# ASC Topic 450: Contingencies Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/450/) 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): 2026-09-10T00:26:49.502Z to 2026-09-10T00:29:23.763Z Record version: sha256:cc84c114f0f3c72101b616e9b74a26193c8373130366e7b532837c0e28decec5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 450 is the general framework for contingencies — existing conditions whose uncertainty will be resolved by a future event confirming the acquisition of an asset, reduction of a liability, impairment of an asset, or incurrence of a liability (450-10-05-5) — noting that merely using an estimate does not create a contingency (450-10-05-6). The Topic is deliberately asymmetric: a loss contingency is accrued only when it is probable that an asset was impaired or a liability incurred at the balance sheet date and the amount is reasonably estimable (450-20-25-2, with range accrual at the best estimate or the minimum per 450-20-30-1), and disclosed when a loss is at least reasonably possible (450-20-50-3 through 50-4); a gain contingency is generally not recognized at all, only disclosed without misleading implications about realization (450-30-25-1, 450-30-50-1). Industry and entity-specific subtopics adapt the model: government contractors (450-912), rate-regulated utilities where regulator-approved recovery creates a liability rather than income (450-980-25-1), not-for-profits facing donor-restriction noncompliance or tax-exempt status problems (450-958), and health care entities accruing malpractice losses (including incurred-but-not-reported incidents) gross of insurance recoveries (450-954). The single most important idea is the probable/reasonably-estimable accrual threshold paired with the conservative refusal to anticipate gains. Source downloaded (UTC): 2026-09-10T00:26:49.502Z to 2026-09-10T00:26:58.831Z Record version: sha256:7078c1b174f841eaf9cdc5491292974a7ee2ed9947a2d7bc586cc3cef7ee22c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-10: Contingencies — Overall ### Machine-generated study aids ```json { "summary": "ASC 450-10 is the Overall subtopic of the Contingencies Topic; it sets the pervasive scope, definitions, and cross-references for gain and loss contingencies addressed in 450-20 and 450-30. A contingency exists when an existing condition, situation, or set of circumstances involves uncertainty that will be resolved by a future event confirming the acquisition of an asset, reduction of a liability, loss or impairment of an asset, or incurrence of a liability (450-10-05-5). Critically, the mere use of an estimate does not create a contingency (450-10-05-6), and the Topic does not apply to recognition and initial measurement of contingency-related assets and liabilities measured at fair value in a business combination, NFP acquisition, or joint venture formation (450-10-15-2A).", "key_points": [ "Resolution of the uncertainty must confirm one of four outcomes: acquisition of an asset, reduction of a liability, loss or impairment of an asset, or incurrence of a liability (450-10-05-5).", "Not all uncertainty is a contingency — the fact that an estimate is involved does not itself create a loss or gain contingency (450-10-05-6).", "The Contingencies Topic applies to all entities (450-10-15-2), but excludes recognition and initial measurement of assets and liabilities arising from contingencies measured at fair value (and assets measured at other than fair value) on the acquisition date under Subtopic 805-20, 958-805, or on the formation date under 805-60 (450-10-15-2A).", "Depreciation, and related recurring repairs, maintenance, and overhauls, are not contingencies because expiration of the asset's utility is not uncertain (450-10-55-2).", "Accrued amounts owed for services already received, such as advertising and utilities, are not contingencies even if estimated, because the obligation has definitely been incurred (450-10-55-3).", "The possibility of a future change in the tax law is not an uncertainty within the meaning of the Topic (450-10-55-4).", "ASC 450 is not all-inclusive; Topic-specific contingency guidance exists elsewhere (e.g., uncertainty in income taxes at 740-10-25, variable consideration at 606-10-32-5 through 32-14, variable lease payments at 842-20-55-1 through 55-2, insurance contracts at 944-40)." ], "categories": [ "Contingencies and guarantees", "Recognition", "Disclosure", "Business combinations" ], "audience_level": "introductory", "student_note": "This is the gatekeeping subtopic: before applying the probable/reasonably possible/remote framework of 450-20, you must first confirm you actually have a contingency. The classic error is treating any estimated accrual (depreciation, accrued utilities, warranty-like estimates of known obligations) as a contingency, when the defining feature is uncertainty about whether an asset or liability exists at all, resolvable only by a future event.", "related_topics": [ "450-20", "450-30", "805-20", "740-10", "606-10", "944-40" ], "key_concepts": [ "loss contingency", "gain contingency", "existing condition involving uncertainty", "estimates versus contingencies", "scope exception for business combinations", "future confirming event", "disclosure of uncertainties" ] } ``` Source downloaded (UTC): 2026-09-10T00:26:49.502Z to 2026-09-10T00:26:49.502Z Record version: sha256:b82ae467ee8d6c224e0572cee13f67372e62bd222f34c75a13421e0a630d547d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/450/10/#00-status) SEC content: no ##### [450-10-00-1](https://asc.understandingaccounting.org/asc/450/10/#450-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:49.502Z to 2026-09-10T00:26:49.502Z Record version: sha256:c3f946ffe4cc04978fdb3ddb8b9302d3988a197113eb3fe2e59cc9d89d855a2d 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
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2010-0701/28/2010
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
Formation DateAddedAccounting Standards Update No. 2023-0508/23/2023
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
ReinsuranceAddedAccounting Standards Update No. 2016-1912/14/2016
Transaction PriceAddedAccounting Standards Update No. 2014-0905/28/2014
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
Variable Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
450-10-15-2AAmendedAccounting Standards Update No. 2023-0508/23/2023
450-10-15-2AAmendedAccounting Standards Update No. 2010-0701/28/2010
450-10-60-1AmendedAccounting Standards Update No. 2025-1112/08/2025
450-10-60-2AmendedAccounting Standards Update No. 2016-1912/14/2016
450-10-60-3AmendedAccounting Standards Update No. 2014-0905/28/2014
450-10-60-4AmendedAccounting Standards Update No. 2014-0905/28/2014
450-10-60-8AmendedAccounting Standards Update No. 2016-0202/25/2016
450-10-60-12SupersededAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:26:51.228Z to 2026-09-10T00:26:51.228Z Record version: sha256:14aade1666094bf5a34d71ac616c74e8720c22222fa0307bab67383de12647e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/450/10/#05-overview-and-background) SEC content: no ##### [450-10-05-1](https://asc.understandingaccounting.org/asc/450/10/#450-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:51.228Z to 2026-09-10T00:26:51.228Z Record version: sha256:af9090e7997e2345ae0213db18cab20c0ea58f3f8120f3c715b97204bc601ddd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Contingencies Topic includes the following Subtopics: 1. a Overall 2. b Loss Contingencies 3. c Gain Contingencies. ##### [450-10-05-2](https://asc.understandingaccounting.org/asc/450/10/#450-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:51.228Z to 2026-09-10T00:26:51.228Z Record version: sha256:31ee26c79761ce3524e0026394e59da0e94221970b42aeb186254e038fb12953 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic, in combination with Subtopics 450-20 and 450-30, provides general guidance regarding gain and loss contingencies. Other Topics include gain or loss contingencies related to those specific Topics. Therefore, the Contingencies Topic does not include all standards related to contingencies. While not intended to be all-inclusive, the following Relationships Sections within the Contingency Subtopics provide links to many Topic-specific contingencies: 1. a See Section 450-10-60 for references to other standards related to uncertainties that could result in either a gain or a loss. 2. b See Section 450-20-60 for references to other standards related to uncertainties that could result in a future loss. 3. c See Section 450-30-60 for references to other standards related to uncertainties that could result in a future gain. ##### [450-10-05-3](https://asc.understandingaccounting.org/asc/450/10/#450-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:51.228Z to 2026-09-10T00:26:51.228Z Record version: sha256:e0e5def74d271c1620f9514f2a77eb2aa07b770ae268e10194e6ecdbcdfdf160 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Overall Subtopic establishes the scope and scope exceptions for the Contingencies Topic, provides definitions, and includes links to the standards that appear in Subtopics 450-20 and 450-30. ##### [450-10-05-4](https://asc.understandingaccounting.org/asc/450/10/#450-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:51.228Z to 2026-09-10T00:26:51.228Z Record version: sha256:77f02b6460af6d20a085a18366a68b39087022ec5f3f0a44c9e1e00ad6f30544 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Contingencies Topic establishes standards of financial accounting and reporting for loss contingencies and gain contingencies, including standards for disclosures. ##### [450-10-05-5](https://asc.understandingaccounting.org/asc/450/10/#450-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:51.228Z to 2026-09-10T00:26:51.228Z Record version: sha256:864a0ca740fb1cc0deec8b2be5033c09f41ab59628182a9284e73513cf9470a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Resolution of the uncertainty may confirm any of the following: 1. a The acquisition of an asset 2. b The reduction of a liability 3. c The loss or impairment of an asset 4. d The incurrence of a liability. ##### [450-10-05-6](https://asc.understandingaccounting.org/asc/450/10/#450-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:51.228Z to 2026-09-10T00:26:51.228Z Record version: sha256:627e871f1bab0c7766f7a5cca1bf91ce184bc5051680e73e258be875ae3be6e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Not all uncertainties inherent in the accounting process give rise to [contingencies](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur."). Estimates are required in financial statements for many ongoing and recurring activities of an entity. The mere fact that an estimate is involved does not of itself constitute the type of uncertainty referred to in the definition of a loss contingency or a gain contingency. Several examples of situations that are not contingencies are included in Section 450-10-55. Source downloaded (UTC): 2026-09-10T00:26:53.128Z to 2026-09-10T00:26:53.128Z Record version: sha256:812c92cee2e8f5e15195e83500493732c46f77ae84e865e184f11c4627e0739c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/450/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [450-10-15-1](https://asc.understandingaccounting.org/asc/450/10/#450-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:53.128Z to 2026-09-10T00:26:53.128Z Record version: sha256:8fc9c5fa8333d379398c7536a10553a27d452e9fe8264628e77319e965daccc2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Scope Section of the Overall Subtopic establishes the pervasive scope for all Subtopics of the Contingencies Topic. Unless explicitly addressed within specific Subtopics, the following scope guidance applies to all Subtopics of the Contingencies Topic. #### Entities ##### [450-10-15-2](https://asc.understandingaccounting.org/asc/450/10/#450-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:53.128Z to 2026-09-10T00:26:53.128Z Record version: sha256:6d8eb0edc7f20ac82989abf9ffd6e21d92ae329e42e8391104657917068abd54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Contingencies Topic applies to all entities. #### Transactions ##### [450-10-15-2A](https://asc.understandingaccounting.org/asc/450/10/#450-10-15-2A) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:53.128Z to 2026-09-10T00:26:53.128Z Record version: sha256:29d8a24ce6f45a493f4480db3f03a45d62710644d7a3cc28081e8e55bd71c830 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Contingencies Topic does not apply to the recognition and initial measurement of assets or liabilities arising from contingencies that are measured at fair value or assets arising from contingencies measured at an amount other than fair value on the [acquisition date](https://asc.understandingaccounting.org/glossary/a/#acquisition-date "The date on which the acquirer obtains control of the acquiree.") in a business combination under the requirements of Subtopic 805-20, on the acquisition date in an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities.") under the requirements of Subtopic 958-805, or on the [formation date](https://asc.understandingaccounting.org/glossary/f/#formation-date "The formation date of a joint venture is the date on which an entity initially meets the definition of a joint venture, which is not necessarily the legal entity formation date. The formation date is the measurement date for the formation transaction. If multiple arrangements are accounted for as a single transaction that establishes the formation of a joint venture, the formation date is the measurement date for all arrangements that form part of the single formation transaction.") in a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") formation under the requirements of Subtopic 805-60. Those Subtopics provide the recognition and initial measurement requirements for assets and liabilities arising from contingencies measured at fair value and for assets arising from contingencies measured at an amount other than fair value as part of a business combination, an acquisition by a not-for-profit entity, or a joint venture formation. #### Other Considerations ##### [450-10-15-3](https://asc.understandingaccounting.org/asc/450/10/#450-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:53.128Z to 2026-09-10T00:26:53.128Z Record version: sha256:d4d79207c2ea93050c4e358ac138c006ecff534a3ea3ce61ef34a7340339b98e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some cases, there may be uncertainty about whether a situation is a [contingency](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur."). Section 450-10-55 includes several situations that are not contingencies, and thus are outside the scope of the Contingencies Topic. Source downloaded (UTC): 2026-09-10T00:26:56.894Z to 2026-09-10T00:26:56.894Z Record version: sha256:7eede4c9ddfb21aed2bb048ba44600fa724cfca6d707588ae31bb693ba874990 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/450/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [450-10-55-1](https://asc.understandingaccounting.org/asc/450/10/#450-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:56.894Z to 2026-09-10T00:26:56.894Z Record version: sha256:314d359f0a3d482ebb9f4b75c1f2d6a869998fc2fb45d27740931f84484f8f03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section includes several situations that do not meet the definition of a [contingency](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur."), and thus are outside the scope of this Topic. ##### [450-10-55-2](https://asc.understandingaccounting.org/asc/450/10/#450-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:56.894Z to 2026-09-10T00:26:56.894Z Record version: sha256:56896f8f0fe518f4a01131651258f1523b3c2951cac3ddfc7b65167c6de66bca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The fact that estimates are used to allocate the known cost of a depreciable asset over the period of use by an entity does not make depreciation a contingency; the eventual expiration of the utility of the asset is not uncertain. Thus, depreciation of assets is not a contingency, nor are such matters as recurring repairs, maintenance, and overhauls, which interrelate with depreciation. This Topic is not intended to alter present depreciation practices as described in Section 360-10-35. ##### [450-10-55-3](https://asc.understandingaccounting.org/asc/450/10/#450-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:56.894Z to 2026-09-10T00:26:56.894Z Record version: sha256:eb2eaa2bafdd85a4c69336f795bc24ad518faeefd1eafaa5bf91a2eb1ebe394c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts owed for services received, such as advertising and utilities, are not contingencies even though the accrued amounts may have been estimated; there is nothing uncertain about the fact that those obligations have been incurred. ##### [450-10-55-4](https://asc.understandingaccounting.org/asc/450/10/#450-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:56.894Z to 2026-09-10T00:26:56.894Z Record version: sha256:12ac4deb39b1145400ff2c4eaff1fdba04285ae6a6d541be02bda39db2bef179 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The possibility of a change in the tax law in some future year is not an uncertainty. Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:f86bc0a72198972d02a7aeb1989c776de602743646d4b02af383e3acb4c28350 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/450/10/#60-relationships) SEC content: no #### Interim Reporting ##### [450-10-60-1](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:dccb8ebac5dc0a4dbcef837b5f8c6c0de870395431499278af0ec73a1a1ebd95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [contingencies](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") and other uncertainties that could be expected to affect the fairness of presentation of financial data at an interim date, see paragraph [270-10-50-6](https://asc.understandingaccounting.org/asc/270/10/#270-10-50-6). