f313d8a9378cc3e8fab534efd06de9cdd8c 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
RevenueSupersededAccounting Standards Update No. 2014-0905/28/2014
Significant ChangesSupersededAccounting Standards Update No. 2019-0203/06/2019
Significant Changes to a FilmAddedAccounting Standards Update No. 2019-0203/06/2019
926-405-25-1AmendedAccounting Standards Update No. 2014-0905/28/2014
926-405-55-2AmendedAccounting Standards Update No. 2014-0905/28/2014
926-405-55-3AmendedAccounting Standards Update No. 2014-0905/28/2014
926-405-55-5AmendedAccounting Standards Update No. 2014-0905/28/2014
926-405-55-6AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:17:24.635Z to 2026-09-10T00:17:24.635Z Record version: sha256:2ebf58d12325c5c828886bac8727da0de9ea8c37039b856eecd76b65b09954f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/926/#05-overview-and-background) SEC content: no ##### [405-926-05-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:24.635Z to 2026-09-10T00:17:24.635Z Record version: sha256:b244f4d466152a8d36cd3706af30d2c5a074277dae24e7b17d708f1f2da798d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to entities in the film production and distribution industry on the accounting for costs incurred to compensate third parties involved in the production of a film, such as actors or writers. These costs are referred to as [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed."). This Subtopic also addresses the accounting for costs incurred to make insignificant changes to a film after its initial availability to a customer. Source downloaded (UTC): 2026-09-10T00:17:26.473Z to 2026-09-10T00:17:26.473Z Record version: sha256:3af41b65a01dee94c09436021a4631b749aee9b0dfd014bbbdd8d704f0616505 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/926/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-926-15-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:26.473Z to 2026-09-10T00:17:26.473Z Record version: sha256:281ca0df37c779196df12c1f3674a55f32d614397d43e09ad55eb2f0d1279e87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-10-15. Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:60828de462cdd6c68385e0d95365535509ca174b424ac38b2e6c4e4db8566a5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/926/#25-recognition) SEC content: no #### Participation Costs ##### [405-926-25-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:3742a9327d036321493c7f7d93de07cf9fb7291e3d5d54435e6a4b4c8f0dbaf0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall accrue (expense) [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed.") using the individual-film-forecast-computation method, which accrues (expenses) such costs in the same ratio that current period actual revenue (numerator) bears to estimated remaining unrecognized ultimate revenue as of the beginning of the current fiscal year (denominator). That is, unaccrued (not yet expensed) ultimate participation costs at the beginning of the current fiscal year are multiplied by the individual-film-forecast-computation method fraction. In this way, in the absence of changes in estimates, participation costs are accrued (expensed) in a manner that yields a constant rate of profit over the ultimate period, as described in paragraph [926-20-35-5(a)](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-5), for each film before [exploitation costs](https://asc.understandingaccounting.org/glossary/e/#exploitation-costs "All direct costs (including marketing, advertising, publicity, promotion, and other distribution expenses) incurred in connection with the distribution of a film."), manufacturing costs, and other period expenses. ##### [405-926-25-2](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:1350d0e41facc782d5c434f798d20eebd9920f9dea11562b566c07336d16f178 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall accrue a liability for participation costs only if it is probable that there will be a sacrifice of assets to settle its obligation under the terms of the participation agreement. At each balance sheet date, accrued participation costs shall not be less than the amounts that an entity is obligated to pay as of that date. ##### [405-926-25-3](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:b01c1d8dfe881285b6f0f6b1613d6d58e6f4b9f7e76fab43d19be70ba636c983 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall begin accruing (expensing) participation costs when a film is released and it begins to recognize revenue from that film. ##### [405-926-25-4](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:98b2c4ad44bc896635f738e89e9b4deeace98810004fbd0fbb773f9df402c63f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimates of unaccrued (that is, not yet expensed) ultimate participation costs are used in the individual-film-forecast-computation method to arrive at current period participation cost expense. Such costs shall be determined using assumptions that are consistent with an entity's estimates of [film costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "Film costs include all direct negative costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest in accordance with Topic 835. Examples of direct negative costs include costs of story and scenario; compensation of cast, directors, producers, extras, and miscellaneous staff; costs of set construction and operations, wardrobe, and accessories; costs of sound synchronization; rental facilities on location; and postproduction costs such as music, special effects, and editing."), exploitation costs, and ultimate revenue, as limited by paragraphs [926-20-35-5](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-5) and [926-20-35-11](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-11). ##### [405-926-25-5](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:67d096f1032c46c08db969ab1ac6b493661e34566228e6095197a5650e4a0068 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A film may continue to generate revenue after its film costs are fully amortized. When revenue is recorded on fully amortized [films](https://asc.understandingaccounting.org/glossary/f/#films "Feature films, television specials, television series, or similar products (including animated films and television programming) that are sold, licensed, or exhibited, whether produced on film, video tape, digital, or other video recording format."), an entity shall accrue associated participation costs as that revenue is recognized. #### Costs Incurred for Insignificant Changes to a Film ##### [405-926-25-6](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:0c79cea9c8e6f8e6aea511f7432004cc78c375806a995d57be51f2ad2eced939 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A licensing arrangement may require an entity to make changes to a film after its initial availability to a customer. Those changes may be deemed [significant](https://asc.understandingaccounting.org/glossary/s/#significant-changes "Changes that are additive to a film; that is, the creation of new or additional content after the film is initially available to the customer. For example, reshooting a scene or creating additional special effects are significant changes. (P) December 16, 2019; (N) December 16, 2020926-20-65-2Glossary term superseded by Accounting Standards Update No. 2019-02.") or not significant. Any costs expected to be incurred for changes that are not significant shall be accrued and charged to expense if an entity begins to recognize revenue from the arrangement before incurring those costs. Source downloaded (UTC): 2026-09-10T00:17:35.142Z to 2026-09-10T00:17:35.142Z Record version: sha256:c0186a825a2bb287d0d6a88270ab351cab8dca6fee3f821cab601396b257bce9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/926/#35-subsequent-measurement) SEC content: no #### Ultimate Participation Costs ##### [405-926-35-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:35.142Z to 2026-09-10T00:17:35.142Z Record version: sha256:3b77930425a8afb380de2ab052e440f6e0eb5372309249460226b88c9c9e6296 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, at any balance sheet date, the recognized [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed.") liability exceeds the estimated unpaid ultimate participation costs for an individual film, the excess liability shall be reduced with an offsetting credit to unamortized [film costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "Film costs include all direct negative costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest in accordance with Topic 835. Examples of direct negative costs include costs of story and scenario; compensation of cast, directors, producers, extras, and miscellaneous staff; costs of set construction and operations, wardrobe, and accessories; costs of sound synchronization; rental facilities on location; and postproduction costs such as music, special effects, and editing."). To the extent that an excess liability exceeds unamortized film costs for that film, that excess liability shall be credited to income. For more information, see Example 1 (paragraph [926-405-55-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-1)). ##### [405-926-35-2](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:35.142Z to 2026-09-10T00:17:35.142Z Record version: sha256:e94773533a5ee7b55e512b4bafaab3b9f5b22e58b9e336abffec444a7936cad7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the accounting of revised estimates of participation costs, see paragraph [926-20-35-3](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-3). Source downloaded (UTC): 2026-09-10T00:17:38.268Z to 2026-09-10T00:17:38.268Z Record version: sha256:def930361671081698638c01a471f04672641f2713ed5ecc3004015531e70b9b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/926/#50-disclosure) SEC content: no #### Accrued Participation Liabilities ##### [405-926-50-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:38.268Z to 2026-09-10T00:17:38.268Z Record version: sha256:ef88dba3cfd63ca041006bde39a5092297ca8500f0452ed8542ce1fb87b13d6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the amount of accrued participation liabilities that it expects to pay during the upcoming operating cycle. #### Participation Costs ##### [405-926-50-2](https://asc.understandingaccounting.org/asc/405/926/#405-926-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:38.268Z to 2026-09-10T00:17:38.268Z Record version: sha256:9591818af84e6397b30c7c6b20615e6bbffd98dd7862447bb9b186230ca09efe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose its methods of accounting for [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed."). Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:1c6f88fbf1510b548791908cc011b169293ed42db2147dee146c38641bd16d86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/926/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [405-926-55-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:1e085d5cc7ac7d3b10cb8d725200cabc015fcfcecce1bae83a6e86cd8899822f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the adjustment of a participation liability that is in excess of a revised estimate of amounts ultimately payable (in accordance with paragraph [926-405-35-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-1)). ##### [405-926-55-2](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:1ac7eccb03b11c1907bdc6ce4cc768da5951ce893df0f58b8243861bb2ae13de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with paragraph [926-405-35-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-1), a participation liability that exceeds the unpaid amount expected to be ultimately payable shall be offset against the remaining carrying value of the corresponding film. This scenario can result from changes in ultimate revenue and cost estimates that result in reduced expectations of ultimate [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed."). ##### [405-926-55-3](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:8b7c471de282594ccd3efe3453caad75918ad4a639cfbb72ed5f3738bc8afbf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the following: 1. a Film cost: $50,000 2. b Estimated ultimate revenue: 1. 1 Year 1: $100,000 2. 2 Year 2: $80,000. 3. c Actual revenue recognized: 1. 1 In Year 1: $60,000 2. 2 In Year 2: $10,000. 4. d Estimated ultimate participation costs: 1. 1 Year 1: $10,000 2. 2 Year 2: $0. 