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For [contingencies](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") and other uncertainties that could be expected to affect the fairness of presentation of financial data at an interim date, see paragraph [270-10-50-69](https://asc.understandingaccounting.org/asc/270/10/#270-10-50-69). #### Other Assets and Deferred Costs ##### [450-10-60-2](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:439ffd5b9332cbdf78c4dfe4e625f960e9b59fae1e1fcc08360ab72a96a44129 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies associated with insurance and [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 that do not transfer insurance risk, see Section 340-30. #### Revenue Recognition ##### [450-10-60-3](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:dbbfb063978e921d2cbba25e69d50ee03ff995ac537de8fbf50e59862e4ac900 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See the guidance on estimating and constraining estimates of variable consideration (for example, a sale with a right of return) in paragraphs [606-10-32-5 through 32-14](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-5) included in the [transaction price](https://asc.understandingaccounting.org/glossary/t/#transaction-price "The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.") for [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."). ##### [450-10-60-4](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:2ae14203fe784f503bd7f0bae1cf1e3c26d85101563e9894a7aa23c08e9797ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For cases in which a nonmonetary asset is destroyed or damaged (that is, an involuntary conversion) and the amount of monetary assets to be received is uncertain, see paragraph [610-30-25-4](https://asc.understandingaccounting.org/asc/610/30/#610-30-25-4). #### Other Expenses ##### [450-10-60-5](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:1842f03be17752ab8bd8b26ea6aaf4b02135085f16cc64fd7bdf643902b21216 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For accounting by an insured entity for the contingencies associated with a multiple-year retrospectively rated insurance contract accounted for as insurance, see the Multiple-Year Retrospectively Rated Contracts Subsections of Subtopic 720-20. #### Income Taxes ##### [450-10-60-6](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:78e965bd7e304b561e8247863e8cecea175245534cae1a336e46a4a950546353 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For accounting for uncertainty in income taxes, see Section 740-10-25. #### Business Combinations ##### [450-10-60-7](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:4249ec5923e517c1c9c5b747a6ea463f59b61c823d76e18fd73ea44d86199815 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For recognition of contingent obligations for contractual termination benefits and curtailment losses under employee benefit plans that will be triggered by the consummation of the business combination, see paragraphs [805-20-55-50 through 55-51](https://asc.understandingaccounting.org/asc/805/20/#805-20-55-50) . #### Leases ##### [450-10-60-8](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:33e1bd95bf2643cf179a17d15282862043e417dd03da6cab874a7a5bdac278a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [variable lease payments](https://asc.understandingaccounting.org/glossary/v/#variable-lease-payments "Payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time."), see paragraphs [842-20-55-1 through 55-2](https://asc.understandingaccounting.org/asc/842/20/#842-20-55-1) . #### Financial Services—Insurance ##### [450-10-60-9](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:69b99245b3656f51e931190c3a56a327a40d0bdd9acd72cbd4ec45d9063c3308 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies that arise when an insurance entity or a reinsurance entity issues an insurance contract, see Subtopic 944-40. ##### [450-10-60-10](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:f47ee3b52f4a646b58c708923736844b21824726d6b86b261376b1eb080c8fba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies associated with a reinsurance contract between insurance entities (including retrocession), see Section 944-20-15. ##### [450-10-60-11](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:6f2e7ee9fd9435895dbea512cca743bb6e99cc72d6ab7fd86a171ae104e2225c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies associated with multiple-year retrospectively rated contracts, see Subtopic 944-20. ##### [450-10-60-12](https://asc.understandingaccounting.org/asc/450/10/#450-10-60-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:58.831Z to 2026-09-10T00:26:58.831Z Record version: sha256:920124ee7cd6d1ae6c78280037c722e90c79181b4fc0d8d773f0716cc8624c70 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): 2026-09-10T00:27:01.778Z to 2026-09-10T00:27:44.704Z Record version: sha256:9ad6b9ace38e8df0e1bf33716f25a9ac2220c1ca4f05aeac0aff5572099ac313 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20: Contingencies — Loss Contingencies ### Machine-generated study aids ```json { "summary": "ASC 450-20 governs when a loss contingency must be accrued as a charge to income and when it must instead be disclosed. A loss is accrued only if, based on information available before the financial statements are issued, it is probable that an asset was impaired or a liability incurred at the balance sheet date and the amount of loss is reasonably estimable (450-20-25-2). If the estimate is a range, the best estimate in the range is accrued, or the minimum of the range if no amount is better than any other (450-20-30-1); if accrual criteria are not met but a loss is at least reasonably possible, disclosure of the nature of the contingency and an estimate of possible loss (or a statement that none can be made) is required (450-20-50-3 through 50-4).", "key_points": [ "Accrual requires both conditions of 450-20-25-2: (a) information available before issuance indicates it is probable that an asset had been impaired or a liability incurred at the date of the financial statements, and (b) the amount of loss is reasonably estimable.", "A range estimate does not defer accrual: per 450-20-25-5 and 450-20-30-1, accrue the amount that is the better estimate within the range, or the minimum of the range if no amount is better than any other (e.g., accrue $3 million of a $3-$9 million range).", "Losses relating to future periods, general or unspecified business risks, and mere absence of insurance are not accruable (450-20-25-3, 450-20-25-8, 450-20-55-5, 450-20-55-7); events causing impairment after the balance sheet date fail condition (a) (450-20-25-6).", "If probability is met but the amount cannot be reasonably estimated, the loss is charged to income in the period it becomes estimable and is never treated as a prior period adjustment (450-20-25-7); disclosure is preferable to accrual in that period (450-20-50-5).", "Disclosure is required when there is at least a reasonable possibility that a loss or additional loss was incurred and either no accrual was made or exposure exists beyond the amount accrued, and must state the nature of the contingency and an estimate of possible loss or range, or that no estimate can be made (450-20-50-3 through 50-4).", "For unasserted claims, no disclosure is required unless it is probable a claim will be asserted and there is a reasonable possibility of an unfavorable outcome (450-20-50-6; 450-20-55-14 through 55-15).", "Accruals must be labeled descriptively (e.g., 'estimated liability'); the term 'reserve' is prohibited for a 450-20-25-2 accrual, and accrual itself sets aside no funds and provides no economic protection (450-20-50-1; 450-20-05-8 through 05-9)." ], "categories": [ "Contingencies and guarantees", "Recognition", "Initial measurement", "Disclosure" ], "audience_level": "introductory", "student_note": "This is the classic litigation-accrual rule tested on exams: probable + estimable = accrue; reasonably possible = disclose only; remote = generally nothing. The most common error is thinking a wide range of loss defeats estimability — instead you accrue the minimum of the range and disclose the additional exposure.", "related_topics": [ "450-10", "450-30", "460", "855", "275", "410-30" ], "key_concepts": [ "loss contingency", "probable, reasonably possible, remote", "reasonably estimable", "range of loss", "minimum of range accrual", "unasserted claims and assessments", "pending or threatened litigation", "subsequent events" ] } ``` Source downloaded (UTC): 2026-09-10T00:27:01.778Z to 2026-09-10T00:27:01.778Z Record version: sha256:1de09c819c8f0d6b99c2d8c819598451219ad6bad857f9b1118dc26f480a631f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/450/20/#00-status) SEC content: no ##### [450-20-00-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:01.778Z to 2026-09-10T00:27:01.778Z Record version: sha256:7abfcfe0f7f90a30d567452fb7abdb2965adc6535fa7c40008217447050c3994 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
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
ReinsuranceAddedAccounting Standards Update No. 2016-1912/14/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
450-20-05-3AmendedAccounting Standards Update No. 2016-1912/14/2016
450-20-15-2AmendedAccounting Standards Update No. 2016-1306/16/2016
450-20-50-1AmendedAccounting Standards Update No. 2024-0311/04/2024
450-20-50-2AAmendedAccounting Standards Update No. 2016-1306/16/2016
450-20-50-2AAddedAccounting Standards Update No. 2010-2007/21/2010
450-20-55-4AmendedMaintenance Update 2018-02 (PDF)02/02/2018
450-20-60-2AmendedAccounting Standards Update No. 2016-1306/16/2016
450-20-60-3AmendedAccounting Standards Update No. 2016-1306/16/2016
450-20-60-14AmendedAccounting Standards Update No. 2016-1912/14/2016
450-20-60-15AmendedAccounting Standards Update No. 2016-0202/25/2016
450-20-60-16AmendedAccounting Standards Update No. 2016-0202/25/2016
Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:9472162c66d70d5b78f31d72f538e33d562b9c64179fff4b581745fa4cf0cd9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/450/20/#05-overview-and-background) SEC content: no ##### [450-20-05-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:fc5531fa2af0e245d11f4f40ca8536b96363e7133ef980629c7977ea2c68bac9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for the recognition and disclosure of a [loss contingency](https://asc.understandingaccounting.org/glossary/l/#loss-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. The term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses."). ##### [450-20-05-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:aa6cd5473d021f34b82359e38f053420097fd0e3306eb2a1d1ed3562fdac1c62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic, in combination with Subtopics 450-10 and 450-30, provides general guidance regarding gain and loss contingencies. Other Topics include gain or loss contingencies related to those specific Topics. Therefore, the Contingencies Topic does not include all standards related to contingencies. While not intended to be all-inclusive, the following Relationships Sections within the Contingency Subtopics provide links to many Topic-specific contingencies: 1. a See Section 450-10-60 for references to other standards related to uncertainties that could result in either a gain or a loss. 2. b See Section 450-20-60 for references to other standards related to uncertainties that could result in a future loss. 3. c See Section 450-30-60 for references to other standards related to uncertainties that could result in a future gain. ##### [450-20-05-3](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:ec4bd9670dd52178fe2069eb672ebc5e5ef3754d767a63966611452b7bc472dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are examples of loss contingencies for which links are provided in Section 450-20-60: 1. a Collectibility of receivables 2. b Obligations related to product warranties and product defects 3. c Risk of loss from catastrophes assumed by property and casualty insurance entities including [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.") entities 4. d Guarantees of indebtedness of others 5. e Obligations of commercial banks under standby letters of credit 6. f Agreements to repurchase receivables (or to repurchase the related property) that have been sold. #### Dealing with Uncertainty when Accounting for Losses ##### [450-20-05-4](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:8d9855ff65ed159a04b60e67adfe85c68cc3ff02af66e9eb1a3acb45af0fb651 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting standards use two primary approaches to dealing with uncertainty in loss circumstances: 1. a Recognition using a probability threshold 2. b Measurement using a fair value objective. ##### [450-20-05-5](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:8722f9fe6a72d2dd3e010b0a7d4d6cc76e5780839095ab076693aebab03d613f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic deals with uncertainty by requiring a probability threshold for recognition of a loss contingency and that the amount of the loss be reasonably estimable. As noted in paragraph [450-20-30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-30-1), when both of those recognition criteria are met, and the reasonably estimable loss is a range, it requires accrual of the amount that appears to be a better estimate than any other estimate within the range, or accrual of the minimum amount in the range if no amount within the range is a better estimate than any other amount. ##### [450-20-05-6](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:d08235897217a0aa04f58f5c4e5fac416a9169065af76ba93f27c1e8abc6e123 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In contrast, fair value is not an estimate of the ultimate settlement amount or the present value of an estimate of the ultimate settlement amount. Uncertainty in the amount and timing of the future cash flows necessary to settle a liability and the likelihood of possible outcomes are incorporated into the measurement of the fair value of the liability. For example, a third party would charge a price to assume an uncertain liability even though the likelihood of a future sacrifice is less than [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur."). Similarly, when the likelihood of a future sacrifice is probable, the price a third party would charge to assume an obligation incorporates expectations about some future events that are less than probable. Recognizing the fair value of an obligation results in recognition of some obligations for which the likelihood of future settlement, although more than zero, is less than probable from a loss contingencies perspective. ##### [450-20-05-7](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:372d4c753301eab467f2c6b79f1d68e9e32e9e0ee90962df5282e4f5a64ca2b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because this Subtopic deals with uncertainty differently, the recognition guidance in Section 450-20-25 is inconsistent with standards in other Topics that have an objective of measuring fair value. #### Accruals of Loss Contingencies Do Not Provide Financial Protection ##### [450-20-05-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:b2a97074e11ee9172659787a609d15e22f530ceff03ac7719dbe428a44829efd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accrual of a loss related to a [contingency](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") does not create or set aside funds to lessen the possible financial impact of a loss. Confusion exists between accounting accruals (sometimes referred to as accounting reserves) and the reserving or setting aside of specific assets to be used for a particular purpose or contingency. Accounting accruals are simply a method of allocating costs among accounting periods and have no effect on an entity's cash flow. Those accruals in no way protect the assets available to replace or repair uninsured property that may be lost or damaged, or to satisfy claims that are not covered by insurance, or, in the case of insurance entities, to satisfy the claims of insured parties. Accrual, in and of itself, provides no financial protection that is not available in the absence of accrual. ##### [450-20-05-9](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:e5ce226c188ec818a1c023f07f42cff8331095bc8fbdb5d2e3f59ff9519a4cf2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may choose to maintain or have access to sufficient liquid assets to replace or repair lost or damaged property or to pay claims in case a loss occurs. Alternatively, it may transfer the risk to others by purchasing insurance. The accounting standards set forth in this Subtopic do not affect the fundamental business economics of that decision. That is a financial decision, and if an entity's management decides to do neither, the presence or absence of an accrued credit balance on the balance sheet will have no effect on the consequences of that decision. Insurance or reinsurance reduces or eliminates risks and the inherent earnings fluctuations that accompany risks. Unlike insurance and reinsurance, the use of accounting reserves does not reduce or eliminate risk. The use of accounting reserves is not an alternative to insurance and reinsurance in protecting against risk. Earnings fluctuations are inherent in risk retention, and they are reported as they occur. #### Types of Loss Contingencies ##### [450-20-05-10](https://asc.understandingaccounting.org/asc/450/20/#450-20-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:04.682Z to 2026-09-10T00:27:04.682Z Record version: sha256:f5127f5756dee008ca463c5fb1100da72f5a751a05cd8d3022792aaa194c4e0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are examples of loss contingencies that are discussed in this Subtopic: 1. a Injury or damage caused by products sold 2. b Risk of loss or damage of property by fire, explosion, or other hazards 3. c Actual or possible claims and assessments 4. d Threat of expropriation of assets 5. e Pending or threatened litigation. Source downloaded (UTC): 2026-09-10T00:27:06.347Z to 2026-09-10T00:27:06.347Z Record version: sha256:e9cf5826e95590a8f1dc6178a3bd9f86992604628676cdd2378a9d6149de1958 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/450/20/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [450-20-15-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:06.347Z to 2026-09-10T00:27:06.347Z Record version: sha256:afca066ba50a201d3b7fbce6f9dd0640ce7b05bd6e65aa3fc4b258939dab6b37 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 450-10-15, with specific transaction exceptions noted below. #### Transactions ##### [450-20-15-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:06.347Z to 2026-09-10T00:27:06.347Z Record version: sha256:2055387f8ab6244943280de094af8d248400d9b57057cd2ca62cb86aeac1971b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following transactions are excluded from the scope of this Subtopic because they are addressed elsewhere in the Codification: 1. a Stock issued to employees, which is discussed in Topic 718. 2. b Employment-related costs, including deferred compensation contracts, which are discussed in Topics 710, 712, and 715. However, certain postemployment benefits are included in the scope of this Subtopic through application of paragraphs [712-10-25-4 through 25-5](https://asc.understandingaccounting.org/asc/712/10/#712-10-25-4) . 3. c Uncertainty in income taxes, which is discussed in Section 740-10-25. 4. d Accounting and reporting by insurance entities, which is discussed in Topic 944. 5. e Measurement of credit losses for instruments within the scope of Topic 326 on measurement of credit losses. Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:e66df42e9fe4bc581a5bbb6f9f91c6dee58e65ba1c0ab2556e5f3c2b819dc09c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/450/20/#25-recognition) SEC content: no #### General Rule ##### [450-20-25-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:7bc8717da267e0c542e2e5fdff6bff22d393ae39aa229ede7a307d92141f3f5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a [loss contingency](https://asc.understandingaccounting.org/glossary/l/#loss-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. The term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses.") exists, the likelihood that the future event or events will confirm the loss or impairment of an asset or the incurrence of a liability can range from [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") to [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight."). As indicated in the definition of [contingency](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur."), the term _loss_ is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses. The Contingencies Topic uses the terms _probable_, [reasonably possible](https://asc.understandingaccounting.org/glossary/r/#reasonably-possible "The chance of the future event or events occurring is more than remote but less than likely."), and _remote_ to identify three areas within that range. ##### [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:09836dfbc6c00a3f9ab8891b5e23ca38bd39d13e79e7c9b6d325b8555339eb64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met: 1. a Information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements. Date of the financial statements means the end of the most recent accounting period for which financial statements are being presented. It is implicit in this condition that it must be probable that one or more future events will occur confirming the fact of the loss. 2. b The amount of loss can be reasonably estimated. The purpose of those conditions is to require accrual of losses when they are reasonably estimable and relate to the current or a prior period. Paragraphs [450-20-55-1 through 55-17](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-1) and Examples 1-2 (see paragraphs [450-20-55-18 through 55-35](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-18) ) illustrate the application of the conditions. As discussed in paragraph [450-20-50-5](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-5), disclosure is preferable to accrual when a reasonable estimate of loss cannot be made. Further, even losses that are reasonably estimable shall not be accrued if it is not probable that an asset has been impaired or a liability has been incurred at the date of an entity's financial statements because those losses relate to a future period rather than the current or a prior period. Attribution of a loss to events or activities of the current or prior periods is an element of asset impairment or liability incurrence. #### Assessing Probability of Incurrence of a Loss ##### [450-20-25-3](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:3d221cff8be31e00d745d2e44dad4c304abc4f949e790e9778a508d53f67b44c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The conditions in the preceding paragraph are not intended to be so rigid that they require virtual certainty before a loss is accrued. Instead, the condition in (a) in the preceding paragraph is intended to proscribe accrual of losses that relate to future periods. #### Assessing Whether a Loss Is Reasonably Estimable ##### [450-20-25-4](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:ce3050a4b06a90e6a6e3081986f835e047259b05fee0def796ae48f804f673b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The condition in paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is intended to prevent accrual in the financial statements of amounts so uncertain as to impair the integrity of those statements. ##### [450-20-25-5](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:24e670cacf006bd826ff933a0d921cabe534f535ddf65168cfa2ba56600e61dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. That requirement shall not delay accrual of a loss until only a single amount can be reasonably estimated. To the contrary, when the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is met and information available indicates that the estimated amount of loss is within a range of amounts, it follows that some amount of loss has occurred and can be reasonably estimated. Thus, when the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is met with respect to a particular loss contingency and the reasonable estimate of the loss is a range, the condition in paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is met and an amount shall be accrued for the loss. #### Events After the Date of the Financial Statements ##### [450-20-25-6](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:41fc7a191e7f42680e924989edd4e1f523abb52bb9e21354524673aad3e692c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the date of an entity's financial statements but before those financial statements are issued or are available to be issued (as discussed in Section 855-10-25), information may become available indicating that an asset was impaired or a liability was incurred after the date of the financial statements or that there is at least a reasonable possibility that an asset was impaired or a liability was incurred after that date. The information may relate to a loss contingency that existed at the date of the financial statements, for example, an asset that was not insured at the date of the financial statements. On the other hand, the information may relate to a loss contingency that did not exist at the date of the financial statements, for example, threat of expropriation of assets after the date of the financial statements or the filing for bankruptcy by an entity whose debt was guaranteed after the date of the financial statements. In none of the cases cited in this paragraph was an asset impaired or a liability incurred at the date of the financial statements, and the condition for accrual in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is, therefore, not met. ##### [450-20-25-7](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:29fad75b1a441977a0fe13a2a3ea4b9daf5a9b1e4632008bfde3ed5f6807b5b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a loss cannot be accrued in the period when it is probable that an asset had been impaired or a liability had been incurred because the amount of loss cannot be reasonably estimated, the loss shall be charged to the income of the period in which the loss can be reasonably estimated and shall not be charged retroactively to an earlier period. All estimated losses for loss contingencies shall be charged to income rather than charging some to income and others to retained earnings as prior period adjustments. #### Business Risks ##### [450-20-25-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:12.550Z to 2026-09-10T00:27:12.550Z Record version: sha256:2cf458cd182401ca3e7215c5b30f3324efc2c7d7780c14b8ed46664eca154c2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. General or unspecified business risks do not meet the conditions for accrual in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2), and no accrual for loss shall be made. Source downloaded (UTC): 2026-09-10T00:27:15.994Z to 2026-09-10T00:27:15.994Z Record version: sha256:c2de6a724aaeada20f1da3a84d961462121ad4b6fa7d3a449f3910e258e9fd36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/450/20/#30-initial-measurement) SEC content: no ##### [450-20-30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:15.994Z to 2026-09-10T00:27:15.994Z Record version: sha256:c850b5d59cfbfc25ee33f1cbc4ada97284a04d24ef2d1c47e339ba36e7f2dba5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, that amount shall be accrued. When no amount within the range is a better estimate than any other amount, however, the minimum amount in the range shall be accrued. Even though the minimum amount in the range is not necessarily the amount of loss that will be ultimately determined, it is not likely that the ultimate loss will be less than the minimum amount. Examples 1-2 (see paragraphs [450-20-55-18 through 55-35](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-18) ) illustrate the application of these initial measurement standards. Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:909e7fa79607f70eb9147f87673d8ad17c4d6fb99ae50e70f106f89b007cde99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/450/20/#50-disclosure) SEC content: no #### Accruals for Loss Contingencies ##### [450-20-50-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:d9d758c8a1a809c1f8cf73fc1f0f9507711e1987c8a8545d79b77b1950c15a8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure of the nature of an accrual made pursuant to the provisions of paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2), and in some circumstances the amount accrued, may be necessary for the financial statements not to be misleading. Terminology used shall be descriptive of the nature of the accrual, such as estimated liability or liability of an estimated amount. The term _reserve_ shall not be used for an accrual made pursuant to paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2); that term is limited to an amount of unidentified or unsegregated assets held or retained for a specific purpose. Examples 1 (see paragraph [450-20-55-18](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-18)) and 2, Cases A, B, and D (see paragraphs [450-20-55-23](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-23), [450-20-55-27](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-27), and [450-20-55-32](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-32)) illustrate the application of these disclosure standards. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Disclosure of the nature of an accrual made pursuant to the provisions of paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2), and in some circumstances the amount accrued, may be necessary for the financial statements not to be misleading. Terminology used shall be descriptive of the nature of the accrual, such as estimated liability or liability of an estimated amount. The term _reserve_ shall not be used for an accrual made pursuant to paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2); that term is limited to an amount of unidentified or unsegregated assets held or retained for a specific purpose. Examples 1 (see paragraph [450-20-55-18](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-18)) and 2, Cases A, B, and D (see paragraphs [450-20-55-23](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-23), [450-20-55-27](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-27), and [450-20-55-32](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-32)) illustrate the application of these disclosure standards. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ##### [450-20-50-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:b0d578bed0fcf0ec9e50c4ab1e88360be7499afd55edd0613bdecb4ad1d0fcfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the criteria in paragraph [275-10-50-8](https://asc.understandingaccounting.org/asc/275/10/#275-10-50-8) are met, paragraph [275-10-50-9](https://asc.understandingaccounting.org/asc/275/10/#275-10-50-9) requires disclosure of an indication that it is at least [reasonably possible](https://asc.understandingaccounting.org/glossary/r/#reasonably-possible "The chance of the future event or events occurring is more than remote but less than likely.") that a change in an entity's estimate of its [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") liability could occur in the near term. Example 3 (see paragraph [450-20-55-36](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-36)) illustrates this disclosure for an entity involved in litigation. #### Unrecognized Contingencies ##### [450-20-50-2A](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-2A) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:8d0ecf373bd44cb30ef8cd0595b6d7048e253d5863eb4ebfbc70cfac7e9c90f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosures required by paragraphs [450-20-50-3 through 50-6](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) do not apply to credit losses on instruments within the scope of Topic 326 on measurement of credit losses. (See paragraph [310-10-50-21](https://asc.understandingaccounting.org/asc/310/10/#310-10-50-21).) ##### [450-20-50-3](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:381f08fd1cec8fb2aa625aebcf56e2e627ca533ba438899b1bba48b92a895b29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure of the [contingency](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") shall be made if there is at least a reasonable possibility that a loss or an additional loss may have been incurred and either of the following conditions exists: 1. a An accrual is not made for a [loss contingency](https://asc.understandingaccounting.org/glossary/l/#loss-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. The term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses.") because any of the conditions in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) are not met. 2. b An exposure to loss exists in excess of the amount accrued pursuant to the provisions of paragraph [450-20-30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-30-1). Examples 1-3 (see paragraphs [450-20-55-18 through 55-37](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-18) ) illustrate the application of these disclosure standards. ##### [450-20-50-4](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:549530268618b316bd49af914aec0d25df987c4ad6a04dcb426f5981cecf6144 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosure in the preceding paragraph shall include both of the following: 1. a The nature of the contingency 2. b An estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. ##### [450-20-50-5](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:2b2a44e7d8c2146d227854c31ffc7dbd1782902115b496b6f9e14310e07d9a6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure is preferable to accrual when a reasonable estimate of loss cannot be made. For example, disclosure shall be made of any loss contingency that meets the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) but that is not accrued because the amount of loss cannot be reasonably estimated (the condition in paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2)). Disclosure also shall be made of some loss contingencies that do not meet the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2)—namely, those contingencies for which there is a reasonable possibility that a loss may have been incurred even though information may not indicate that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements. ##### [450-20-50-6](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:db4f4c7b14a4349434636f02150fcfae721e8991baa64ca42965f5b51ae0d236 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure is not required of a loss contingency involving an unasserted claim or assessment if there has been no manifestation by a potential claimant of an awareness of a possible claim or assessment unless both of the following conditions are met: 1. a It is considered probable that a claim will be asserted. 