5. e For Year 1, film cost amortization was $30,000, and participation costs accrued were $6,000. ##### [405-926-55-4](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:a4f626f07110ee3a07b5a1ac51cfae96b3da6e52fe9a5978833215d42a8e7f8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Adjustments of Participation Liability and [Film Costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "Film costs include all direct negative costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest in accordance with Topic 835. Examples of direct negative costs include costs of story and scenario; compensation of cast, directors, producers, extras, and miscellaneous staff; costs of set construction and operations, wardrobe, and accessories; costs of sound synchronization; rental facilities on location; and postproduction costs such as music, special effects, and editing.") in Year 2. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-644C1B0C-5013-48EB-A2BC-CB54CD59C52B-low.gif) Unamortized Film Costs Participation Liability Balance at end of Year 1 " $20,000 " " $6,000 " Adjustment to eliminate excess liability " (6,000)" " (6,000)" Adjusted balances " $14,000 " $- ##### [405-926-55-5](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:643795c0ac195a76d8a1cf96470110f95aa421defaf7e8318964a58bb3401a8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Film cost amortization in Year 2: - $10,000 recognized revenue/$20,000 remaining ultimate revenue x $14,000 unamortized film costs = $7,000 - The $20,000 remaining ultimate revenue is computed as follows: Year 2 revised ultimate revenue of $80,000 minus cumulative prior recognized revenue of $60,000. - The $14,000 unamortized film costs is computed as follows: Film cost of $50,000 minus cumulative prior amortization of $30,000 and minus the excess participation liability adjustment of $6,000. ##### [405-926-55-6](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:6b314be987226642014239525d0e1e90618f6aab23a20cf7a1a6c74f49182ed3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Participation costs accrued in Year 2: - $10,000 recognized revenue/$20,000 remaining ultimate revenue x $0 remaining ultimate participation costs = $0 - The $20,000 remaining ultimate revenue is computed as follows: Year 2 revised ultimate revenue of $80,000 minus cumulative prior recognized revenue of $60,000. - Estimated ultimate participation costs were reduced to $0 in Year 2; accordingly, the excess liability was reversed and no further accruals are required. Source downloaded (UTC): 2026-09-10T00:17:48.299Z to 2026-09-10T00:17:59.597Z Record version: sha256:394283773d56470ca92b44b71aeb3bd4b9cdba54ed5fb67827a9b63cd7af7631 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-928: Liabilities — Entertainment—Music ### Machine-generated study aids ```json { "summary": "This subtopic tells a music licensee how to account for fees owed under a license agreement with the owner/licensor of a record master or music copyright that grants the right to sell or distribute records or music for a stipulated fee. Its single rule: license fees that are not fixed in amount before the agreement expires must be estimated and accrued, license by license.", "key_points": [ "A licensee may obtain the right to sell or distribute records or music from the owner or licensor of a record master or music copyright for a stipulated fee, and this Subtopic governs the licensee's accounting and reporting for those fees (405-928-05-1).", "Scope follows the Overall Subtopic scope in Section 928-10-15 (405-928-15-1).", "Fees required by a licensing agreement that are not fixed in amount prior to the agreement's expiration date must be estimated and accrued by the licensee (405-928-25-1).", "The estimate and accrual must be made on a license-by-license basis, not in the aggregate (405-928-25-1).", "An example of such an unfixed fee is the amount owed for free records distributed by a record club in excess of a stipulated number (405-928-25-1)." ], "categories": [ "Recognition", "Industry-specific", "Subsequent measurement" ], "audience_level": "intermediate", "student_note": "This is a one-rule industry subtopic: the licensee cannot wait for the fee to become fixed—unfixed license fees must be estimated and accrued as incurred. The common misunderstanding is aggregating estimates across licenses; the guidance requires a license-by-license computation.", "related_topics": [ "928-10", "928-340", "928-405", "450-20", "926" ], "key_concepts": [ "license agreement", "record master", "music copyright", "licensee fees", "accrual of estimated fees", "license-by-license basis", "record club free records" ] } ``` Source downloaded (UTC): 2026-09-10T00:17:48.299Z to 2026-09-10T00:17:48.299Z Record version: sha256:1e001cbffbd8b91767d2782cad421de1393062a18b2f365db59f15e33c2addd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-928-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/928/#05-overview-and-background) SEC content: no ##### [405-928-05-1](https://asc.understandingaccounting.org/asc/405/928/#405-928-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:48.299Z to 2026-09-10T00:17:48.299Z Record version: sha256:6e04505ceff12fe72b057a0febea2fd194b78a2f8da8aa01f140950c77de54ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A licensee entity may enter into a [license agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreements "Contractual arrangements entered into by an owner (licensor) of a record master or music copyright with a licensee granting the licensee the right to sell or distribute records or music for a fixed fee paid to the licensor or for a fee based on sales of records or music. License agreements are modifications of the compulsory provisions of the copyright law.") with an owner or licensor of a [record master](https://asc.understandingaccounting.org/glossary/r/#record-master "The master tape resulting from the performance of the artist. It is used to produce molds for commercial record production and other tapes for use in making cartridges, cassettes, DVDs, and reel tapes. The costs of producing a record master include the cost of the musical talent (musicians, vocal background, and arrangements); the cost of the technical talent for engineering, directing, and mixing; costs for the use of the equipment to record and produce the master; and studio facility charges. Under the standard type of artist contract, the record company bears a portion of the cost and recovers a portion of the cost from the artist out of designated royalties earned. However, either party may bear all or most of the cost.") or music copyright granting the licensee the right to sell or distribute records or music for a stipulated fee. This Subtopic provides guidance for the accounting and reporting by the licensee of fees paid under such license arrangements. Source downloaded (UTC): 2026-09-10T00:17:52.259Z to 2026-09-10T00:17:52.259Z Record version: sha256:8d6db8ba6c84cef874fe4ab40b4aae3dd0193e3f1e030c3c65e72caa32ea1f77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-928-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/928/#15-scope-and-scope-exceptions) SEC content: no ##### [405-928-15-1](https://asc.understandingaccounting.org/asc/405/928/#405-928-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:52.259Z to 2026-09-10T00:17:52.259Z Record version: sha256:2dbe13fd65f9741299c104872d8e8ee46f576f79860a76bc8e35090c950eb0a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 928-10-15. Source downloaded (UTC): 2026-09-10T00:17:59.597Z to 2026-09-10T00:17:59.597Z Record version: sha256:ee1c76b290f7634d99581559ea5cc06bfa653849fbcb15bc8c614241a27ce32f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-928-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/928/#25-recognition) SEC content: no #### Licensee Accounting ##### [405-928-25-1](https://asc.understandingaccounting.org/asc/405/928/#405-928-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:59.597Z to 2026-09-10T00:17:59.597Z Record version: sha256:0df244a1c6c7ba75bd14d4db54e7963eab8700f35fc117144c7ced7034de8e27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any fees required by a licensing agreement (for example, for free records distributed by a record club in excess of a stipulated number) that are not fixed in amount prior to the expiration date of the agreement shall be estimated and accrued on a license-by-license basis by the licensee. Source downloaded (UTC): 2026-09-10T00:18:03.082Z to 2026-09-10T00:18:22.655Z Record version: sha256:735ad1897588f876ec6bec0018212c0f4569c324e1fcd7d34b0bdc98dcb5b676 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-940: Liabilities — Financial Services—Brokers and Dealers ### Machine-generated study aids ```json { "summary": "This Subtopic addresses liabilities of brokers and dealers in securities, specifically stock-loan and repurchase (repo) transactions entered into to finance investment positions in lieu of a bank loan. Topic 860 supplies the general accounting for whether such transactions are sales or financings. If they are accounted for as financing transactions, the related rebate or interest expense must be presented in the income statement separately from any trading gains or losses.", "key_points": [ "The Subtopic covers broker-dealer liabilities, including stock-loan and repo transactions used to finance investment positions (405-940-05-1).", "Scope follows the broker-dealer Overall Subtopic scope in Section 940-10-15 (405-940-15-1).", "Topic 860 (Transfers and Servicing) provides the general guidance on whether stock-loan and repurchase transactions are accounted for as sales or as secured borrowings (405-940-45-1).", "When such transactions are accounted for as financings, the rebate or interest expense must be reported in the income statement as an expense separate and apart from trading gains or losses (405-940-45-1).", "Former implementation guidance at 405-940-55-1 was superseded by ASU 2018-09." ], "categories": [ "Presentation", "Industry-specific", "Financial instruments", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "The practical point is presentation: broker-dealers cannot bury repo/stock-loan rebate or interest expense inside trading revenue. A common misunderstanding is thinking this Subtopic decides sale vs. financing treatment — that determination is made under Topic 860; ASC 405-940 only dictates income statement display once financing treatment applies.", "related_topics": [ "860", "940-10", "940-320", "210-20", "942" ], "key_concepts": [ "broker-dealer liabilities", "stock-loan transactions", "repurchase agreements", "financing transactions", "rebate expense", "interest expense presentation", "trading gains and losses" ] } ``` Source downloaded (UTC): 2026-09-10T00:18:03.082Z to 2026-09-10T00:18:03.082Z Record version: sha256:01a68b7c3f7a18bd904dabb2c442309c403966e1b597fb9357c60e11956c51a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-940-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/940/#00-status) SEC content: no ##### [405-940-00-1](https://asc.understandingaccounting.org/asc/405/940/#405-940-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:03.082Z to 2026-09-10T00:18:03.082Z Record version: sha256:844ad35d70271b96f0865f6a3c751561ccf40676b7fa3437bd9ce660dc2825a3 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
Financial Asset (2nd def.)AmendedAccounting Standards Update No. 2016-1912/14/2016
Repurchase AgreementAmendedAccounting Standards Update No. 2014-1106/12/2014
Repurchase Agreement (1st def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Repurchase Agreement (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
940-405-45-1AmendedAccounting Standards Update No. 2014-0603/14/2014
940-405-55-1SupersededAccounting Standards Update No. 2018-0907/16/2018