2. b There is a reasonable possibility that the outcome will be unfavorable. ##### [450-20-50-7](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:1ad18ba0f98aec8bea694015320ba223c126d4c7682f9821087d287c46ae6b55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure of noninsured or underinsured risks is not required by this Subtopic. However, disclosure in appropriate circumstances is not discouraged. ##### [450-20-50-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:7a6f45ddff207033d81536e8704501f986af3806a4f440db9ea92a84cf788a84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No disclosure about general or unspecified business risks is required by this Subtopic, however, Topic 275 requires disclosure of certain business risks. #### Losses Arising After the Date of the Financial Statements ##### [450-20-50-9](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:57044a6186618d58f6bf02fdc61edd15a5e65df96c88dfdfb7275c1a72263058 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure of a loss, or a loss contingency, arising after the date of an entity's financial statements but before those financial statements are issued, as described in paragraphs [450-20-25-6 through 25-7](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-6) , may be necessary to keep the financial statements from being misleading if an accrual is not required. If disclosure is deemed necessary, the financial statements shall include both of the following: 1. a The nature of the loss or loss contingency 2. b An estimate of the amount or range of loss or possible loss or a statement that such an estimate cannot be made. ##### [450-20-50-10](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:19.230Z to 2026-09-10T00:27:19.230Z Record version: sha256:84888c57f346f0922c4a889eed14d97aa4b78e8dce7c0942414854f903ea3510 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Occasionally, in the case of a loss arising after the date of the financial statements if the amount of asset impairment or liability incurrence can be reasonably estimated, disclosure may best be made by supplementing the historical financial statements with pro forma financial data giving effect to the loss as if it had occurred at the date of the financial statements. It may be desirable to present pro forma statements, usually a balance sheet only, in columnar form on the face of the historical financial statements. Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:a04b6b91f66670a50d98516d38938881cadca12a3f1767bf667baab7d0ef51e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/450/20/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [450-20-55-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:960ca80f66a2641b3c2a719d8d298344811a70a1185713b173a4271e8a8a8393 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section includes implementation guidance for the application of the conditions for accrual of [loss contingencies](https://asc.understandingaccounting.org/glossary/l/#loss-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. The term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses.") and for the disclosure requirements of this Subtopic. This guidance does not address all possible applications of the requirements of this Subtopic. Therefore, accrual and disclosure of loss contingencies should be based on an evaluation of the facts and circumstances in each particular situation. ##### [450-20-55-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:84e130972eac0be52a6c1d85f8b68316532d71f3862b8548d86ee1f6a2534402 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that a claim resulting from injury or damage caused by a product defect will arise with respect to products or services that have been sold, accrual for losses may be appropriate. The condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) would be met, for instance, with respect to a drug product or toys that have been sold if a health or safety hazard related to those products is discovered and as a result it is considered probable that liabilities have been incurred. The condition in paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) would be met if experience or other information enables the entity to make a reasonable estimate of the loss with respect to the drug product or the toys. ##### [450-20-55-3](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:97897c37ae5d98abf24c44fb19e43fba9ebaf7121c72cd6ac8136504684f9597 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the date of an entity's financial statements, it may not be insured against risk of future loss or damage to its property by fire, explosion, or other hazards. Some risks, for all practical purposes, may be noninsurable, and the self-assumption of those risks is mandatory. ##### [450-20-55-4](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:31007af635a6f0aad707dc3137eb60910a9f6645c9d6cd893492c6a08cf4376b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The absence of insurance against losses from risks of those types constitutes an existing condition involving uncertainty about the amount and timing of any losses that may occur, in which case a [loss contingency](https://asc.understandingaccounting.org/glossary/l/#loss-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. The term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses.") exists. Uninsured risks may arise in a number of ways, including the following: 1. a Noninsurance of certain risks 2. b Co-insurance or deductible clauses in an insurance contract 3. c Insurance through a subsidiary or investee to the extent not reinsured with an independent insurer. (The effects of transactions between a parent or other investor and a subsidiary or investee insurance entity should be eliminated from an entity's financial statements in accordance with paragraphs [810-10-45-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-1) and [323-10-35-7](https://asc.understandingaccounting.org/asc/323/10/#323-10-35-7).) ##### [450-20-55-5](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:250801cc733233aadf7a8fa1c0ce0b712be672dbc462781db78fbe5c0c703d7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The absence of insurance does not mean that an asset has been impaired or a liability has been incurred at the date of an entity's financial statements. Fires, explosions, and other similar events that may cause loss or damage of an entity's property are random in their occurrence. With respect to events of that type, the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is not satisfied prior to the occurrence of the event because until that time there is no diminution in the value of the property. There is no relationship of those events to the activities of the entity prior to their occurrence, and no asset is impaired prior to their occurrence. Further, unlike an insurance entity, which has a contractual obligation under policies in force to reimburse insureds for losses, an entity can have no such obligation to itself and, hence, no liability. ##### [450-20-55-6](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:536579edd91fcfefb6b3aef2b17abd70b0cbd86843b59996ea6035a7a080f26e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may choose not to purchase insurance against risk of loss that may result from injury to others, damage to the property of others, or interruption of its business operations. Exposure to risks of those types constitutes an existing condition involving uncertainty about the amount and timing of any losses that may occur, in which case a [contingency](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") exists. ##### [450-20-55-7](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:a2563a891a77370151d0ceca24d6f315f55cb3bf438255107eb102bdb574c65c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Mere exposure to risks of those types, however, does not mean that an asset has been impaired or a liability has been incurred. The condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is not met with respect to loss that may result from injury to others, damage to the property of others, or business interruption that may occur after the date of an entity's financial statements. Losses of those types do not relate to the current or a prior period but rather to the future period in which they occur. Thus, for example, an entity with a fleet of vehicles should not accrue for injury to others or damage to the property of others that might be caused by those vehicles in the future even if the amount of those losses may be reasonably estimable. ##### [450-20-55-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:2e05347e573e2afd72bea2fb1de6a0da8d1a5084a939d2cf6ff0448b13a19136 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the other hand, the conditions in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) would be met with respect to uninsured losses resulting from injury to others or damage to the property of others if both of the following are true: 1. a The event took place prior to the date of the financial statements, even though the entity may not become aware of those matters until after that date. 2. b The experience of the entity or other information enables it to make a reasonable estimate of the loss that was incurred prior to the date of its financial statements. Injury or damage resulting from products that have been sold are discussed in paragraph [450-20-55-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-2). ##### [450-20-55-9](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:20e3a856ca676de849a83046cf79ab1f5faa429939d10cbb24f5de03d8fb3b0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The threat of expropriation of assets is a contingency (as defined) because of the uncertainty about its outcome and effect. The condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is met if both of the following are true: 1. a Expropriation is imminent. 2. b Compensation will be less than the carrying amount of the assets. Imminence may be indicated, for example, by public or private declarations of intent by a government to expropriate assets of the entity or actual expropriation of assets of other entities. The condition in paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) requires that accrual be made only if the amount of loss can be reasonably estimated. If the conditions for accrual are not met, the disclosures described in paragraphs [450-20-50-3 through 50-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) would be made if there is at least a reasonable possibility that an asset has been impaired. ##### [450-20-55-10](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:e4caf5ae9c54254b50daa1ea866ded5d6c1bf811b625dc7afc442c9dc43770ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in determining whether accrual and/or disclosure is required with respect to pending or threatened litigation and actual or possible claims and assessments: 1. a The period in which the underlying cause (that is, the cause for action) of the pending or threatened litigation or of the actual or possible claim or assessment occurred 2. b The degree of probability of an unfavorable outcome 3. c The ability to make a reasonable estimate of the amount of loss. Examples 1 through 2 (see paragraphs [450-20-55-18 through 55-35](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-18) ) illustrate the consideration of these factors in determining whether to accrue or disclose litigation. ##### [450-20-55-11](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:b5cc8286921e69e6debcccb9a26269b3b6817a8bc7e5171b8ec1adf6272ff74d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accrual may be appropriate for litigation, claims, or assessments whose underlying cause is an event occurring on or before the date of an entity's financial statements even if the entity does not become aware of the existence or possibility of the lawsuit, claim, or assessment until after the date of the financial statements. If those financial statements have not been issued or are not yet available to be issued (as discussed in Section 855-10-25), accrual of a loss related to the litigation, claim, or assessment would be required if the probability of loss is such that the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is met and the amount of loss can be reasonably estimated. ##### [450-20-55-12](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:79b5b91cf8b663419425d6cbbfb13ccf68a8f2875dad38c423144bc918b3559f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the underlying cause of the litigation, claim, or assessment is an event occurring before the date of an entity's financial statements, the probability of an outcome unfavorable to the entity must be assessed to determine whether the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is met. Among the factors that should be considered are the following: 1. a The nature of the litigation, claim, or assessment 2. b The progress of the case (including progress after the date of the financial statements but before those statements are issued or are available to be issued \[as discussed in Section 855-10-25\]) 3. c The opinions or views of legal counsel and other advisers, although, the fact that legal counsel is unable to express an opinion that the outcome will be favorable to the entity should not necessarily be interpreted to mean that the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) is met 4. d The experience of the entity in similar cases 5. e The experience of other entities 6. f Any decision of the entity's management as to how the entity intends to respond to the lawsuit, claim, or assessment (for example, a decision to contest the case vigorously or a decision to seek an out-of-court settlement). ##### [450-20-55-13](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:e5ca161e22fa824e2fd49e8be2ae9a8b7e167bf2ff71167b9eb6ab27976c571a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The filing of a suit or formal assertion of a claim or assessment does not automatically indicate that accrual of a loss may be appropriate. The degree of probability of an unfavorable outcome must be assessed. The condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) would be met if an unfavorable outcome is determined to be probable. Accrual would be inappropriate, but disclosure would be required, if an unfavorable outcome is determined to be [reasonably possible](https://asc.understandingaccounting.org/glossary/r/#reasonably-possible "The chance of the future event or events occurring is more than remote but less than likely.") but not probable, or if the amount of loss cannot be reasonably estimated. ##### [450-20-55-14](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:edb08ba6bb6256655c8aafa62701d9a98a3c69e32f55e6fccfc312921d4168f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. With respect to unasserted claims and assessments, an entity must determine the degree of probability that a suit may be filed or a claim or assessment may be asserted and the possibility of an unfavorable outcome. If an unfavorable outcome is probable and the amount of loss can be reasonably estimated, accrual of a loss is required by paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). For example: 1. a A catastrophe, accident, or other similar physical occurrence predictably engenders claims for redress, and in such circumstances their assertion may be probable. 2. b An investigation of an entity by a governmental agency, if enforcement proceedings have been or are likely to be instituted, is often followed by private claims for redress, and the probability of their assertion and the possibility of loss should be considered in each case. 3. c An entity may believe there is a possibility that it has infringed on another entity's patent rights, but the entity owning the patent rights has not indicated an intention to take any action and has not even indicated an awareness of the possible infringement. In that case, a judgment must first be made as to whether the assertion of a claim is probable. ##### [450-20-55-15](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:ca36103a31a2c9eeae0921507830851c1e546e4e4dd74ad0745884d764e990b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the judgment is that assertion is not probable, no accrual or disclosure would be required. On the other hand, if the judgment is that assertion is probable, then a second judgment must be made as to the degree of probability of an unfavorable outcome. The disclosures described in paragraphs [450-20-50-3 through 50-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) would be required in either of the following circumstances: 1. a An unfavorable outcome is probable but the amount of loss cannot be reasonably estimated. 2. b An unfavorable outcome is reasonably possible but not probable. ##### [450-20-55-16](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:ed53e3134f424f3e8d9ed48866a592730eeef00e140881ec4416e504fa36152a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a condition for accrual of a loss contingency, the condition in paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) requires that the amount of loss can be reasonably estimated. In some cases, it may be determined that a loss was incurred because an unfavorable outcome of the litigation, claim, or assessment is probable (thus satisfying the condition in paragraph [450-20-25-2\[a\]](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2)), but the range of possible loss is wide. Examples 1 and 3 (see paragraphs [450-20-55-18](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-18) and [450-20-55-36](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-36)) illustrate the application of the standards in this Subtopic when the range of possible loss is wide. ##### [450-20-55-17](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:739ab517e13db0198d307323eb08e661d7363dfbb0d5f32bbb2afc5033a48f7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a condition for accrual of a loss contingency, the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) requires that information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicate that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements. Accordingly, accrual would clearly be inappropriate for litigation, claims, or assessments whose underlying cause is an event or condition occurring after the date of financial statements but before those financial statements are issued or are available to be issued. For example, an entity would not accrue a suit for damages alleged to have been suffered as a result of an accident that occurred after the date of the financial statements. However, disclosure may be required by paragraphs [450-20-50-9 through 50-10](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-9) . ##### [450-20-55-17A](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-17A) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:617b710a571d140f5edcaf177b819a87dd496d2cf67fe5a8cc5cb36f145ec5a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not prohibit (and, in fact, requires) accrual of a net loss (that is, a loss in excess of deferred premiums) that probably will be incurred on insurance policies that are in force, provided that the loss can be reasonably estimated. #### Illustrations ##### [450-20-55-18](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:3c8174e9cc4121f69136ce7e7c078edab70e44780181d8a4a3c8ae6975f29877 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may be litigating a dispute with another party. In preparation for the trial, it may determine that, based on recent developments involving one aspect of the litigation, it is probable that it will have to pay $2 million to settle the litigation. Another aspect of the litigation may, however, be open to considerable interpretation, and depending on the interpretation by the court the entity may have to pay an additional $8 million over and above the $2 million. ##### [450-20-55-19](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:451dc868260036ef0c9a6fb252e29368d90284020ee9e7570b9b1b59980ea603 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In that case, paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) requires accrual of the $2 million if that is considered a reasonable estimate of the loss. ##### [450-20-55-20](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:755b33e3b6168aaca97d0475dc05851a1f10d57a9e93e1f8d5b1ce061ea99705 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [450-20-50-1 through 50-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-1) require disclosure of the nature of the accrual, and depending on the circumstances, may require disclosure of the $2 million that was accrued. ##### [450-20-55-21](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:939eb533b8dbddaa1cfe8e2d3b54959fdde585c548a9315b589cfa51ee9f4c10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [450-20-50-3 through 50-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) require disclosure of the additional exposure to loss if there is a reasonable possibility that the additional amounts will be paid. ##### [450-20-55-22](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:49fb8397772cd881b1b8ecc0c675f90c0ecbd34fa3cfbfcc5699b276f6301cec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate application of the accrual and disclosure requirements in the following stages of litigation: 1. a The trial is complete but the damages are undetermined (Case A). 2. b The trial is incomplete but an unfavorable outcome is probable (Case B). 3. c The trial is incomplete and unfavorable outcome is reasonably possible (Case C). 4. d There is a range of loss and one amount is a better estimate than any other (Case D). ##### [450-20-55-23](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:8a3f9c26b4c065fd41821f3081e4b8daf51f0400f398c1365e0048a6cdb8834a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity is involved in litigation at the close of its fiscal year and information available indicates that an unfavorable outcome is probable. Subsequently, after a trial on the issues, a verdict unfavorable to the entity is handed down, but the amount of damages remains unresolved at the time the financial statements are issued or are available to be issued (as discussed in Section 855-10-25). Although the entity is unable to estimate the exact amount of loss, its reasonable estimate at the time is that the judgment will be for not less than $3 million or more than $9 million. No amount in that range appears at the time to be a better estimate than any other amount. ##### [450-20-55-24](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:88fc893fbe9cdd56f6e76d6ea02744ea0ab0c02e2227621a989c9a3d858cb39f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, paragraph [450-20-30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-30-1) requires accrual of the $3 million (the minimum of the range) at the close of the fiscal year. ##### [450-20-55-25](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:615016591427505efd28c3d704d90ae3a8fa97bf328d237a711c30aecad457bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [450-20-50-1 through 50-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-1) require disclosure of the nature of the contingency and, depending on the circumstances, may require disclosure of the amount of the accrual. ##### [450-20-55-26](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:baea3f47da1dd5804297e0272e15f2ef594305394990903beb8518b2f7c8070a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [450-20-50-3 through 50-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) require disclosure of the exposure to an additional amount of loss of up to $6 million. ##### [450-20-55-27](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:f506dd25715d97988138d4e5bec17b6701f3d9d468b21cb42ed19991d9500aad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Case A, except it is probable that a verdict will be unfavorable and the trial has not been completed before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25). In that situation, the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) would be met because information available to the entity indicates that an unfavorable verdict is probable. An assessment that the range of loss is between $3 million and $9 million would meet the condition in paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). ##### [450-20-55-28](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:547739ca92b5062141c7c16ae6cf8283661ba1968232debe497dfd9012cfe15a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, if no single amount in that range is a better estimate than any other amount, paragraph [450-20-30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-30-1) requires accrual of $3 million (the minimum of the range) at the close of the fiscal year. ##### [450-20-55-29](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:dbe27e92f3883bb188f0c80fbbf94aed175ea0db2dbb2dd1a3de5f5d20c1893c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [450-20-50-1 through 50-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-1) require disclosure of the nature of the contingency and, depending on the circumstances, may require disclosure of the amount of the accrual. ##### [450-20-55-30](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:883d6297b16cb5dc3252eabc83d40ada0968a13ea3f463d1a4dab4cd8e07fc41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 450-20-50-3 through 50-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) require disclosure of the exposure to an additional amount of loss of up to $6 million. ##### [450-20-55-31](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:0478f5786806d61baa1c5006ee016c6f6f6e6f68f6aa061d8a5dbd00529e85c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts as in Case B, except the entity had assessed the verdict differently (for example, that an unfavorable verdict was not probable but was only reasonably possible). The condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) would not have been met and no amount of loss would be accrued. Paragraphs [450-20-50-3 through 50-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) require disclosure of the nature of the contingency and any amount of loss that is reasonably possible. ##### [450-20-55-32](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:44bcb8b1cea52d13973351ec6da0900fd340171435b846acff4ff6e30125dc7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that in Case A and Case B the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) has been met and a reasonable estimate of loss is a range between $3 million and $9 million but a loss of $4 million is a better estimate than any other amount in that range. ##### [450-20-55-33](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:4a457d62d478b877fed3a092c84115e58a6fb17dbbf748df7f6a2e8ef76ce6c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, paragraph [450-20-30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-30-1) requires accrual of $4 million. ##### [450-20-55-34](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:34f1055a43214ea7a3b4e0c196227ed0959e830d9140f8002aa77450f0928374 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [450-20-50-1 through 50-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-1) require disclosure of the nature of the contingency and, depending on the circumstances, may require disclosure of the amount of the accrual. ##### [450-20-55-35](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:6184303926d6fa6391800f4a1cd6319d920d9b89d842c5d681304f1bd83515ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [450-20-50-3 through 50-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) require disclosure of the exposure to an additional amount of loss of up to $5 million. ##### [450-20-55-36](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:5261be1111d9897189ada13ba73ea65c247750726af9d302cbc552d23fcb3092 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A is the defendant in litigation involving a major competitor claiming patent infringement (Entity B). The suit claims damages of $200 million. Discovery has been completed, and Entity A is engaged in settlement discussions with the plaintiff. Entity A has made an offer of $5 million to settle the case, which offer was rejected by the plaintiff; the plaintiff has made an offer of $35 million to settle the case, which offer was rejected by Entity A. Based on the expressed willingness of the plaintiff to settle the case along with information revealed during discovery and the likely cost and risk to both sides of litigating, Entity A believes that it is probable the case will not come to trial. Accordingly, Entity A has determined that it is probable that it has some liability. Entity A's reasonable estimate of this liability is a range between $10 million and $35 million, with no amount within that range a better estimate than any other amount; accordingly, $10 million was accrued. ##### [450-20-55-37](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:21.859Z to 2026-09-10T00:27:21.859Z Record version: sha256:7adddbcde0d197676bb9496bd33b728d3ccc01429421521e41f065677a9c3499 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A provides the following disclosure in accordance with Section 450-20-50. - On March 15, 19X1, Entity B filed a suit against the company claiming patent infringement. While the company believes it has meritorious defenses against the suit, the ultimate resolution of the matter, which is expected to occur within one year, could result in a loss of up to $25 million in excess of the amount accrued. Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:4a07c42590c45cef8fa2c3de1e8ae15bcdc877a9a348b65cfe5f1ca41ce6f7c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/450/20/#60-relationships) SEC content: no #### Risks and Uncertainties ##### [450-20-60-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:5be68fbd352a08166e4e9d52ce7db7dcbae5e5187c659af399a1b8abf227aa67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For disclosure of certain risks and uncertainties that stem from the nature of an entity's operations and from significant concentrations in certain aspects of an entity's operations, many of which are noninsured or underinsured risks, see Topic 275. #### Receivables ##### [450-20-60-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:2ecd9b4a54a60001bfb7af80e1976db47a4f5c60560e94ea366ce7c368082adb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [contingencies](https://asc.understandingaccounting.org/glossary/c/#contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") related to the collectibility of receivables, see Subtopic 326-20 on financial instruments measured at amortized cost. ##### [450-20-60-3](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:e5f829e314020a8fc562e1b1d10bf971075c85fe54b50efffc6edff39d6f348c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to the collectibility of a loan portfolio, see Subtopic 326-20. #### Inventory ##### [450-20-60-4](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:a7a42daaddc0e6301c83e21031db9d8addf4f93583c72cebd7c46b32423b5af3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For inventories that are impaired by damage, deterioration, obsolescence, changes in price levels, or other causes, see Section 330-10-35. ##### [450-20-60-5](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:8748c08154130944f71c0bc511aefbff0c35726f5260b7d79bd40302ccaef921 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For losses that are expected to arise from firm, uncancelable, and unhedged commitments for the future purchase of inventory, see Section 330-10-35. #### Liabilities ##### [450-20-60-6](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:4584c531d799f657e17113dbb76e3b34d2b3865b54008a2e9e45c7a49bdd75cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For assessments by state guaranty funds and workers' compensation second-injury funds and other assessments related to insurance activities, including insurance activities of an entity that self-insures, see Subtopic 405-30. #### Asset Retirement and Environmental Obligations ##### [450-20-60-7](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:a7a4fa96077401f9f2a38d78f25b77a6964cf1fa7bae61d7c881046bb3940ba8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies associated with the retirement of a tangible long-lived asset that result from the acquisition, construction, or development and/or the normal operation of a long-lived asset, see Subtopic 410-20. ##### [450-20-60-8](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:28db2593c538bfa4265def32f556591e567a80c36ff47eab80835578e6f9a6be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to environmental remediation liabilities that arise from the improper operation of a long-lived asset, see Subtopic 410-30. #### Guarantees ##### [450-20-60-9](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:dbecf6c83102b61c4f4d8a54aba00858ef025c36bf8590de33b4e1a9a40886c9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to product warranties and product defects, see the Product Warranties Subsections of Subtopic 460-10. ##### [450-20-60-10](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:b6fe9d39b61e0be60ee93ad7e26bb852484d295b03aca22f71e695742049a2d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to guarantees of indebtedness of others, see Topic 460. ##### [450-20-60-11](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:9e15aa7502ccd6ea491036970aa32bda634a927d8a14b7c0cc9b7e130c7554d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to obligations of commercial banks under financial standby letters of credit, see Topic 460. #### Debt ##### [450-20-60-12](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:c0f61885b4865de8725f2d249e81f057b193dc545b2aa46a956206404183e44b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingent payments of a troubled debt restructuring, see Section 470-60-35. #### Compensation—Retirement Benefits ##### [450-20-60-13](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:8e816828fa301675a5d822638ce961e63e88bdcfbe6be27bfb2fe0f4a21ab908 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to withdrawal from a multiemployer plan, see paragraphs [715-80-35-2](https://asc.understandingaccounting.org/asc/715/80/#715-80-35-2) and [715-80-50-2](https://asc.understandingaccounting.org/asc/715/80/#715-80-50-2). #### Other Expenses ##### [450-20-60-14](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:c2945bea790501c6940c773c14fda4b63fc6575e81df737d157fa97d61513a89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to an insurance contract or [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 that does not, despite its form, provide for indemnification of the insured or the ceding company by the insurer or reinsurer against loss or liability, see paragraph [720-20-25-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-25-1). #### Leases ##### [450-20-60-15](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:e67b6d688049e0a68f70e9178551784ac9103a47f4c4ec735bd174dfc4078976 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [variable lease payments](https://asc.understandingaccounting.org/glossary/v/#variable-lease-payments "Payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time."), see paragraphs [842-10-55-1 through 55-2](https://asc.understandingaccounting.org/asc/842/10/#842-10-55-1) . ##### [450-20-60-16](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:974c94eb0831b1184e83e0a77f57617bd793b73d6910b10b66091ae7a7e30b63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the classification effects of a provision in a lease that requires lessee indemnifications for environmental contamination caused by the lessee during its use of the property, see paragraph [842-10-55-15](https://asc.understandingaccounting.org/asc/842/10/#842-10-55-15). #### Transfers and Servicing ##### [450-20-60-17](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:ec14e12ed06391610023e0369a547026cc20458a2e1dfc3789bea97753674b1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to agreements to repurchase receivables (or to repurchase the related property) that have been sold or otherwise assigned, see Section 860-10-40. #### Extractive Activities—Mining ##### [450-20-60-18](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:efcb364f949b36da5202e3241174e07626b773629949c554d75412d627db0978 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies resulting from the Coal Industry Retiree Health Benefit Act of 1992, see Subtopic 930-715. #### Financial Services—Insurance ##### [450-20-60-19](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:107d45c25e33cebda7d6d87ec7061b6cc9fc79616592b05f2a8263e7abbbab91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to the risk of loss that is assumed by a property and casualty insurance entity or reinsurance entity when it issues an insurance policy covering risk of loss from catastrophes, see Subtopic 944-40. #### Financial Services—Investment Companies ##### [450-20-60-20](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:0bb32367427d571392bb57a266a8b6dc75bce4736820c36e3a300b7f678239ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to the collectibility of interest receivable, including purchased interest, see paragraph [946-320-35-17 to 35-19](https://asc.understandingaccounting.org/asc/320/946/#320-946-35-17). #### Health Care Entities ##### [450-20-60-21](https://asc.understandingaccounting.org/asc/450/20/#450-20-60-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:25.699Z to 2026-09-10T00:27:25.699Z Record version: sha256:8569ac8d20a1d97ee1b169ee63873e866700ee779e5d2841aa3272e02ecbb9f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contingencies related to malpractice claims, see Subtopic 954-450. Source downloaded (UTC): 2026-09-10T00:27:31.843Z to 2026-09-10T00:27:31.843Z Record version: sha256:999cea4d9f33cff1494f54f445d254375b3dc15e818876ced8cbd6f9d63e9d27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/450/20/#sec-00-status) SEC content: yes ##### [450-20-S00-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:31.843Z to 2026-09-10T00:27:31.843Z Record version: sha256:4732860757b4b08102469a67cce8d5012771466fcdecd8cd208d1f3c24a8b266 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