Source downloaded (UTC): 2026-09-10T00:18:06.326Z to 2026-09-10T00:18:06.326Z Record version: sha256:0f9041be610df05530cf52632d062eab21d635bf28c142b9ff3cc663f8e2b38e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-940-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/940/#05-overview-and-background) SEC content: no ##### [405-940-05-1](https://asc.understandingaccounting.org/asc/405/940/#405-940-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:06.326Z to 2026-09-10T00:18:06.326Z Record version: sha256:565d6f4d8d3a9eef777325e7cca9b6ce5ee26fc8387b40c200cf0f72da9edabf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses liabilities for brokers and dealers in securities (broker-dealers), including stock-loan and repo transactions entered into for the purpose of financing investment positions (such as in lieu of a bank loan). Source downloaded (UTC): 2026-09-10T00:18:10.257Z to 2026-09-10T00:18:10.257Z Record version: sha256:d83c77fbbd3df2238908639885ba4f96b14054fd586a6b10ad5da71784b374ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-940-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/940/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-940-15-1](https://asc.understandingaccounting.org/asc/405/940/#405-940-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:10.257Z to 2026-09-10T00:18:10.257Z Record version: sha256:5e70d1eda10707fbd5b7f71716e8650e3448b5d6293426539d5b173db51b57da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 940-10-15. Source downloaded (UTC): 2026-09-10T00:18:17.313Z to 2026-09-10T00:18:17.313Z Record version: sha256:249d0c7fa62458e00b7ebb7cba9c87dd2bca96970c6695b181f9f93013e51eab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-940-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/405/940/#45-other-presentation-matters) SEC content: no ##### [405-940-45-1](https://asc.understandingaccounting.org/asc/405/940/#405-940-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:17.313Z to 2026-09-10T00:18:17.313Z Record version: sha256:87665609c5bb19fa7983a656908393e48e1245bf04553c4bc6b4ad89d056bf4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Stock-loan and [repurchase transactions](https://asc.understandingaccounting.org/glossary/r/#repurchase-agreement "An agreement under which the transferor (repo party) transfers a financial asset to a transferee (repo counterparty or reverse party) in exchange for cash and concurrently agrees to reacquire that financial asset at a future date for an amount equal to the cash exchanged plus or minus a stipulated interest factor. Instead of cash, other securities or letters of credit sometimes are exchanged. Some repurchase agreements call for repurchase of financial assets that need not be identical to the financial assets transferred.") may be entered into for the purpose of financing positions (such as in lieu of a bank loan). Topic 860 provides general guidance on such transactions. If such transactions are accounted for as financing transactions, the rebate or interest expense shall be reflected in the income statement as an expense separate and apart from any trading gains or losses. Source downloaded (UTC): 2026-09-10T00:18:19.931Z to 2026-09-10T00:18:19.931Z Record version: sha256:47d04a49d9ebe751a6acaabcb43a9f08a94e566c59b8145065f682a84ca7fcfd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-940-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/940/#55-implementation-guidance-and-illustrations) SEC content: no ##### [405-940-55-1](https://asc.understandingaccounting.org/asc/405/940/#405-940-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:19.931Z to 2026-09-10T00:18:19.931Z Record version: sha256:4410b1c94565e29386ad27517ecefbdb7ac8c22dc452271df10cd513af12a571 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-09](https://asc.understandingaccounting.org/updates/asu-2018-09/). Source downloaded (UTC): 2026-09-10T00:18:26.642Z to 2026-09-10T00:18:55.779Z Record version: sha256:366213912088da9e3d9b3727343eac31a2ceafcd7ca96f09f2fcb311b6f91171 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942: Liabilities — Financial Services—Depository and Lending ### Machine-generated study aids ```json { "summary": "This Subtopic governs how depository and lending institutions recognize, measure, present, and disclose deposit liabilities and short-sale obligations. Deposit liabilities are recognized when deposits are received (not when funds are collected), with deposit float recorded as both an asset and a liability, and credit unions must present member share/savings accounts unequivocally as liabilities. Short sales (\"securities sold, not yet purchased\") are reported as liabilities measured at fair value through income, with interest on short positions accrued as interest expense.", "key_points": [ "Obligations incurred in short sales are reported as liabilities, generally called securities sold, not yet purchased (405-942-25-1), with additional guidance in 815-10-55-57.", "Short-sale obligations are subsequently measured at fair value through the income statement at each reporting date with interest accrued as interest expense (405-942-35-1); the fair value adjustment is classified with gains and losses on securities (405-942-45-1).", "A deposit liability is recognized when deposits are received, not when the institution collects the funds; deposit float (checks in process of collection, not available for withdrawal) is recorded as both an asset and a liability, and deposits are not recorded based solely on collections (405-942-25-3).", "Credit unions and corporate credit unions must report all member deposit accounts, including member shares, unequivocally as liabilities on the statement of financial condition (405-942-25-4; 405-942-55-1).", "Credit union statements of financial condition must either present deposit/savings accounts as the first item in the liabilities and equity section or include them within a captioned total-liabilities subtotal; an unclassified presentation showing savings accounts last before retained earnings is unacceptable (405-942-45-3; 405-942-55-2).", "Interest on member accounts (commonly called dividends) is reported as expense in the statement of income, and interest payable to members is included as a liability (405-942-45-4).", "Required deposit disclosures include aggregate time deposits (including CDs) at or above the insured limit, instruments pledged as collateral for deposits not otherwise disclosed under Topic 860, demand deposits reclassified as loans such as overdrafts, and deposits received on terms other than those available in the normal course of business (405-942-50-1)." ], "categories": [ "Recognition", "Presentation", "Disclosure", "Industry-specific" ], "audience_level": "intermediate", "student_note": "Two traps: deposits become liabilities when received, not when the check clears (float sits on both sides of the balance sheet), and credit union \"shares\"/savings accounts are liabilities despite the equity-sounding label and the \"dividend\" terminology used for interest paid on them.", "related_topics": [ "942-10", "815-10", "860", "480", "825", "942-405" ], "key_concepts": [ "deposit liabilities", "deposit float", "securities sold, not yet purchased", "short sales", "member share accounts", "redeemable preferred stock of a subsidiary", "uninsured time deposits", "credit union presentation" ] } ``` Source downloaded (UTC): 2026-09-10T00:18:26.642Z to 2026-09-10T00:18:26.642Z Record version: sha256:d158c4e68e1f4c3f7f4a8f87e17fd073c6b676ca65772ebe258566870a74e438 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/942/#00-status) SEC content: no ##### [405-942-00-1](https://asc.understandingaccounting.org/asc/405/942/#405-942-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:26.642Z to 2026-09-10T00:18:26.642Z Record version: sha256:8dfee8bd6d1b0afef7de509c638256e6ca99f9d8bd6b35755f359cee2da31fe8 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
942-405-50-1AmendedMaintenance Update 2018-02 (PDF)02/02/2018
942-405-50-1AmendedMaintenance Update 2014-07 (PDF)03/17/2014
Source downloaded (UTC): 2026-09-10T00:18:29.423Z to 2026-09-10T00:18:29.423Z Record version: sha256:e8c876a6bad90713df74e5cea4efe6218b58ab0d758ba0e6fd86824a283fcbd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/942/#05-overview-and-background) SEC content: no ##### [405-942-05-1](https://asc.understandingaccounting.org/asc/405/942/#405-942-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:29.423Z to 2026-09-10T00:18:29.423Z Record version: sha256:d6d8a3f0ad6b998d0d9cc62d1ca48c04cd3eb3eced4a8eeb7b41c3f53666a938 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides disclosure and implementation guidance for deposit liabilities by financial institutions. Source downloaded (UTC): 2026-09-10T00:18:33.266Z to 2026-09-10T00:18:33.266Z Record version: sha256:6dfba4cafa0268bb3ee19ac3797ddfd8aa6e91c26e157175f1d2f46b8fdea795 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/942/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-942-15-1](https://asc.understandingaccounting.org/asc/405/942/#405-942-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:33.266Z to 2026-09-10T00:18:33.266Z Record version: sha256:59db736c161636ee1a299e74a1bc6536b8f3ca224e5ac1310a518152acb270e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 942-10-15. Source downloaded (UTC): 2026-09-10T00:18:38.996Z to 2026-09-10T00:18:38.996Z Record version: sha256:613eba49205b3d4450aaac28f6ada77e739f628d05d7db67c673cef41d6d7572 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/942/#25-recognition) SEC content: no #### Short Sales of Securities ##### [405-942-25-1](https://asc.understandingaccounting.org/asc/405/942/#405-942-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:38.996Z to 2026-09-10T00:18:38.996Z Record version: sha256:95deb84a77b1421409f0ec6e778bc856614a6192782ab85963f6c200274ca84f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The obligations incurred in short sales shall be reported as liabilities. Such liabilities are generally called securities sold, not yet purchased. ##### [405-942-25-2](https://asc.understandingaccounting.org/asc/405/942/#405-942-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:38.996Z to 2026-09-10T00:18:38.996Z Record version: sha256:9f846b8a6818074c4774cb24966e9c8f6eb4d62e390cb01593e101b839b486ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [815-10-55-57](https://asc.understandingaccounting.org/asc/815/10/#815-10-55-57) for additional guidance concerning short sales. #### Deposits ##### [405-942-25-3](https://asc.understandingaccounting.org/asc/405/942/#405-942-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:38.996Z to 2026-09-10T00:18:38.996Z Record version: sha256:e2c6ef6ec33f804b4e2c1863e06a308d4000ce4606e2de0e521b1ee41b334625 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The institution's liability for deposits originates and shall be recognized at the time deposits are received rather than when the institution collects the funds. Checks that are deposited by customers and that are in the process of collection and are currently not available for withdrawal (deposit float) shall be recorded as assets and liabilities. Deposits shall not be recorded based solely on collections. #### Member Deposits ##### [405-942-25-4](https://asc.understandingaccounting.org/asc/405/942/#405-942-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:38.996Z to 2026-09-10T00:18:38.996Z Record version: sha256:659d536c7dcd61e6e387b3e7889230b4de8fef2155dc0b0390fa18a0b2864a07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Credit unions and corporate credit unions shall report unequivocally all member deposit accounts, including member shares, as liabilities in the statement of financial condition. Source downloaded (UTC): 2026-09-10T00:18:42.712Z to 2026-09-10T00:18:42.712Z Record version: sha256:4ec2f820be2daf1f5bcc75599407033ab15f1f076a13cabc90d5eb9512893941 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/942/#35-subsequent-measurement) SEC content: no #### Short Sales of Securities ##### [405-942-35-1](https://asc.understandingaccounting.org/asc/405/942/#405-942-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:42.712Z to 2026-09-10T00:18:42.712Z Record version: sha256:e76d4721fc7ffc3b9d7ee98501ca8a014a5029ce62362b9cf9ad761a2063d6e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The obligations incurred in short sales shall be subsequently measured at fair value through the income statement at each reporting date. Interest on the short positions shall be accrued periodically and reported as interest expense. Source downloaded (UTC): 2026-09-10T00:18:44.394Z to 2026-09-10T00:18:44.394Z Record version: sha256:0b3e9ec3c03c0dc16fbf8920b159a5bc88c27a589d45de17c2e989159714a656 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/405/942/#45-other-presentation-matters) SEC content: no #### Short Sales of Securities ##### [405-942-45-1](https://asc.understandingaccounting.org/asc/405/942/#405-942-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:44.394Z