450-20-S99-1AmendedAccounting Standards Update No. 2012-0308/27/2012
450-20-S99-1AmendedAccounting Standards Update No. 2009-0709/15/2009
Source downloaded (UTC): 2026-09-10T00:27:35.851Z to 2026-09-10T00:27:35.851Z Record version: sha256:6aff3e23c9a3afc124a932dbd1bbd65c5d7439356a51c53e746caa3767f1dafc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/450/20/#sec-25-recognition) SEC content: yes #### Accounting for Legal Costs ##### [450-20-S25-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:35.851Z to 2026-09-10T00:27:35.851Z Record version: sha256:95f4787e783cb5ebcc2944380ed1951885f902fc134c53f915e23058d1eb4add Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [450-20-S99-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-S99-2), SEC Staff Announcement: Accounting for Legal Costs Expected to Be Incurred in Connection with a Loss Contingency, for SEC Staff views on the recognition of such costs. Source downloaded (UTC): 2026-09-10T00:27:37.671Z to 2026-09-10T00:27:37.671Z Record version: sha256:e35ac2011e76ebf1dd13ddb32f1a4a89fb9ec19eccb62b362620275cf4696d0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/450/20/#sec-30-initial-measurement) SEC content: yes #### Use of Discounts ##### [450-20-S30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:37.671Z to 2026-09-10T00:27:37.671Z Record version: sha256:1897af79f392ee312a8abf60638891005e26b24222b3fb699e82d0dbe7e4f0ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [450-20-S99-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-S99-1), SAB Topic 5.Y, Question 1, for the SEC Staff views on the use of discounts to measure loss contingencies. Source downloaded (UTC): 2026-09-10T00:27:39.885Z to 2026-09-10T00:27:39.885Z Record version: sha256:48a9be9331e8b0db545d75eca9e3491b147153ec108370212327462f9cabe21a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/450/20/#sec-50-disclosure) SEC content: yes #### Accruals for Loss Contingencies ##### [450-20-S50-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:39.885Z to 2026-09-10T00:27:39.885Z Record version: sha256:1c1fda0b4620097a49fdd5cde73ce70792c921060d0d9f0850a4807779740e42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [450-20-S99-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-S99-1), SAB Topic 5.Y., Question 2 and Question 4, for the SEC Staff views on disclosures pertaining to loss contingencies. #### Policy for Accrual of Legal Costs ##### [450-20-S50-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-S50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:39.885Z to 2026-09-10T00:27:39.885Z Record version: sha256:06b657e2c0cbed05ac65e16cb2a2c05aabbd1c5da2d614e4293cfb85751e444a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [450-20-S99-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-S99-2), SEC Staff Announcement: Accounting for Legal Costs Expected to be Incurred in Connection with a Loss Contingency, for SEC Staff views on disclosures related to such accounting. Source downloaded (UTC): 2026-09-10T00:27:44.704Z to 2026-09-10T00:27:44.704Z Record version: sha256:d2e3dad00128db63457a0fdc7ef3f8378d788f34d799ca1eedbedf394f38efb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-20-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/450/20/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [450-20-S99-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:44.704Z to 2026-09-10T00:27:44.704Z Record version: sha256:2bb745ab26585518edf7768d542cef8a86f02719faae7d0030315d117d9948ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.Y, Accounting and Disclosures Relating to Loss Contingencies. - Facts: A registrant believes it may be obligated to pay material amounts as a result of product or environmental remediation liability. These amounts may relate to, for example, damages attributed to the registrant's products or processes, clean-up of hazardous wastes, reclamation costs, fines, and litigation costs. The registrant may seek to recover a portion or all of these amounts by filing a claim against an insurance carrier or other third parties. - Question 1: Assuming that the registrant's estimate of an environmental remediation or product liability meets the conditions set forth in FASB ASC paragraph [410-30-35-12](https://asc.understandingaccounting.org/asc/410/30/#410-30-35-12) (Asset Retirement and Environmental Obligations Topic) for recognition on a discounted basis, what discount rate should be applied and what, if any, special disclosures are required in the notes to the financial statements? - Interpretive Response: The rate used to discount the cash payments should be the rate that will produce an amount at which the environmental or product liability could be settled in an arm's-length transaction with a third party. Further, the discount rate used to discount the cash payments should not exceed the interest rate on monetary assets that are essentially risk free FN48 and have maturities comparable to that of the environmental or product liability. - FN48 As described in Concepts Statement 7, _Using Cash Flow Information and Present Value in Accounting Measurements_. - If the liability is recognized on a discounted basis to reflect the time value of money, the notes to the financial statements should, at a minimum, include disclosures of the discount rate used, the expected aggregate undiscounted amount, expected payments for each of the five succeeding years and the aggregate amount thereafter, and a reconciliation of the expected aggregate undiscounted amount to amounts recognized in the statements of financial position. Material changes in the expected aggregate amount since the prior balance sheet date, other than those resulting from pay-down of the obligation, should be explained. - Question 2: What financial statement disclosures should be furnished with respect to recorded and unrecorded product or environmental remediation liabilities? - Interpretive Response: FASB ASC Section 450-20-50, Contingencies—Loss Contingencies—Disclosure, identifies disclosures regarding loss contingencies that generally are furnished in notes to financial statements. FASB ASC Section 410-30-50, Asset Retirement and Environmental Obligations—Environmental Obligations—Disclosure, identifies disclosures that are required and recommended regarding both recorded and unrecorded environmental remediation liabilities. The staff believes that product and environmental remediation liabilities typically are of such significance that detailed disclosures regarding the judgments and assumptions underlying the recognition and measurement of the liabilities are necessary to prevent the financial statements from being misleading and to inform readers fully regarding the range of reasonably possible outcomes that could have a material effect on the registrant's financial condition, results of operations, or liquidity. In addition to the disclosures required by FASB ASC Section 450-20-50 and FASB ASC Section 410-30-50, examples of disclosures that may be necessary include: - Circumstances affecting the reliability and precision of loss estimates. - The extent to which unasserted claims are reflected in any accrual or may affect the magnitude of the contingency. - Uncertainties with respect to joint and several liability that may affect the magnitude of the contingency, including disclosure of the aggregate expected cost to remediate particular sites that are individually material if the likelihood of contribution by the other significant parties has not been established. - Disclosure of the nature and terms of cost-sharing arrangements with other potentially responsible parties. - The extent to which disclosed but unrecognized contingent losses are expected to be recoverable through insurance, indemnification arrangements, or other sources, with disclosure of any material limitations of that recovery. - Uncertainties regarding the legal sufficiency of insurance claims or solvency of insurance carriers. FN49 - FN49 The staff believes there is a rebuttable presumption that no asset should be recognized for a claim for recovery from a party that is asserting that it is not liable to indemnify the registrant. Registrants that overcome that presumption should disclose the amount of recorded recoveries that are being contested and discuss the reasons for concluding that the amounts are probable of recovery. - The time frame over which the accrued or presently unrecognized amounts may be paid out. - Material components of the accruals and significant assumptions underlying estimates. - Registrants are cautioned that a statement that the contingency is not expected to be material does not satisfy the requirements of FASB ASC Topic 450 if there is at least a reasonable possibility that a loss exceeding amounts already recognized may have been incurred and the amount of that additional loss would be material to a decision to buy or sell the registrant's securities. In that case, the registrant must either (a) disclose the estimated additional loss, or range of loss, that is reasonably possible, or (b) state that such an estimate cannot be made. - Question 4: What disclosures should be furnished with respect to site restoration costs or other environmental remediation costs? FN52 - FN52 Registrants are reminded that FASB ASC Subtopic 410-20, Asset Retirement and Environmental Obligations—Asset Retirement Obligations, provides guidance for accounting and reporting for costs associated with asset retirement obligations. - Interpretive Response: The staff believes that material liabilities for site restoration, post-closure, and monitoring commitments, or other exit costs that may occur on the sale, disposal, or abandonment of a property as a result of unanticipated contamination of the asset should be disclosed in the notes to the financial statements. Appropriate disclosures generally would include the nature of the costs involved, the total anticipated cost, the total costs accrued to date, the balance sheet classification of accrued amounts, and the range or amount of reasonably possible additional losses. If an asset held for sale or development will require remediation to be performed by the registrant prior to development, sale, or as a condition of sale, a note to the financial statements should describe how the necessary expenditures are considered in the assessment of the asset's value and the possible need to reflect an impairment loss. Additionally, if the registrant may be liable for remediation of environmental damage relating to assets or businesses previously disposed, disclosure should be made in the financial statements unless the likelihood of a material unfavorable outcome of that contingency is remote. FN53 The registrant's accounting policy with respect to such costs should be disclosed in accordance with FASB ASC Topic 235, Notes to Financial Statements. - FN53 If the company has a guarantee as defined by FASB ASC Topic 460, Guarantees, the entity is required to provide the disclosures and recognize the fair value of the guarantee in the company's financial statements even if the "contingent" aspect of the guarantee is deemed to be remote. ##### [450-20-S99-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:44.704Z to 2026-09-10T00:27:44.704Z Record version: sha256:251386d14a4a77719f129c8641646fe36bea4dc75866b8e30767e2e5d4d5adc7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Staff Announcement: Accounting for Legal Costs Expected to Be Incurred in Connection with a Loss Contingency. - Dates Discussed: January 23, 1997; March 24-25, 1999 - The Task Force discussed a potential new issue relating to the accounting for legal costs expected to be incurred in connection with a FASB Statement No. 5, Accounting for Contingencies, loss contingency. Some Task Force members observed that they believe practice typically has expensed such costs as incurred; however, other Task Force members suggested that practice may not be consistent in this area. The Task Force declined to add this potential new issue to its agenda. - The SEC Observer noted that the SEC staff would expect a registrant's accounting policy to be applied consistently and that APB Opinion No. 22, Disclosure of Accounting Policies, requires disclosure of material accounting policies and the methods of applying those policies. Source downloaded (UTC): 2026-09-10T00:27:48.583Z to 2026-09-10T00:28:10.377Z Record version: sha256:2cf765d165bbdcef3057adc296568e6d2dffce35ff9c5fca3363a73d87c8f57c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-30: Contingencies — Gain Contingencies ### Machine-generated study aids ```json { "summary": "ASC 450-30 governs gain contingencies — existing conditions or situations involving uncertainty that may result in a future gain to the entity. The core rule is asymmetric to loss contingencies: a gain contingency usually should not be reflected in the financial statements, because doing so might recognize revenue before it is realized (450-30-25-1). Instead, adequate disclosure is required, worded carefully so as not to imply that realization is more likely than it is (450-30-50-1).", "key_points": [ "A contingency that might result in a gain usually should not be reflected in the financial statements because to do so might be to recognize revenue before its realization (450-30-25-1).", "Adequate disclosure shall be made of a gain contingency, but care shall be exercised to avoid misleading implications as to the likelihood of realization (450-30-50-1).", "The Subtopic follows the same scope and scope exceptions as the Overall Subtopic in Section 450-10-15 (450-30-15-1).", "The Contingencies Topic is not all-inclusive; Topic-specific gain contingencies are cross-referenced in Section 450-30-60, with parallel links for either-gain-or-loss uncertainties in 450-10-60 and loss uncertainties in 450-20-60 (450-30-05-2).", "Whether a receivable arising from a recognized gain contingency may be offset against an existing liability is determined under Section 210-20-45 (450-30-60-1).", "Business interruption insurance recoveries are presented and disclosed under Sections 220-30-45 and 220-30-50 (450-30-60-2, 450-30-60-3); insurance recoveries under purchased retroactive insurance contracts follow paragraph 720-20-25-3 (450-30-60-4).", "A lessor's income from variable lease payments is recognized under paragraphs 842-30-25-2, 842-30-25-9, and 842-30-25-11 (450-30-60-5)." ], "categories": [ "Recognition", "Disclosure", "Contingencies and guarantees", "Presentation" ], "audience_level": "introductory", "student_note": "Exams love the asymmetry: probable losses are accrued under 450-20, but probable gains are only disclosed — never accrued until realized. The common error is treating a likely litigation win or insurance claim as an accrued receivable, or writing a disclosure that implies recovery is assured.", "related_topics": [ "450-10", "450-20", "210-20", "220-30", "720-20", "842-30" ], "key_concepts": [ "gain contingency", "realization", "conservatism asymmetry", "adequate disclosure", "misleading implications", "insurance recoveries", "offsetting receivable against liability", "variable lease payments" ] } ``` Source downloaded (UTC): 2026-09-10T00:27:48.583Z to 2026-09-10T00:27:48.583Z Record version: sha256:2fe6f59e0df5d2437dfee15e2ffafabc687d8cff4150c0280feac8cf2a2a0712 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/450/30/#00-status) SEC content: no ##### [450-30-00-1](https://asc.understandingaccounting.org/asc/450/30/#450-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:48.583Z to 2026-09-10T00:27:48.583Z Record version: sha256:f03b36d85f881007db180b0ca814003f7f741bd891eca10b7481931f6df54400 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
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Finance LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Operating LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
450-30-60-5AmendedAccounting Standards Update No. 2016-0202/25/2016
Source downloaded (UTC): 2026-09-10T00:27:52.539Z to 2026-09-10T00:27:52.539Z Record version: sha256:826d22e45feed7e4e2e452fab537e2a144bd6d800923ba540a2094608d9ab2bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/450/30/#05-overview-and-background) SEC content: no ##### [450-30-05-1](https://asc.understandingaccounting.org/asc/450/30/#450-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:52.539Z to 2026-09-10T00:27:52.539Z Record version: sha256:fb2b08a8b51fa19a8dda4e6e90840ac62f456df3b1fdaf9d26d9add13d9ded1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for the recognition and disclosure of a [gain contingency](https://asc.understandingaccounting.org/glossary/g/#gain-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain to an entity that will ultimately be resolved when one or more future events occur or fail to occur."). ##### [450-30-05-2](https://asc.understandingaccounting.org/asc/450/30/#450-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:52.539Z to 2026-09-10T00:27:52.539Z Record version: sha256:22d27c65410ce39bdf3e68df4c89d3a4f2d00fa1ee4daea4077e32fcd7249468 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic, in combination with Subtopics 450-10 and 450-20, provides general guidance regarding gain and [loss contingencies](https://asc.understandingaccounting.org/glossary/l/#loss-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. The term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses."). Other Topics include gain or loss contingencies related to those specific Topics. Therefore, the Contingencies Topic does not include all standards related to contingencies. While not intended to be all-inclusive, the following Relationships Sections within the Contingency Subtopics provide links to many Topic-specific contingencies: 1. a See Section 450-10-60 for references to other standards related to uncertainties that could result in either a gain or a loss. 2. b See Section 450-20-60 for references to other standards related to uncertainties that could result in a future loss. 3. c See Section 450-30-60 for references to other standards related to uncertainties that could result in a future gain. Source downloaded (UTC): 2026-09-10T00:27:55.964Z to 2026-09-10T00:27:55.964Z Record version: sha256:39029e37411b4b70abe94f45de4a9afb13851c773da0d6b3bf64fb6b979ed45f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/450/30/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [450-30-15-1](https://asc.understandingaccounting.org/asc/450/30/#450-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:27:55.964Z to 2026-09-10T00:27:55.964Z Record version: sha256:6c1713c0bc39f249531f3cb29d626dc5d1dbd97f1f9ec57bd412c017e79674c0 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 450-10-15. Source downloaded (UTC): 2026-09-10T00:28:02.205Z to 2026-09-10T00:28:02.205Z Record version: sha256:4d37f0ca81d467ac67f79eaab9c7ffef1c6c485a60fb86efcc2f2bc6ae2d3a22 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/450/30/#25-recognition) SEC content: no ##### [450-30-25-1](https://asc.understandingaccounting.org/asc/450/30/#450-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:02.205Z to 2026-09-10T00:28:02.205Z Record version: sha256:c68fdf1f9e1f23467c52af19b461dd44bc7898806ad0dd7ab7da13718e2e2d75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contingency that might result in a gain usually should not be reflected in the financial statements because to do so might be to recognize revenue before its realization. Source downloaded (UTC): 2026-09-10T00:28:04.439Z to 2026-09-10T00:28:04.439Z Record version: sha256:8fa30498a711add719e50ed3d026ed37463c4ead3e6374a4ef9e03803ac1c84f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/450/30/#50-disclosure) SEC content: no ##### [450-30-50-1](https://asc.understandingaccounting.org/asc/450/30/#450-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:04.439Z to 2026-09-10T00:28:04.439Z Record version: sha256:987a2f5cf8f4147a77ddd074431057a32e68c680dcb88f9108c466c518a27d56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Adequate disclosure shall be made of a contingency that might result in a gain, but care shall be exercised to avoid misleading implications as to the likelihood of realization. Source downloaded (UTC): 2026-09-10T00:28:08.097Z to 2026-09-10T00:28:08.097Z Record version: sha256:6d9089c89fa28a796e29c3bdef66ebaae530eaa181aa108aa6ce72c19b458b53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-30-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/450/30/#60-relationships) SEC content: no #### Balance Sheet ##### [450-30-60-1](https://asc.understandingaccounting.org/asc/450/30/#450-30-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:08.097Z to 2026-09-10T00:28:08.097Z Record version: sha256:2ad3163944be2f20ba02e2ee8393385294e8dc2ab19546ef34b1adff7a06bde1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the determination of whether a receivable resulting from the recognition of a [gain contingency](https://asc.understandingaccounting.org/glossary/g/#gain-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible gain to an entity that will ultimately be resolved when one or more future events occur or fail to occur.") may be offset against an existing liability, see Section 210-20-45. #### Income Statement ##### [450-30-60-2](https://asc.understandingaccounting.org/asc/450/30/#450-30-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:08.097Z to 2026-09-10T00:28:08.097Z Record version: sha256:64f00d96212f301d5df5e8bf18e134bc8b8a12bc7fe6b9505947ece706beb326 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the presentation of business interruption insurance recoveries in the income statement, see Section 220-30-45. ##### [450-30-60-3](https://asc.understandingaccounting.org/asc/450/30/#450-30-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:08.097Z to 2026-09-10T00:28:08.097Z Record version: sha256:5ad61ca841d5ddcf7c66cdc6172961766e7020ff112ef13d43eea4344e511789 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For disclosure of information about business interruption insurance recoveries, see Section 220-30-50. #### Other Expenses ##### [450-30-60-4](https://asc.understandingaccounting.org/asc/450/30/#450-30-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:08.097Z to 2026-09-10T00:28:08.097Z Record version: sha256:f9424b9672e2923c07052078988d50a7c20f8c27f34ea619357a3d111bc283e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For recognition of insurance recoveries by an entity insured through a purchased retroactive insurance contract (other than for core insurance operations of an insurance entity), see paragraph [720-20-25-3](https://asc.understandingaccounting.org/asc/720/20/#720-20-25-3). #### Leases ##### [450-30-60-5](https://asc.understandingaccounting.org/asc/450/30/#450-30-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:08.097Z to 2026-09-10T00:28:08.097Z Record version: sha256:0a69b834ee73b24f46ad3c33f564e45bbc4bc0489c61e34218607c669c185616 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a lessor's accounting for income from [variable lease payments](https://asc.understandingaccounting.org/glossary/v/#variable-lease-payments "Payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time."), see paragraphs [842-30-25-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-2) (for [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.")), [842-30-25-9](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-9) (for [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.")), and [842-30-25-11](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-11) (for [operating leases](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.")). Source downloaded (UTC): 2026-09-10T00:28:13.837Z to 2026-09-10T00:28:25.535Z Record version: sha256:b4c20571eab6d21dfa83b2df41f512651a8502c39e565376dc5608e55015a423 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-912: Contingencies — Contractors—Federal Government ### Machine-generated study aids ```json { "summary": "ASC 450-912 is the contingencies guidance specific to contractors dealing with the U.S. federal government. It addresses contingencies arising when a contract is terminated for the convenience of the government and contingencies related to subcontractor claims under those terminated contracts. The substantive recognition guidance is largely cross-referenced elsewhere—subcontractor claim contingencies are addressed in paragraph 912-20-25-3, and the former recognition paragraph was superseded by ASU 2014-09.", "key_points": [ "The Subtopic covers contingencies of government contractors associated with contracts terminated for the convenience of the government and subcontractor claims under those terminated contracts (450-912-05-1).", "Scope follows the Overall Subtopic scope in Section 912-10-15, so it applies to entities with federal government contracts (450-912-15-1).", "Paragraph 450-912-25-1, which previously provided recognition guidance, was superseded by Accounting Standards Update No. 2014-09 (the revenue recognition standard).", "Subcontractor claims as they relate to contingencies are addressed by cross-reference to paragraph 912-20-25-3 rather than in this Subtopic (450-912-25-2).", "Because of the ASU 2014-09 supersession, termination-for-convenience claim amounts are now generally analyzed under the contract-with-customer revenue model rather than as contingent gains under Topic 450." ], "categories": [ "Contingencies and guarantees", "Industry-specific", "Recognition", "Revenue" ], "audience_level": "intermediate", "student_note": "This is a short, mostly cross-referencing industry subtopic—its practical significance is that ASU 2014-09 gutted its recognition paragraph, pushing termination claims into the Topic 606 revenue model. The common misunderstanding is assuming Topic 450's gain-contingency rules still govern claims on contracts terminated for the government's convenience.", "related_topics": [ "912-10", "912-20", "912-605", "606", "450-20", "450-30" ], "key_concepts": [ "termination for convenience", "government contracts", "subcontractor claims", "loss contingency", "gain contingency", "terminated contract claims", "superseded guidance" ] } ``` Source downloaded (UTC): 2026-09-10T00:28:13.837Z to 2026-09-10T00:28:13.837Z Record version: sha256:b8b42abd54027795b4c3ecc1813f2674c7382d51679c9988f186b1cdbe0f545a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-912-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/450/912/#00-status) SEC content: no ##### [450-912-00-1](https://asc.understandingaccounting.org/asc/450/912/#450-912-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:13.837Z to 2026-09-10T00:28:13.837Z Record version: sha256:4046d837f1b48c2279e50297136297cf7de2421f3332b89e8ae5a9d646cc7346 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
912-450-25-1SupersededAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:28:16.856Z to 2026-09-10T00:28:16.856Z Record version: sha256:0e6bc9879f2300669d31c251757594ccf04319f1d674ae3ab315dafef9304cd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-912-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/450/912/#05-overview-and-background) SEC content: no ##### [450-912-05-1](https://asc.understandingaccounting.org/asc/450/912/#450-912-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:16.856Z to 2026-09-10T00:28:16.856Z Record version: sha256:ab8eeec8e5b7937b5e30c0c916296394d9b9b9a27a48a51c751a90524bd6d51c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to government contractors related to contingencies associated with contracts terminated for the convenience of the government and [subcontractor claims](https://asc.understandingaccounting.org/glossary/s/#subcontractor-claims "Those obligations of a contractor to a subcontractor that arise from the subcontractor's costs incurred through transactions that were related to a contract terminated but did not result in the transfer of billable materials or services to the contractor before termination.") under terminated contracts. Source downloaded (UTC): 2026-09-10T00:28:19.356Z to 2026-09-10T00:28:19.356Z Record version: sha256:7b8baac88c46c5c8e8d47d9baf5ca7eeb292235369bbca835be185cd2ec28359 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-912-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/450/912/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [450-912-15-1](https://asc.understandingaccounting.org/asc/450/912/#450-912-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:19.356Z to 2026-09-10T00:28:19.356Z Record version: sha256:34e7a36bd04a1e62ed6efef8f826ac2e766e7ef8ce420f8cf208df636af2a4a3 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): 2026-09-10T00:28:25.535Z to 2026-09-10T00:28:25.535Z Record version: sha256:3d15964b7e463a98ae2d0abe89e341643c6bb78037df4ce7c587b3640a5e0185 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-912-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/450/912/#25-recognition) SEC content: no ##### [450-912-25-1](https://asc.understandingaccounting.org/asc/450/912/#450-912-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:25.535Z to 2026-09-10T00:28:25.535Z Record version: sha256:a7b918e08e19ecbeb28c2cf4d131075da2fb2017cdb441fb1e171a362667a60d 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/). #### Subcontractor Claims ##### [450-912-25-2](https://asc.understandingaccounting.org/asc/450/912/#450-912-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:25.535Z to 2026-09-10T00:28:25.535Z Record version: sha256:8e6d3863481037dd262164d591a048d0637d7b144024700e4979735129f9b116 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a discussion of [subcontractor claims](https://asc.understandingaccounting.org/glossary/s/#subcontractor-claims "Those obligations of a contractor to a subcontractor that arise from the subcontractor's costs incurred through transactions that were related to a contract terminated but did not result in the transfer of billable materials or services to the contractor before termination.") as they relate to contingencies, see paragraph [912-20-25-3](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-3). Source downloaded (UTC): 2026-09-10T00:28:27.303Z to 2026-09-10T00:28:57.040Z Record version: sha256:7484ad054d89645883db95fc36fd32a844e4f2461a6a4e844835e44eee586e28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954: Contingencies — Health Care Entities ### Machine-generated study aids ```json { "summary": "This subtopic applies Topic 450 loss-contingency principles to health care entities, principally medical malpractice claims, prepaid health care contract losses, and preferred provider \"stop-loss\" guarantees. Malpractice liabilities must be accrued when the incidents giving rise to the claims occur — including losses from incidents probable of having occurred but not yet reported — based on best estimates of ultimate claim costs, and may not be presented net of anticipated insurance recoveries. Losses on prepaid health care contracts are recognized when it is probable that expected future health care and maintenance costs on a group of existing contracts will exceed anticipated future premiums and stop-loss recoveries.", "key_points": [ "Ultimate costs of malpractice claims and similar contingent liabilities, including litigation and settlement costs, are accrued when the incidents giving rise to the claims occur (450-954-25-2).", "A malpractice liability shall not be presented net of anticipated insurance recoveries; an indemnified entity recognizes an insurance receivable at the same time and on the same basis as the liability, subject to a valuation allowance for uncollectible amounts (450-954-25-2).", "Accruals are based on estimated ultimate losses and settlement costs, not on recommended funding amounts, which improperly include credit for investment income and a margin for risk of adverse deviation (450-954-25-2A); the adverse-deviation factor does not meet the Topic 450 liability recognition criteria (450-954-25-2B(a)).", "Estimated losses from asserted and unasserted claims are accrued individually or on a group basis using all relevant information — industry experience, the entity's own historical experience, existing asserted claims, and reported incidents — and include losses from unreported incidents probable of having occurred before period end (450-954-30-1); estimates are not based on payments to a trust fund (450-954-25-3).", "The greater the volume of operations, the greater the likelihood that the minimum estimate of probable unreported incidents exceeds zero, and industry data must be adjusted for comparability and currency (450-954-30-2).", "Losses under prepaid health care services contracts are recognized when it is probable that expected future health care and maintenance costs (fixed and variable, direct and allocable indirect) under a group of existing contracts will exceed anticipated future premiums and stop-loss insurance recoveries, with contracts grouped consistently with the provider's premium-rating method (450-954-30-3 through 30-4).", "Estimated losses are reviewed and changed at each reporting date, with changes recognized currently as additional expense or a reduction of expense (450-954-35-1); entities must disclose their malpractice insurance program and, if claims are discounted, the discounted carrying amount and the interest rate(s) used (450-954-50-1 through 50-2)." ], "categories": [ "Contingencies and guarantees", "Industry-specific", "Recognition", "Disclosure" ], "audience_level": "intermediate", "student_note": "The classic trap is netting: a health care entity must gross up the malpractice liability and record a separate insurance receivable, never report the liability net of expected recoveries, and must accrue for incurred-but-not-reported incidents rather than only asserted claims. A second trap is confusing an actuary's recommended funding amount (which builds in investment income credit and a risk margin) with the GAAP loss accrual.", "related_topics": [ "450-20", "954-450", "954-720", "944-40", "720-20", "954-810" ], "key_concepts": [ "medical malpractice claims", "incurred but not reported claims", "loss contingency accrual", "gross presentation of insurance recoveries", "insurance receivable", "prepaid health care contract losses", "risk of adverse deviation", "discounting of accrued claims" ] } ``` Source downloaded (UTC): 2026-09-10T00:28:27.303Z to 2026-09-10T00:28:27.303Z Record version: sha256:9c7c00c87f422cd5c94602dd2eaa04247b4667031286d69ad2a98ed2094a7e9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/450/954/#00-status) SEC content: no ##### [450-954-00-1](https://asc.understandingaccounting.org/asc/450/954/#450-954-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:27.303Z to 2026-09-10T00:28:27.303Z Record version: sha256:23e4f54fda7d6c42651fbc40bee70628290b43086cdd663a9d322b3711ca4564 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