to 2026-09-10T00:18:44.394Z Record version: sha256:2638a4b9a518b6fe95be6b549c5976f6f7a791509bacf2353a7baf056b59d883 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The fair value adjustment on short sales of securities shall be classified in the income statement with gains and losses on securities. #### Redeemable Preferred Stock Dividends ##### [405-942-45-2](https://asc.understandingaccounting.org/asc/405/942/#405-942-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:44.394Z to 2026-09-10T00:18:44.394Z Record version: sha256:0a241250fe6d71f733e30c438df20cf0a51a726fdfc82e277ddea3c43ecff65e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For redeemable preferred stock of a [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") accounted for as a liability in a parent's [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity."), dividends shall be included in the determination of income as interest expense. For redeemable preferred stock of a subsidiary accounted for as a [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") in a subsidiary in a [parent's](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") consolidated financial statements, the dividends shall be presented as noncontrolling interest in income of a subsidiary. For redeemable preferred stock of a parent treated as capital, but displayed in the balance sheet as mezzanine capital, dividends shall be included in the statement of changes in shareholders' equity. #### Member Deposits ##### [405-942-45-3](https://asc.understandingaccounting.org/asc/405/942/#405-942-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:44.394Z to 2026-09-10T00:18:44.394Z Record version: sha256:bd26888a9120f27e370a69aacd51666c8311e329414865d564ca9e232ceb0aa1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The statement of financial condition of credit unions and corporate credit unions shall either: 1. a Present deposit accounts as the first item in the liabilities and equity section 2. b Include deposit accounts within a captioned subtotal for total liabilities. An unclassified presentation whereby all liabilities and equity are shown together under one subheading and savings accounts are presented as the last item before retained earnings shall not be an acceptable presentation. ##### [405-942-45-4](https://asc.understandingaccounting.org/asc/405/942/#405-942-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:44.394Z to 2026-09-10T00:18:44.394Z Record version: sha256:f2df08cac4fa2576badadac62aaea2da66e305cff087cd1c367efd3bb0caedfe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The interest paid or accrued on these accounts, commonly referred to as dividends, shall be reported as an expense on the statement of income, and the amount of interest payable to members shall be included as a liability in the statement of financial condition. Source downloaded (UTC): 2026-09-10T00:18:48.452Z to 2026-09-10T00:18:48.452Z Record version: sha256:c070bef8ec479951f3cf3adb00d6cd13728145a7c10717f0bfcfe117f1e23669 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/942/#50-disclosure) SEC content: no #### Deposits ##### [405-942-50-1](https://asc.understandingaccounting.org/asc/405/942/#405-942-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:48.452Z to 2026-09-10T00:18:48.452Z Record version: sha256:706c668bfb80248803f60aafa21bc2c7ab19c29a6eed6022b1ab7006b5b1fe60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosures about deposit liabilities shall include all of the following: 1. a The aggregate amount of time deposit accounts (including certificates of deposit) in denominations that meet or exceed the insured limit at the balance sheet date 2. b Securities, mortgage loans, or other financial instruments that serve as collateral for deposits, that are otherwise not disclosed under Topic 860 3. c The aggregate amount of any demand deposits that have been reclassified as loan balances, such as overdrafts, at the balance-sheet date 4. d Deposits that are received on terms other than those available in the normal course of business. Source downloaded (UTC): 2026-09-10T00:18:51.823Z to 2026-09-10T00:18:51.823Z Record version: sha256:5045bdf379628ab5ca8f00883e0cd5e16137ecc55e9ed67525c91f24f4a77e8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-942-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/942/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [405-942-55-1](https://asc.understandingaccounting.org/asc/405/942/#405-942-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:51.823Z to 2026-09-10T00:18:51.823Z Record version: sha256:0fbdbeddd42a20e41f8ba298a9617abfe38fc24d57b5ef312ef44f13602658c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a credit union to be in compliance with the Codification, it must be unequivocal on the face of the statement of financial condition that savings accounts are a liability. ##### [405-942-55-2](https://asc.understandingaccounting.org/asc/405/942/#405-942-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:51.823Z to 2026-09-10T00:18:51.823Z Record version: sha256:2832ace07f2ae86d30a147aa9b9b4b5fd0071350ecdc830464cac90064aa94e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A credit union statement of financial condition shall either: 1. a Present savings accounts as the first item in the liabilities and equity section 2. b Include savings accounts within a captioned subtotal for total liabilities. #### Illustrations ##### [405-942-55-3](https://asc.understandingaccounting.org/asc/405/942/#405-942-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:51.823Z to 2026-09-10T00:18:51.823Z Record version: sha256:18d8bedb225a19726f49fad884ee36a113da21fa7943958d7806084d4fff15d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example provides an illustration in which it is unequivocal on the face of the statement of financial condition that savings accounts are a liability. - Sample Credit Union - Statements of Financial Condition - December 31, 19X2 and 19X1 - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-CE3952D1-9416-499F-9162-573F003055AB-low.gif) 19X2 19X1 Assets "Loans to members, net of allowance for loan losses (Note 3)" " $44,800,000 " " $40,900,000 " Cash " 700,000 " " 800,000 " Investments (Notes 2 and 6) " 5,000,000 " " 7,000,000 " Accrued interest receivable " 100,000 " " 70,000 " Property and equipment (Note 4) " 1,050,000 " " 900,000 " "Central liquidity facility stock, at cost" " 250,000 " " 250,000 " Other assets " 50,000 " " 40,000 " Total assets " $51,950,000 " " $49,960,000 " Liabilities and Equity Savings accounts (Note 5) " $42,600,000 " " $42,460,000 " Borrowed funds (Note 6) " 5,000,000 " " 4,000,000 " Accrued and other liabilities " 800,000 " " 500,000 " Commitments and contingent liabilities (Note 9) - - Total liabilities " 48,400,000 " " 46,960,000 " "Retained earnings, substantially restricted (Note 7)" " 3,550,000 " " 3,000,000 " Total liabilities and equity " $51,950,000 " " $49,960,000 " - The accompanying notes are an integral part of these financial statements. \[For purposes of these illustrations, the notes to financial statements have not been included in this or the following Example.\] ##### [405-942-55-4](https://asc.understandingaccounting.org/asc/405/942/#405-942-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:51.823Z to 2026-09-10T00:18:51.823Z Record version: sha256:b76983f18980ca76c183bd5d8800e4dde0f050b0e0574fc6abcff3c7fd4ac93e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example provides an illustration in which it is unequivocal on the face of the statement of financial condition that savings accounts are a liability. - Sample Credit Union - Statements of Financial Condition - December 31, 19X2 and 19X1 - ![](https://asc.understandingaccounting.org/asc-img/GUID-42A27AE9-EE96-425A-AC63-1B9CDDA73B00-low.gif) 19X2 19X1 Assets "Loans to members, net of allowance for loan losses (Note 3)" " $44,800,000 " " $40,900,000 " Cash " 700,000 " " 800,000 " Investments (Notes 2 and 6) " 5,000,000 " " 7,000,000 " Accrued interest receivable " 100,000 " " 70,000 " Property and equipment (Note 4) " 1,050,000 " " 900,000 " "Central liquidity facility stock, at cost" " 250,000 " " 250,000 " Other assets " 50,000 " " 40,000 " Total assets " $51,950,000 " " $49,960,000 " Liabilities and Equity Borrowed funds (Note 6) " $5,000,000 " " $4,000,000 " Accrued and other liabilities " 800,000 " " 500,000 " Commitments and contingent liabilities (Note 9) - - Liabilities excluding savings accounts " 5,800,000 " " 4,500,000 " Savings accounts (Note 5) " 42,600,000 " " 42,460,000 " Total liabilities " 48,400,000 " " 46,960,000 " "Retained earnings, substantially restricted (Note 7)" " 3,550,000 " " 3,000,000 " Total liabilities and equity " $51,950,000 " " $49,960,000 " - The accompanying notes are an integral part of these financial statements. Source downloaded (UTC): 2026-09-10T00:18:57.648Z to 2026-09-10T00:19:09.841Z Record version: sha256:0cecbbc34f83842c8bcfa001b6a8e47a1409948e6aeb97c299ae08459550a231 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944: Liabilities — Financial Services—Insurance ### Machine-generated study aids ```json { "summary": "ASC 405-944 tells insurance entities where liability accounting guidance lives and adds one specific rule for reinsurance contracts. Liabilities for claims costs and future policyholder benefits are in Subtopic 944-40, premium deficiencies in 944-60, and policyholder dividends in 944-50. The substantive rule here: a ceding entity that agrees to service the reinsured contracts without reasonable compensation must accrue a liability for estimated excess future servicing costs (405-944-25-1).", "key_points": [ "The Subtopic is organized into a General Subsection and a Reinsurance Contracts Subsection, both addressing insurance entity liabilities (405-944-05-1).", "Cross-references direct users elsewhere: claims costs and future policyholder benefits to Subtopic 944-40, premium deficiencies to 944-60, and dividends to policyholders to 944-50 (405-944-05-2).", "Scope follows Section 944-10-15 (the Overall insurance Subtopic), and the Reinsurance Contracts Subsections apply only to reinsurance contracts, identified under 944-20-15 (405-944-15-1 through 15-3).", "If a ceding entity agrees to service all related insurance contracts without reasonable compensation, it must accrue a liability for estimated excess future servicing costs under the reinsurance contract (405-944-25-1)." ], "categories": [ "Recognition", "Industry-specific", "Subsequent measurement" ], "audience_level": "intermediate", "student_note": "The only operative rule in this Subtopic is the accrual of excess future servicing costs by a ceding entity that services reinsured contracts for less than reasonable compensation; everything else is a signpost to Subtopics 944-40, 944-50, and 944-60. A common mistake is looking here for measurement of claim liabilities or policyholder benefits, which are governed by 944-40.", "related_topics": [ "944-40", "944-50", "944-60", "944-20", "944-10", "944-30" ], "key_concepts": [ "reinsurance contract", "ceding entity", "excess future servicing costs", "policyholder benefits", "premium deficiency", "policyholder dividends", "insurance liabilities" ] } ``` Source downloaded (UTC): 2026-09-10T00:18:57.648Z to 2026-09-10T00:18:57.648Z Record version: sha256:d10b99525a600c21ec43f94cb1d77b6b7202612bcaf6dcaee1b9edc5ec4ffd7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/944/#00-status) SEC content: no ##### [405-944-00-1](https://asc.understandingaccounting.org/asc/405/944/#405-944-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:57.648Z to 2026-09-10T00:18:57.648Z Record version: sha256:7480a569faa2704ee479d6d1fd34d54ea9b84ddba3346e900d2c9f17291445ed 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
Dividend to PolicyholdersAddedAccounting Standards Update No. 2014-0603/14/2014
944-405-05-1AmendedAccounting Standards Update No. 2016-1912/14/2016
944-405-05-2AmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T00:18:59.503Z to 2026-09-10T00:18:59.503Z Record version: sha256:543cd7a145f9ee5d2530683b98207896b7c26b112bf803ebd40ce5348bf938f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/944/#05-overview-and-background) SEC content: no ##### [405-944-05-1](https://asc.understandingaccounting.org/asc/405/944/#405-944-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:59.503Z to 2026-09-10T00:18:59.503Z Record version: sha256:76617de5bf8fab137d5d01c1a3e93d18246a7bb6ade47d9795f31d2c32695338 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of liabilities. The guidance in this Subtopic is provided in the following two Subsections: 1. a General 2. b [Reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts. ##### [405-944-05-2](https://asc.understandingaccounting.org/asc/405/944/#405-944-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:59.503Z to 2026-09-10T00:18:59.503Z Record version: sha256:22d330924b80188a09c0cdf09ed358056fe9a42fceef5950fccbd60785269f4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on liabilities for claims costs and future policyholder benefits, see Subtopic 944-40. For guidance on liabilities related to premium deficiencies, see Subtopic 944-60. For guidance on liabilities for [dividends to policyholders](https://asc.understandingaccounting.org/glossary/d/#dividend-to-policyholders "Nonguaranteed amounts distributable to policyholders of participating life insurance contracts and based on actual performance of the insurance entity as determined by the insurer. Under various state insurance laws, dividends are apportioned to policyholders on an equitable basis. The dividend allotted to any contract often is based on the amount that the contract, as one of a class of similar contracts, has contributed to the income available for distribution as dividends. Dividends to policyholders include annual policyholder dividends and terminal dividends."), see Subtopic 944-50. ### Reinsurance Contracts ##### [405-944-05-3](https://asc.understandingaccounting.org/asc/405/944/#405-944-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:59.503Z to 2026-09-10T00:18:59.503Z Record version: sha256:ce0facaf959bd391b06c55fb9bec1a8cfd200844b234ef38672f9264054784ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of liabilities related to [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts. Source downloaded (UTC): 2026-09-10T00:19:02.199Z to 2026-09-10T00:19:02.199Z Record version: sha256:cf1ccf395ded670a03c0c9bcff36dd39fbda853893c361616601def0ba89c4d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/944/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-944-15-1](https://asc.understandingaccounting.org/asc/405/944/#405-944-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:02.199Z to 2026-09-10T00:19:02.199Z Record version: sha256:9da12a4ae0c791540230cefd70da3d7609463f1409dfa541d9abe67c03a6d66b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15. ### Reinsurance Contracts ##### [405-944-15-2](https://asc.understandingaccounting.org/asc/405/944/#405-944-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:02.199Z to 2026-09-10T00:19:02.199Z Record version: sha256:c2785a0b8f3abe2c5b6d5ae5962617ba18036cdb1917126b5babf976c8d139b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/405/944/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [405-944-15-3](https://asc.understandingaccounting.org/asc/405/944/#405-944-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:02.199Z to 2026-09-10T00:19:02.199Z Record version: sha256:393dccf6b2e41c6af99b627f89fbecb3d54e82934cb37d06f5753070b944b8c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Reinsurance Contracts Subsections of this Subtopic applies only to [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts. For guidance on identifying a reinsurance contract, see the [Reinsurance Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. Source downloaded (UTC): 2026-09-10T00:19:09.841Z to 2026-09-10T00:19:09.841Z Record version: sha256:29383066b08da1c143ba7c2191aba71eedde6803c123777b9b83a9ac805e9773 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/944/#25-recognition) SEC content: no ### Reinsurance Contracts ##### [405-944-25-1](https://asc.understandingaccounting.org/asc/405/944/#405-944-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:09.841Z to 2026-09-10T00:19:09.841Z Record version: sha256:194c63b7dd26dde13d09566c7e4d18fe7cd362fbda18e5b974263eaebaca32f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a [ceding entity](https://asc.understandingaccounting.org/glossary/c/#ceding-entity "The party that pays a reinsurance premium in a reinsurance transaction. The ceding entity receives the right to reimbursement from the assuming entity under the terms of the reinsurance contract.") has agreed to service all of the related insurance contracts without reasonable compensation, a liability shall be accrued for estimated excess future servicing costs under the [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contract. Source downloaded (UTC): 2026-09-10T00:19:12.218Z to 2026-09-10T00:19:18.650Z Record version: sha256:b94af746a27ec0e636a3361a1516b3fe51ab721875ed065fe21711e6474021d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-946: Liabilities — Financial Services—Investment Companies ### Machine-generated study aids ```json { "summary": "This Subtopic gives presentation guidance for liabilities in an investment company's statement of assets and liabilities. It requires accounts payable to be broken out separately for investment securities purchased and for capital stock reacquired, and describes what falls into \"other liabilities.\" Foreign-currency payables are translated at current exchange rates and may be grouped with the corresponding functional currency payables.", "key_points": [ "The Subtopic addresses an investment company's accounting for liabilities (405-946-05-1) and follows the scope of Section 946-10-15 (405-946-15-1).", "Accounts payable must be listed separately for investment securities purchased and for capital stock reacquired (405-946-45-1).", "Other liabilities includes amounts due to counterparties for collateral on return of securities loaned, deferred income, and dividends and distributions payable (405-946-45-2).", "Payables denominated in foreign currencies are converted into the functional currency at current exchange rates and may be categorized within the corresponding functional currency payables (405-946-45-2)." ], "categories": [ "Presentation", "Industry-specific", "Foreign currency", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "This is a short, purely presentational subtopic: it dictates line-item detail on a fund's statement of assets and liabilities rather than recognition or measurement. A common misunderstanding is thinking it changes how liabilities are measured — measurement still comes from the general liability and foreign currency guidance.", "related_topics": [ "946-10", "946-210", "830", "405-20", "860-30" ], "key_concepts": [ "investment company", "statement of assets and liabilities", "accounts payable", "securities lending collateral", "dividends and distributions payable", "foreign currency payables", "functional currency", "capital stock reacquired" ] } ``` Source downloaded (UTC): 2026-09-10T00:19:12.218Z to 2026-09-10T00:19:12.218Z Record version: sha256:be79a0334b7c75e94e94b828890b92f4f627d5b3189a8dac96023e2cd8d865fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-946-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/946/#05-overview-and-background) SEC content: no ##### [405-946-05-1](https://asc.understandingaccounting.org/asc/405/946/#405-946-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:12.218Z to 2026-09-10T00:19:12.218Z Record version: sha256:592a66c50213f25f1e23b5d9ec35e11353134d0f661ad6b00201299f91d5cd51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses an investment company's accounting for liabilities. Source downloaded (UTC): 2026-09-10T00:19:16.060Z to 2026-09-10T00:19:16.060Z Record version: sha256:827b997456fa74d7c6188e120ba03810c58a915b754a8a2f7a64e41d505893bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-946-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/946/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-946-15-1](https://asc.understandingaccounting.org/asc/405/946/#405-946-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:16.060Z to 2026-09-10T00:19:16.060Z Record version: sha256:1de4479ddb0f4cdfa9a18a71053005dd695c3b25f662b4d36b6df303b9890669 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 946-10-15. Source downloaded (UTC): 2026-09-10T00:19:18.650Z to 2026-09-10T00:19:18.650Z Record version: sha256:3c6f6f66a32595fec799535a4d8f1c4db0e1ceeff501d7ff1f4786108567c411 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-946-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/405/946/#45-other-presentation-matters) SEC content: no #### Statement of Assets and Liabilities or Statement of Net Assets ##### [405-946-45-1](https://asc.understandingaccounting.org/asc/405/946/#405-946-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:18.650Z to 2026-09-10T00:19:18.650Z Record version: sha256:80563b1a1a63e33f00b78de0c1f60e0bc44c84627d7e2c6cea1819430d33fe31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounts payable shall be listed separately for investment securities purchased and capital stock reacquired. ##### [405-946-45-2](https://asc.understandingaccounting.org/asc/405/946/#405-946-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:18.650Z to 2026-09-10T00:19:18.650Z Record version: sha256:61cfe843e1b0dc7acedf33e2c20e94f3ec5bc2c9b964ea10645f8e33c51f7367 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The line item other liabilities includes amounts due to counterparties for collateral on return of securities loaned, deferred income, and dividends and distributions payable. Payables denominated in foreign currencies shall be converted into the functional currency at current exchange rates and may be categorized within the corresponding functional currency payables. Source downloaded (UTC): 2026-09-10T00:19:21.041Z to 2026-09-10T00:19:37.991Z Record version: sha256:b131fe65c9fad4b02c436e7d46c0034db98d6c82327f0a328f280772a3565543 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-954: Liabilities — Health Care Entities ### Machine-generated study aids ```json { "summary": "This Subtopic governs recognition and disclosure of liabilities unique to health care entities, principally accrued health care costs under capitation and other risk-bearing payor contracts. Providers that bear risk for referrals and outside services must accrue a liability for unpaid claims, including incurred but not reported (IBNR) claims, and must accrue health care costs as services are rendered, including services required beyond the premium period and post-termination costs. It also clarifies that entering into a Medicare fraud settlement that requires five years of future compliance audits is not itself the obligating event, so no liability is recognized for those future audits.", "key_points": [ "A capitation contract that obligates the provider to assume the risk of physician referrals and other outside services requires establishing a liability for unpaid claims, including incurred but not reported claims; a lag analysis may help estimate it (405-954-25-1).", "Health care costs are accrued as services are rendered, including estimates of the cost of services rendered but not yet reported (405-954-25-2).", "If a prepaid health care provider must render services to specific members beyond the premium period (by contract or regulation), the costs of those services are accrued currently (405-954-25-2).", "Costs to be incurred after contract termination—such as guaranteed salaries, rent, and depreciation, net of anticipated revenues—are accrued when it is determined a contract with a sponsoring employer or group will be terminated (405-954-25-2).", "Amounts payable to hospitals, physicians, or other providers under risk-retention, bonus, or similar programs are accrued during the contract period based on relevant factors such as experience to date (405-954-25-2).", "No liability is recognized on the settlement date for future Medicare compliance audits required by a fraud settlement agreement, because entering into the agreement is not the obligating event (405-954-25-4 through 25-5).", "Disclosure is required of estimated amounts payable for contractual adjustments and third-party settlements, and, for prepaid health care providers, the basis for accruing health care costs and significant business/contractual arrangements with hospitals, physicians, or associated entities (405-954-50-1; 405-954-50-2)." ], "categories": [ "Recognition", "Disclosure", "Industry-specific", "Contingencies and guarantees" ], "audience_level": "intermediate", "student_note": "The recurring exam trap is timing: costs are accrued when services are rendered (including IBNR and obligations extending past the premium period), but a promise to perform future compliance audits under a Medicare settlement creates no liability because the obligating event hasn't occurred. Distinguish \"we already received/owe the service\" from \"we promised to do something in the future.\"", "related_topics": [ "954-10", "954-405", "405-20", "450-20", "606", "944-40" ], "key_concepts": [ "capitation contract", "incurred but not reported claims", "unpaid claims liability", "prepaid health care services", "lag analysis", "obligating event", "third-party settlements", "risk-retention and bonus programs" ] } ``` Source downloaded (UTC): 2026-09-10T00:19:21.041Z to 2026-09-10T00:19:21.041Z Record version: sha256:a095bd9699be65a724252bae3e8e9523938a6b2d7493a21e6811829af313507f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-954-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/954/#00-status) SEC content: no ##### [405-954-00-1](https://asc.understandingaccounting.org/asc/405/954/#405-954-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:21.041Z to 2026-09-10T00:19:21.041Z Record version: sha256:7674f4c4ac3c913e1cba3c46418f7c794dd9618fbeb4efbea2d0d015e37cabab 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
954-405-25-1AmendedAccounting Standards Update No. 2014-0905/28/2014
954-405-25-3SupersededAccounting Standards Update No. 2014-0905/28/2014
954-405-25-5AmendedAccounting Standards Update No. 2024-0203/29/2024
Source downloaded (UTC): 2026-09-10T00:19:24.097Z to 2026-09-10T00:19:24.097Z Record version: sha256:08abd8fe20928c6fc2ee4ff819f0abe6de6f3370e7680aea96504c439ce69e42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-954-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/954/#05-overview-and-background) SEC content: no ##### [405-954-05-1](https://asc.understandingaccounting.org/asc/405/954/#405-954-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:24.097Z to 2026-09-10T00:19:24.097Z Record version: sha256:333e2e320f546f5697c1f8c44052120c18148223cc3bf93f2e92ff1c3243391d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on liabilities for health care entities within the scope of this Topic. ##### [405-954-05-2](https://asc.understandingaccounting.org/asc/405/954/#405-954-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:24.097Z to 2026-09-10T00:19:24.097Z Record version: sha256:dd7195dbf3446a9c056ee749171e9bd6a676c5356a323aa7fb2a14677a5e176b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contracts between a health care provider and a payor based on anything other than full charges require the provider to accept some financial risk. The nature and degree of risk for the provider varies depending on the contract terms (for example, the definition of the unit of service or the basis for payment). Source downloaded (UTC): 2026-09-10T00:19:25.824Z to 2026-09-10T00:19:25.824Z Record version: sha256:f63465673c6a7d1db86df1597da9109c727fdab8209e0d0614a4aa1f499314a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-954-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/954/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-954-15-1](https://asc.understandingaccounting.org/asc/405/954/#405-954-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:25.824Z to 2026-09-10T00:19:25.824Z Record version: sha256:e9a61a48f55896a8d4eca28459be39746f6ce733637a4d469d94bf95d1711e1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 954-10-15. Source downloaded (UTC): 2026-09-10T00:19:32.072Z to 2026-09-10T00:19:32.072Z Record version: sha256:c197dc615aca53f6b77ac0d63a367c4527f82a43fe68d20c4d767e34a4a0c812 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-954-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/954/#25-recognition) SEC content: no #### Health Care Contracting ##### [405-954-25-1](https://asc.understandingaccounting.org/asc/405/954/#405-954-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:32.072Z to 2026-09-10T00:19:32.072Z Record version: sha256:755374ff53a0c6181d18e36a663db0047d87fccfabc7681f7f79240e8f380383 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a capitation contract obligates the provider to assume the risk of physician referrals and other outside services, a liability for unpaid claims, including incurred but not reported claims, shall be established. A lag analysis may be helpful in estimating the liability. #### Prepaid Health Care Services ##### [405-954-25-2](https://asc.understandingaccounting.org/asc/405/954/#405-954-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:32.072Z to 2026-09-10T00:19:32.072Z Record version: sha256:31116dca1169688194c818c2b601eac983d0f3e3e7beb7c6f3a1c55e3e85f411 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Health care costs shall be accrued as services are rendered, including estimates of the costs of services rendered but not yet reported. Furthermore, if a provider of [prepaid health care services](https://asc.understandingaccounting.org/glossary/p/#prepaid-health-care-services "Any form of health care service provided to a member in exchange for a scheduled payment (or payments) established before care is provided, regardless of the level of service subsequently provided.") is obligated to render services to specific members beyond the premium period due to provisions in the contract or regulatory requirements, the costs of such services to be incurred also shall be accrued currently. Costs that will be incurred after a contract is terminated, such as guaranteed salaries, rent, and depreciation, net of any anticipated revenues, shall be accrued when it is determined that a contract with a sponsoring employer or other group will be terminated. Amounts payable to hospitals, physicians, or other health care providers under risk-retention, bonus, or similar programs shall be accrued during the contract period based on relevant factors, such as experience to date. ##### [405-954-25-3](https://asc.understandingaccounting.org/asc/405/954/#405-954-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:32.072Z to 2026-09-10T00:19:32.072Z Record version: sha256:555c27ae5c30831044b2d8c4d0e447839413f9d9b239b1b9e76505015a221d16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Medicare Settlement Agreements ##### [405-954-25-4](https://asc.understandingaccounting.org/asc/405/954/#405-954-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:32.072Z to 2026-09-10T00:19:32.072Z Record version: sha256:17bab8c918ddf295f4a766d01e90e6c28602c7f87280ff575b80d76c9895add5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A number of health care entities have entered into settlement agreements with the U.S. government regarding allegations of Medicare fraud. In addition to the promise to pay specified penalties to the U.S. government, the settlement agreements impose an obligation on the health care entity to engage an independent review entity to test and report on compliance with Medicare requirements each year for the following five years. ##### [405-954-25-5](https://asc.understandingaccounting.org/asc/405/954/#405-954-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T00:19:32.072Z to 2026-09-10T00:19:32.072Z Record version: sha256:c5255df484c8fd1d60ffcb233c3fbad03e872535ab7aeff0f2c21f8ee0a594e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The settlement agreement represents a promise by a health care entity to perform future compliance audits and a duty or responsibility on which others are justified in relying is created by that promise. However, that promise creates a present duty or responsibility only if an obligating event has already occurred (the third characteristic of a liability; see paragraph 6 of FASB Concepts Statement No. 6, Elements of Financial Statements) that leaves the health care entity with little or no discretion to avoid the future transfer or use of assets. The obligating event for the costs of the future compliance audits is not entering into the agreement. Therefore, the entity shall not recognize a liability for the future Medicare compliance audits on the date the settlement is agreed to. Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [105-10-65-9](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-9)The settlement agreement represents a promise by a health care entity to perform future compliance audits and a duty or responsibility on which others are justified in relying is created by that promise. However, that promise creates a present duty or responsibility only if an obligating event has already occurred that leaves the health care entity with little or no discretion to avoid the future transfer or use of assets. The obligating event for the costs of the future compliance audits is not entering into the agreement. Therefore, the entity shall not recognize a liability for the future Medicare compliance audits on the date the settlement is agreed to. Source downloaded (UTC): 2026-09-10T00:19:34.255Z to 2026-09-10T00:19:34.255Z Record version: sha256:89a859a6707b73655b1785f74b309120e28d52de7eb885ec18fa77c5f0a70644 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-954-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/954/#30-initial-measurement) SEC content: no ##### [405-954-30-1](https://asc.understandingaccounting.org/asc/405/954/#405-954-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:34.255Z to 2026-09-10T00:19:34.255Z Record version: sha256:ff6a4def457ce7c02583360568f14d47221ebbd2fd1c04229736762061fe6512 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Section not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T00:19:36.311Z to 2026-09-10T00:19:36.311Z Record version: sha256:db9d38e99f19db78db14e754622323da8eebbb861799f5cbdfa8cf2267e3f4ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-954-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/954/#50-disclosure) SEC content: no ##### [405-954-50-1](https://asc.understandingaccounting.org/asc/405/954/#405-954-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:36.311Z to 2026-09-10T00:19:36.311Z Record version: sha256:752acfbf0c2061fc537870fa4fc4419b77fd8d199339791f01d287dba67e702e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. With regard to contractual adjustments and third-party settlements, identification and explanation of the estimated amounts that are payable by the entity shall be disclosed. ##### [405-954-50-2](https://asc.understandingaccounting.org/asc/405/954/#405-954-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:36.311Z to 2026-09-10T00:19:36.311Z Record version: sha256:e08506054c912317a8cdfe1126f6577a8363aa2612c6de1d2a3e5286ac784232 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For providers of [prepaid health care services](https://asc.understandingaccounting.org/glossary/p/#prepaid-health-care-services "Any form of health care service provided to a member in exchange for a scheduled payment (or payments) established before care is provided, regardless of the level of service subsequently provided."), the basis for accruing health care costs and significant business and contractual arrangements with hospitals, physicians, or other associated entities shall be disclosed in the notes to financial statements. Source downloaded (UTC): 2026-09-10T00:19:40.959Z to 2026-09-10T00:20:08.319Z Record version: sha256:f635772f3a0ea59489fd0928c29e13abd1b1ffca9af0b848fa2311ccdcd1ffa7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958: Liabilities — Not-for-Profit Entities ### Machine-generated study aids ```json { "summary": "This Subtopic addresses how a not-for-profit entity accounts for its own liabilities, principally unconditional promises to give (grants/pledges the NFP makes to others). It fixes the discount rate used in a present-value measurement at initial recognition (no revision unless the fair value option under 825-10 is elected), requires discount amortization to be reported in the same functional expense classification as the original promise, and requires a maturity schedule disclosure. It also cross-references guidance for donated assets transferred to intermediaries/agents and for refundable membership interests of social and country clubs.", "key_points": [ "Recognition of liabilities from transfers of donated assets to intermediaries and agents follows 958-605-25-23 through 25-24, with initial measurement in 958-605-30-13 (405-958-25-1; 405-958-30-1).", "Initial measurement of liabilities arising from making promises to give is governed by 720-25-30-1 through 30-2 (405-958-30-2).", "If present value of amounts to be paid is used to measure the fair value of an unconditional promise to give at initial recognition (per 835-30-25-10 through 25-11), the discount rate is set at initial recognition and shall not be revised unless the promise is remeasured at fair value under the Fair Value Option Subsections of 825-10 (405-958-35-1).", "Amortization of discount on unconditional promises to give is reported in the same functional expense classification in which the promise was initially reported (405-958-45-1).", "Notes must include, in addition to 450-20-50 disclosures, a schedule of unconditional promises to give showing amounts payable in each of the next five years, the aggregate due in more than five years, and the unamortized discount for promises reported at present value (405-958-50-1).", "Membership interests such as capital shares issued by an NFP social or country club that are wholly or partially refundable on death, relocation, resignation, or at a fixed date are addressed by Subtopic 480-10 (405-958-25-3).", "NFPs that must engage an independent review entity for five years under a Medicare fraud settlement agreement look to Section 954-405-25 (405-958-60-1)." ], "categories": [ "Not-for-profit", "Subsequent measurement", "Disclosure", "Recognition" ], "audience_level": "intermediate", "student_note": "Watch the direction of the promise: this Subtopic covers promises the NFP makes (a liability), while 958-605 covers promises received (a receivable/contribution). The classic trap is revising the discount rate in later periods — the rate is locked in at initial recognition unless the fair value option is elected, and the discount amortization stays in the original functional expense line rather than becoming interest expense.", "related_topics": [ "720-25", "958-605", "835-30", "825-10", "480-10", "954-405" ], "key_concepts": [ "unconditional promise to give", "present value measurement", "fixed discount rate", "discount amortization", "functional expense classification", "maturity schedule disclosure", "agent and intermediary transfers", "refundable membership interests" ] } ``` Source downloaded (UTC): 2026-09-10T00:19:40.959Z to 2026-09-10T00:19:40.959Z Record version: sha256:08766aca17319c43e6e9abfd1408dac7a2aadd64d427e7159bff999ce72477f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/958/#00-status) SEC content: no ##### [405-958-00-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:40.959Z to 2026-09-10T00:19:40.959Z Record version: sha256:4e2f1f866eb01915a29b806bd13e146e8d1a29df79311677a9ae93de9d6c8047 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
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Functional ClassificationSupersededAccounting Standards Update No. 2016-1408/18/2016
Functional Expense ClassificationAddedAccounting Standards Update No. 2016-1408/18/2016
958-405-25-2SupersededAccounting Standards Update No. 2014-0905/28/2014
958-405-45-1AmendedAccounting Standards Update No. 2016-1408/18/2016
Source downloaded (UTC): 2026-09-10T00:19:44.991Z to 2026-09-10T00:19:44.991Z Record version: sha256:1e850599978c20a9220337a2637737dc296b48d43d171a0eec61dada3e9c1684 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/958/#05-overview-and-background) SEC content: no ##### [405-958-05-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:44.991Z to 2026-09-10T00:19:44.991Z Record version: sha256:8d82597d2362831085c33fe73459630ef5c496ad65e1028b02913f8cfed77ef6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance about [promises to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.") made 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). NFPs also shall comply with the applicable standards in Subtopic 720-25. This Subtopic also identifies the Sections within the Not-For-Profit Entities Topic that provide guidance on accounting for liabilities. Source downloaded (UTC): 2026-09-10T00:19:48.744Z to 2026-09-10T00:19:48.744Z Record version: sha256:294fd4ae9976508ad58e46dfc935ff154950c53ac5438ef2f0ec25eb9ba1345d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/958/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-958-15-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:48.744Z to 2026-09-10T00:19:48.744Z Record version: sha256:25ed111fce9de02243028c5ebb9ad0005f4e3140036ea871d864f646ed3f20f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 958-10-15. Source downloaded (UTC): 2026-09-10T00:19:53.538Z to 2026-09-10T00:19:53.538Z Record version: sha256:f293e7ffd0edc4fce2dae3fd23e6ff098e51249dffb18e21750e616c62ffea23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/958/#25-recognition) SEC content: no ##### [405-958-25-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:53.538Z to 2026-09-10T00:19:53.538Z Record version: sha256:be64497c0bcfd04f1ead1518b6a1213a7f83de36dac10bc51d03b42bb3785288 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For recognition guidance on liabilities that result from transfers of donated assets to [intermediaries](https://asc.understandingaccounting.org/glossary/i/#intermediary "Although in general usage the term intermediary encompasses a broad range of situations in which an entity acts between two or more other parties, in this usage, it refers to situations in which a recipient entity acts as a facilitator for the transfer of assets between a potential donor and a potential beneficiary (donee) but is neither an agent or trustee nor a donee and donor.") and [agents](https://asc.understandingaccounting.org/glossary/a/#agent "An entity that acts for and on behalf of another. Although the term agency has a legal definition, the term is used broadly to encompass not only legal agency, but also the relationships described in Topic 958. A recipient entity acts as an agent for and on behalf of a donor if it receives assets from the donor and agrees to use those assets on behalf of or transfer those assets, the return on investment of those assets, or both to a specified beneficiary. A recipient entity acts as an agent for and on behalf of a beneficiary if it agrees to solicit assets from potential donors specifically for the beneficiary's use and to distribute those assets to the beneficiary. A recipient entity also acts as an agent if a beneficiary can compel the recipient entity to make distributions to it or on its behalf."), see paragraphs [958-605-25-23 through 25-24](https://asc.understandingaccounting.org/asc/605/958/#605-958-25-23) . ##### [405-958-25-2](https://asc.understandingaccounting.org/asc/405/958/#405-958-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:53.538Z to 2026-09-10T00:19:53.538Z Record version: sha256:e993647d78d2a0519b32bb193ebd1e5e21b95ccc4be6e5315fcb983e67a35e15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [405-958-25-3](https://asc.understandingaccounting.org/asc/405/958/#405-958-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:53.538Z to 2026-09-10T00:19:53.538Z Record version: sha256:ce2f3b71c47101ef5b600ab2573178588e5afd32058f09649bfa3b00733d70a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A not-for-profit entity (NFP) that is a social or country club may issue membership interests, such as capital shares. If those interests are wholly or partially refundable when the member dies, moves away, resigns his or her membership, or at a fixed date, Subtopic 480-10 provides guidance. Source downloaded (UTC): 2026-09-10T00:19:57.057Z to 2026-09-10T00:19:57.057Z Record version: sha256:cbe890723a0cd0c52429126e54cf531b2ae1dcb8f4d9a690eb4b1b1f96fc56b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/958/#30-initial-measurement) SEC content: no ##### [405-958-30-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:57.057Z to 2026-09-10T00:19:57.057Z Record version: sha256:3cc95d3132cc411c3ea93fe5ad921d9a1ece9246606d7355598c7d616581f5b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For initial measurement guidance on liabilities that result from transfers of donated assets to [intermediaries](https://asc.understandingaccounting.org/glossary/i/#intermediary "Although in general usage the term intermediary encompasses a broad range of situations in which an entity acts between two or more other parties, in this usage, it refers to situations in which a recipient entity acts as a facilitator for the transfer of assets between a potential donor and a potential beneficiary (donee) but is neither an agent or trustee nor a donee and donor.") and [agents](https://asc.understandingaccounting.org/glossary/a/#agent "An entity that acts for and on behalf of another. Although the term agency has a legal definition, the term is used broadly to encompass not only legal agency, but also the relationships described in Topic 958. A recipient entity acts as an agent for and on behalf of a donor if it receives assets from the donor and agrees to use those assets on behalf of or transfer those assets, the return on investment of those assets, or both to a specified beneficiary. A recipient entity acts as an agent for and on behalf of a beneficiary if it agrees to solicit assets from potential donors specifically for the beneficiary's use and to distribute those assets to the beneficiary. A recipient entity also acts as an agent if a beneficiary can compel the recipient entity to make distributions to it or on its behalf."), see paragraph [958-605-30-13](https://asc.understandingaccounting.org/asc/605/958/#605-958-30-13). ##### [405-958-30-2](https://asc.understandingaccounting.org/asc/405/958/#405-958-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:57.057Z to 2026-09-10T00:19:57.057Z Record version: sha256:d5baac9f9dcc844bf70f639d55dc952ca6b0f9816d66501d68d17fae9f923c87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For initial measurement guidance on liabilities that result from making [promises to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional."), see paragraphs [720-25-30-1 through 30-2](https://asc.understandingaccounting.org/asc/720/25/#720-25-30-1) . Source downloaded (UTC): 2026-09-10T00:19:59.203Z to 2026-09-10T00:19:59.203Z Record version: sha256:86b6c0f6453dd7ca644ab3634aca9d5fd1ec3baa931cf44ad5ff3c4cbb157811 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/958/#35-subsequent-measurement) SEC content: no #### Liability for Promises to Give ##### [405-958-35-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:59.203Z to 2026-09-10T00:19:59.203Z Record version: sha256:3e3bfeebe6e94875fe1223e3868a6a4cba9aac662647be6f9fc6b68f07029787 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the present value of the amounts to be paid is used to measure [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 an [unconditional promise to give](https://asc.understandingaccounting.org/glossary/u/#unconditional-promise-to-give "A promise to give that depends only on passage of time or demand by the promisee for performance.") at initial recognition, in conformity with paragraphs [835-30-25-10 through 25-11](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-10) , the discount rate shall be determined at the time the unconditional promise to give is initially recognized and shall not be revised, unless the [promise to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.") is subsequently remeasured at fair value pursuant to the Fair Value Option Subsections of Subtopic 825-10. Source downloaded (UTC): 2026-09-10T00:20:02.539Z to 2026-09-10T00:20:02.539Z Record version: sha256:95dd88d8ffab80b8758644784ca9040f8ac56fdc8e807e291ae26726c4e34728 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/405/958/#45-other-presentation-matters) SEC content: no #### Liability for Promises to Give ##### [405-958-45-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:02.539Z to 2026-09-10T00:20:02.539Z Record version: sha256:49f52aefd5a9b2a22fc86d03ac657bbdfd85b461e16d25106509ba2469f6ac76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amortization of any discount related to [unconditional promises to give](https://asc.understandingaccounting.org/glossary/u/#unconditional-promise-to-give "A promise to give that depends only on passage of time or demand by the promisee for performance.") shall be reported in the same [functional expense classification](https://asc.understandingaccounting.org/glossary/f/#functional-expense-classification "A method of grouping expenses according to the purpose for which costs are incurred. The primary functional classifications of a not-for-profit entity are program services and supporting activities.") in which the [promise to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.") was initially reported. Source downloaded (UTC): 2026-09-10T00:20:04.453Z to 2026-09-10T00:20:04.453Z Record version: sha256:38e92964f1e8138972357ac0f3411747c46339b2c9c9470dd30cef76a19a64d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/958/#50-disclosure) SEC content: no #### Liability for Promises to Give ##### [405-958-50-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:04.453Z to 2026-09-10T00:20:04.453Z Record version: sha256:72def096db6fa2fdf837e4b7eb584a460d1af7a6add3aaa66d886b70ad851822 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to disclosures required by Section 450-20-50, the notes to financial statements shall include a schedule of [unconditional promises to give](https://asc.understandingaccounting.org/glossary/u/#unconditional-promise-to-give "A promise to give that depends only on passage of time or demand by the promisee for performance.") that shows the total amount separated into amounts payable in each of the next five years, the aggregate amount due in more than five years, and for unconditional [promises to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.") that are reported using present value techniques, the unamortized discount. Source downloaded (UTC): 2026-09-10T00:20:08.319Z to 2026-09-10T00:20:08.319Z Record version: sha256:b9ac578d37d6cf522b3ec11401cb99678c7748904f95c48a7c888aa54bccb5ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/405/958/#60-relationships) SEC content: no #### Health Care Entities ##### [405-958-60-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:08.319Z to 2026-09-10T00:20:08.319Z Record version: sha256:0602a1e83e264e723257ab989f71a6780c2e859ae9f7bbac4cad25fec8fd6971 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance for [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) that have entered into settlement agreements with the U.S. government regarding allegations of Medicare fraud that impose an obligation on the entity to engage an independent review entity to test and report on compliance with Medicare requirements each year for five years, see Section 954-405-25. Source downloaded (UTC): 2026-09-10T00:20:12.403Z to 2026-09-10T00:20:28.784Z Record version: sha256:41877d518ce49aa2964f27dc64b87df4dc66c11e5cea10dcd0db24b9649af0d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-980: Liabilities — Regulated Operations ### Machine-generated study aids ```json { "summary": "This Subtopic explains when a regulator's rate actions create liabilities (regulatory liabilities) for an entity with regulated operations. Three mechanisms create liabilities: required refunds to customers that meet the loss-contingency accrual criteria, current rates collected to recover costs expected to be incurred in the future for which the entity remains accountable, and gains or other reductions of net allowable costs that the regulator requires be amortized to customers over future periods. A regulator's actions can eliminate a liability only if the regulator's actions imposed it in the first place.", "key_points": [ "Rate actions of a regulator can impose a liability on a regulated entity, usually an obligation to the entity's customers (405-980-25-1).", "Refunds required by a regulator that meet the criteria for accrual of loss contingencies in paragraph 450-20-25-2 are recorded as liabilities and as reductions of revenue or as expenses (405-980-25-1(a)).", "When current rates are intended to recover costs expected to be incurred in the future and the regulator requires the entity to remain accountable for amounts collected but not yet expended, those amounts are recognized as liabilities rather than revenues and are taken to income only when the associated costs are incurred (405-980-25-1(b)).", "A gain or other reduction of net allowable costs that is to be amortized over future periods for rate-making purposes is not recognized in current income; it is recorded as a liability for the expected future reductions of charges to customers (405-980-25-1(c)).", "Actions of a regulator can eliminate a liability only if the liability was imposed by actions of the regulator (405-980-40-1).", "Implementation example: amounts collected in rates for a regulator-directed contingency (e.g., expected future uninsured storm damage) that does not meet Subtopic 450-20 recognition criteria are recorded as liabilities, and income is recognized equal to the cost when the repair cost is incurred (405-980-55-1)." ], "categories": [ "Recognition", "Derecognition", "Industry-specific", "Revenue" ], "audience_level": "intermediate", "student_note": "This is the liability mirror image of regulatory assets: cash collected today under a regulator's rate order is not always revenue. The common misunderstanding is thinking a regulator can wipe out any liability — it can only eliminate liabilities that its own actions imposed.", "related_topics": [ "980-10", "980-340", "980-405", "450-20", "980-605", "606" ], "key_concepts": [ "regulatory liability", "rate actions of a regulator", "allowable costs", "refunds to customers", "loss contingency accrual", "deferred revenue recognition", "amortization of gains for rate-making", "regulated operations" ] } ``` Source downloaded (UTC): 2026-09-10T00:20:12.403Z to 2026-09-10T00:20:12.403Z Record version: sha256:1eeaca204de28b3d4ba8d22a6aa5b91eec57480d6c22e26ef59e10bbb8ef8998 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-980-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/980/#05-overview-and-background) SEC content: no ##### [405-980-05-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:12.403Z to 2026-09-10T00:20:12.403Z Record version: sha256:5cbdb4358d7b26b34a0691b498d41aaf50d2881172c6e0bacbf7425f350f9ffd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for liabilities for entities with regulated operations. Source downloaded (UTC): 2026-09-10T00:20:15.163Z to 2026-09-10T00:20:15.163Z Record version: sha256:e0845977848130e56a31eb1db6709d59c8acdce4c81e94c0140d13a7a582b2de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-980-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/980/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-980-15-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:15.163Z to 2026-09-10T00:20:15.163Z Record version: sha256:047f9ba6ba9db4acd6bcfd8ceb8cc3689bf7877d711ad886e2afa2f552561389 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 980-10-15. Source downloaded (UTC): 2026-09-10T00:20:21.402Z to 2026-09-10T00:20:21.402Z Record version: sha256:e48b752d11193e311d31c2b7ad061aeda20fe210f5c5671f1ec849913fc14648 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-980-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/980/#25-recognition) SEC content: no #### Regulator-Imposed Liabilities ##### [405-980-25-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:21.402Z to 2026-09-10T00:20:21.402Z Record version: sha256:a84f9ba22b29304b72ae8be98a912cbf6fddc4b0dc33f664184833ff5466f57e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Rate actions of a regulator can impose a liability on a regulated entity. Such liabilities are usually obligations to the entity's customers. The following are the usual ways in which liabilities can be imposed and the resulting accounting: 1. a A regulator may require refunds to customers. Refunds can be paid to the customers who paid the amounts being refunded; however, they are usually provided to current customers by reducing current charges. Refunds that meet the criteria of accrual of loss contingencies (see paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2)) shall be recorded as liabilities and as reductions of revenue or as expenses of the regulated entity. 2. b A regulator can provide current rates intended to recover costs that are expected to be incurred in the future with the understanding that if those costs are not incurred future rates will be reduced by corresponding amounts. If current rates are intended to recover such costs and the regulator requires the entity to remain accountable for any amounts charged pursuant to such rates and not yet expended for the intended purpose, the entity shall not recognize as revenues amounts charged pursuant to such rates. The usual mechanism used by regulators for this purpose is to require the regulated entity to record the anticipated cost as a liability in its regulatory accounting records. Those amounts shall be recognized as liabilities and taken to income only when the associated costs are incurred. (For related implementation guidance, see paragraph [980-405-55-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-55-1)). 3. c A regulator can require that a gain or other reduction of net [allowable costs](https://asc.understandingaccounting.org/glossary/a/#allowable-costs "All costs for which revenue is intended to provide recovery. Those costs can be actual or estimated. In that context, allowable costs include interest cost and amounts provided for earnings on shareholders' investments.") be given to customers over future periods. That would be accomplished, for rate-making purposes, by amortizing the gain or other reduction of net allowable costs over those future periods and reducing rates to reduce revenues in approximately the amount of the amortization. If a gain or other reduction of net allowable costs is to be amortized over future periods for rate-making purposes, the regulated entity shall not recognize that gain or other reduction of net allowable costs in income of the current period. Instead, it shall record it as a liability for future reductions of charges to customers that are expected to result. Source downloaded (UTC): 2026-09-10T00:20:24.235Z to 2026-09-10T00:20:24.235Z Record version: sha256:8215a8c38004e587306ed0ffcae5afa568fe11732578f08f32f0ead76b9d00e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-980-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/405/980/#40-derecognition) SEC content: no #### Regulator-Imposed Liabilities ##### [405-980-40-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:24.235Z to 2026-09-10T00:20:24.235Z Record version: sha256:4c5621e01e924c54ec2bd41992c8e6df26b8790c8fcdd31eb00a765df5926234 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Actions of a regulator can eliminate a liability only if the liability was imposed by actions of the regulator. Source downloaded (UTC): 2026-09-10T00:20:26.812Z to 2026-09-10T00:20:26.812Z Record version: sha256:bb40587369d1bc6e13fcac3d55a50ce7effe8dd1057d3171c8442fbc9faabef2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-980-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/980/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [405-980-55-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:26.812Z to 2026-09-10T00:20:26.812Z Record version: sha256:9bf3390594965f4ffb3e273741ae2620f10652de3203cfbba8fd6fd079ac12e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This paragraph provides guidance on implementing paragraph [980-405-25-1(b)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1). A regulator may direct a regulated entity to include an amount for a contingency in allowable costs for rate-making purposes even though the amount does not meet the criteria in Subtopic 450-20 for recording. For example, a regulator may direct a regulated entity to include an amount for repairs of expected future uninsured storm damage. If a cost to repair storm damage is not subsequently incurred, the increased charges will have to be refunded to customers through future rate reductions. Accordingly, the regulated entity would recognize the amounts charged pursuant to such rates as liabilities rather than as revenues. If a cost to repair storm damage is subsequently incurred, the entity would charge that cost to expense and reduce the liabilities at that time by recognizing income in amounts equal to the cost.