Stop-Loss InsuranceAddedAccounting Standards Update No. 2014-0603/14/2014
954-450-25-1AmendedAccounting Standards Update No. 2014-0603/14/2014
954-450-25-2AmendedAccounting Standards Update No. 2010-2408/27/2010
954-450-25-3AmendedAccounting Standards Update No. 2012-0410/01/2012
954-450-25-3AmendedAccounting Standards Update No. 2010-2408/27/2010
954-450-30-4AmendedAccounting Standards Update No. 2014-0905/28/2014
954-450-65-1AddedAccounting Standards Update No. 2010-2408/27/2010
Source downloaded (UTC): 2026-09-10T00:28:29.279Z to 2026-09-10T00:28:29.279Z Record version: sha256:abb21a31027b87879ef02c133dd555c5a9108b1ea384cfdafa6368f84c74ab53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/450/954/#05-overview-and-background) SEC content: no ##### [450-954-05-1](https://asc.understandingaccounting.org/asc/450/954/#450-954-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:29.279Z to 2026-09-10T00:28:29.279Z Record version: sha256:2c79dcd7d9e5903fe7f1aa750ac6e8d22c18eec993175663d34fa95f5de9fb8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on accounting for contingencies for health care entities within the scope of this Topic. Source downloaded (UTC): 2026-09-10T00:28:32.964Z to 2026-09-10T00:28:32.964Z Record version: sha256:9533dddb8ac7a2c51791640dd709301051c2671902a1bc079002befd6207c92d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/450/954/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [450-954-15-1](https://asc.understandingaccounting.org/asc/450/954/#450-954-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:32.964Z to 2026-09-10T00:28:32.964Z Record version: sha256:2e1b7ed531e38952de126f2febdedf41265bd163092fbea361db1ee1886b8e0d 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): 2026-09-10T00:28:39.369Z to 2026-09-10T00:28:39.369Z Record version: sha256:75d25c72b7224eb398d7ad4aa83c70eaba12586eb0fde5086fe7e86acf193bbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/450/954/#25-recognition) SEC content: no ##### [450-954-25-1](https://asc.understandingaccounting.org/asc/450/954/#450-954-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:39.369Z to 2026-09-10T00:28:39.369Z Record version: sha256:5eafd11626b74965d2e8c0e6a84df5a203c08cc0faf44ced5ad690c1f08980e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Sometimes health care providers enter preferred provider arrangements with self-insured employers whereby the provider guarantees that the employer's health care cost will not increase over a specified amount or percentage. In substance, these providers may have provided aggregate [stop-loss insurance](https://asc.understandingaccounting.org/glossary/s/#stop-loss-insurance "A contract in which an entity agrees to indemnify providers for certain health care costs incurred by members.") to the self-insured employer, and a material liability to the provider may exist. Topic 450 provides guidance on accounting for these contingencies. #### Medical Malpractice Claims ##### [450-954-25-2](https://asc.understandingaccounting.org/asc/450/954/#450-954-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:39.369Z to 2026-09-10T00:28:39.369Z Record version: sha256:3eef7a77ef3f5f0df792bdcff3a8328891fa40b3e4ebca822bd68e6d89d65155 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The ultimate costs of malpractice claims or similar contingent liabilities, which include costs associated with litigating or settling claims, shall be accrued when the incidents that give rise to the claims occur. A health care entity shall evaluate its exposure to losses arising from claims and recognize a liability, if appropriate. The liability shall not be presented net of anticipated insurance recoveries. An entity that is indemnified for these liabilities shall recognize an insurance receivable at the same time that it recognizes the liability, measured on the same basis as the liability, subject to the need for a valuation allowance for uncollectible amounts. The provisions in Section 720-20-25 and Subtopic 944-40 discusses accounting for insurance claims costs, including estimates of costs relating to incurred-but-not-reported claims. Subtopic 450-20 discusses the accounting for loss contingencies. ##### [450-954-25-2A](https://asc.understandingaccounting.org/asc/450/954/#450-954-25-2A) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:39.369Z to 2026-09-10T00:28:39.369Z Record version: sha256:ff12aa86a4cfa70fa808afef4f270604a34897b3c3f042703a2fb988f3174b6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pursuant to paragraph [954-720-25-3](https://asc.understandingaccounting.org/asc/720/954/#720-954-25-3), an accrual for malpractice losses shall be based on estimated ultimate losses and costs associated with settling claims. Accruals shall not be based on recommended funding amounts, which in addition to a provision for the actuarially determined liability also includes a provision for both of the following: 1. a Credit for investment income 2. b A margin for risk of adverse deviation. ##### [450-954-25-2B](https://asc.understandingaccounting.org/asc/450/954/#450-954-25-2B) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:39.369Z to 2026-09-10T00:28:39.369Z Record version: sha256:db4f534f1e87dacb693d4dec433de77637e3cb53205dac69dfe320c5df797921 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are examples of factors to consider and adjustments that may be required to convert actuarially determined malpractice funding amounts to an appropriate loss accrual to be reported in the financial statements: 1. a The risk of adverse deviation is an additional cost factor applied to bring a funding requirement to a selected confidence level. This factor does not meet the criteria for recognition as a liability in accordance with Topic 450. 2. b An evaluation shall be made of the extent and validity of industry data when the credibility factor actuarial technique is used. The lower the credibility factor, the greater the blending of industry data. This may create an unacceptable level of industry data at lower confidence levels. Further, a low credibility factor may indicate that provider-specific data is not sufficient to support the claims liability estimation process. 3. c A review of the discounting approach used is necessary to develop the required disclosure. The impact on the discounting calculation of any other adjustment made to the actuarially determined amounts (such as risk of adverse deviation or the credibility of the risk management system) has to be evaluated. 4. d A review of the expenses included in the loss estimation process shall be made. Such expenses include the expense of settlement and litigation (that is, allocated loss adjustment expenses). #### Medical Malpractice Trust Funds ##### [450-954-25-3](https://asc.understandingaccounting.org/asc/450/954/#450-954-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:39.369Z to 2026-09-10T00:28:39.369Z Record version: sha256:e2b28ac7ee52398675c4aa2abf3de346ae61256d56310f5e89583957b1a96150 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimated losses from asserted and unasserted claims shall be accrued and reported, as indicated in paragraphs [954-450-30-1 through 30-2](https://asc.understandingaccounting.org/asc/450/954/#450-954-30-1) . The estimated losses are not based on payments to the trust fund. See paragraph [954-720-25-5](https://asc.understandingaccounting.org/asc/720/954/#720-954-25-5) for guidance concerning an entity that participates in a common trust fund and forfeits its rights to any excess funding. See also paragraph [954-810-45-4](https://asc.understandingaccounting.org/asc/810/954/#810-954-45-4). #### Prepaid Health Care Services ##### [450-954-25-4](https://asc.understandingaccounting.org/asc/450/954/#450-954-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:39.369Z to 2026-09-10T00:28:39.369Z Record version: sha256:f1ce944ccad6d855050e4b63d69ca25053f5ad0bfcb3cb2d04c7df6b85e4bc7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A prepaid health care provider enters into contracts to provide members with specified health care services for specified periods in return for fixed periodic premiums. The premium revenue is expected to cover health care costs and other costs over the terms of the contracts. Only in unusual circumstances would a provider be able to increase premiums on contracts in force to cover expected losses. A provider may be able to control or reduce future health care delivery costs to avoid anticipated losses, but the ability to avoid losses under existing contracts may be difficult to measure or to demonstrate. Associated entities such as hospitals, medical groups, and individual practice associations may enter into similar contracts with prepaid health care providers in which they agree to deliver identified health care services to the providers' members for specified periods in return for fixed fees. Source downloaded (UTC): 2026-09-10T00:28:42.400Z to 2026-09-10T00:28:42.400Z Record version: sha256:ef9d07bbbdd360e1bf0d3f3b69390df851fd46cf6fa5e4590eba49eb6e6587ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/450/954/#30-initial-measurement) SEC content: no #### Medical Malpractice Claims ##### [450-954-30-1](https://asc.understandingaccounting.org/asc/450/954/#450-954-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:42.400Z to 2026-09-10T00:28:42.400Z Record version: sha256:a9359d88adaf330a31002a1d1bd75ae59b2dd6bb93ffe9de3c398350d619c8ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimated losses from asserted and unasserted medical malpractice claims shall be accrued either individually or on a group basis, based on the best estimates of the ultimate costs of the claims and the relationship of past reported incidents to eventual claims payments. All relevant information, including industry experience, the entity's own historical experience, the entity's existing asserted claims, and reported incidents, shall be used in estimating the expected amount of claims. The accrual includes an estimate of the losses that will result from unreported incidents, which are probable of having occurred before the end of the reporting period. ##### [450-954-30-2](https://asc.understandingaccounting.org/asc/450/954/#450-954-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:42.400Z to 2026-09-10T00:28:42.400Z Record version: sha256:388cca4f1f4849dc1fa7ddba3da95973414a67d4459426349701b8aae32ad630 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In estimating the probability that unreported incidents have occurred, some health care entities may develop a range of possible estimates of the number of unreported incidents, including zero. However, the greater the volume of a health care entity's operations, the greater the likelihood that the entity's minimum estimate of the number of probable unreported incidents will be greater than zero. In estimating losses from malpractice claims, a health care entity may need to modify data drawn from industry experience so it is relevant to developing an estimate that is specific to the entity. Various factors (such as the nature of operations, size, and the provider's past experience) shall be considered in assessing comparability. Further, industry data that are not current may not be relevant. #### Prepaid Health Care Services ##### [450-954-30-3](https://asc.understandingaccounting.org/asc/450/954/#450-954-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:42.400Z to 2026-09-10T00:28:42.400Z Record version: sha256:6d8f1930ea3a55ddd19c697745c3953331fb4a9fcd2e56a150a430d60e9e9862 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The estimated future health care costs and maintenance costs to be considered in determining whether a loss has been incurred shall include fixed and variable, direct and allocable indirect costs. ##### [450-954-30-4](https://asc.understandingaccounting.org/asc/450/954/#450-954-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:42.400Z to 2026-09-10T00:28:42.400Z Record version: sha256:4d6fd651c5533d7c4bc19367919b59f539bc3b7740ac289b0dd0636aee7dbbe3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Losses under [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.") contracts shall be recognized when it is probable that expected future health care costs and maintenance costs under a group of existing contracts will exceed anticipated future premiums and stop-loss insurance recoveries on those contracts. To determine the need to recognize a loss, contracts shall be grouped in a manner consistent with the provider's method of establishing premium rates, for example, by community rating practices, geographical area, or statutory requirements, to determine whether a loss has been incurred. Source downloaded (UTC): 2026-09-10T00:28:45.873Z to 2026-09-10T00:28:45.873Z Record version: sha256:b2e4c6e4818b469172896e281cb2bbc756a2ad85c0463b11f960e394aebcda2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/450/954/#35-subsequent-measurement) SEC content: no #### Medical Malpractice Claims ##### [450-954-35-1](https://asc.understandingaccounting.org/asc/450/954/#450-954-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:45.873Z to 2026-09-10T00:28:45.873Z Record version: sha256:f6faaaea0562204a8e60f514da732b0d109458e00a11a0b1c0c6495c32f7a707 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimated losses are reviewed and changed, if necessary, at each reporting date. The amounts of the changes are recognized currently as additional expense or as a reduction of expense. Source downloaded (UTC): 2026-09-10T00:28:49.716Z to 2026-09-10T00:28:49.716Z Record version: sha256:fd679d972e6c1d01f151f16770605332faa14dee5059d0307c61bfb3b849cb8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/450/954/#50-disclosure) SEC content: no #### Medical Malpractice Insurance ##### [450-954-50-1](https://asc.understandingaccounting.org/asc/450/954/#450-954-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:49.716Z to 2026-09-10T00:28:49.716Z Record version: sha256:931aea4e508cb28f6ff2a8640fffc8b0ade609ccd6e38d6d9e8cbc7c6e5cb242 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Health care entities shall disclose their program of medical malpractice insurance coverages. ##### [450-954-50-2](https://asc.understandingaccounting.org/asc/450/954/#450-954-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:49.716Z to 2026-09-10T00:28:49.716Z Record version: sha256:c861759e0996a8c6f95fdff89c4c157bd8bc3c3e95c1fa07028540e230853190 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Health care entities that discount accrued malpractice claims shall disclose in the notes to the financial statements the carrying amount of accrued malpractice claims that are discounted in the financial statements and the interest rate or rates used to discount those claims. Source downloaded (UTC): 2026-09-10T00:28:53.753Z to 2026-09-10T00:28:53.753Z Record version: sha256:f680f3d8cfa9dc6652b216d621188213127ee8db20ecacd2ee257fab38892c2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-954-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/450/954/#65-transition-and-open-effective-date-information) SEC content: no ##### [450-954-65-1](https://asc.understandingaccounting.org/asc/450/954/#450-954-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:53.753Z to 2026-09-10T00:28:53.753Z Record version: sha256:1e52ca92c334969069c2215d4c4c1a3a917b178dac789d4f3b91091435742a5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/18/2012 after the end of the transition period stated in Accounting Standards Update No. 2010-24, _Health Care Entities (Topic 954): Presentation of Insurance Claims and Related Insurance Recoveries_. Source downloaded (UTC): 2026-09-10T00:28:58.769Z to 2026-09-10T00:29:12.159Z Record version: sha256:a37c925f139e0d91e9c4dd1da53695837ffe29bb002a25a3f16fc978aac2643d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-958: Contingencies — Not-for-Profit Entities ### Machine-generated study aids ```json { "summary": "This Subtopic applies the general loss contingency model of Topic 450 to not-for-profit entities. It identifies two NFP-specific triggers — noncompliance with donor-imposed restrictions on contributed assets and problems with (or absence of a determination letter for) tax-exempt status — that may require accrual of a loss contingency under Subtopic 450-20 and disclosure under Section 450-20-50.", "key_points": [ "NFPs must comply with the general contingency standards in Topic 450 in addition to this Subtopic (450-958-05-1).", "A liability may have to be accrued for loss contingencies arising from noncompliance with donor-imposed restrictions on contributed assets or from a problem with the NFP's tax-exempt status or a missing determination letter (450-958-25-1).", "Section 450-20-25 governs whether an NFP has incurred a loss when one of these circumstances arises (450-958-25-1).", "Tax positions taken in classifying an entity as tax-exempt are addressed in Subtopic 740-20 when there is a tax-exempt status problem or no determination letter (450-958-25-1).", "Noncompliance with donor-imposed restrictions must be disclosed if there is a reasonable possibility a material contingent liability was incurred at the financial statement date, or at least a reasonable possibility the noncompliance could cause a material loss of revenue or inability to continue as a going concern (450-958-50-2).", "If the noncompliance results from failure to maintain an appropriate composition of assets in amounts needed to comply with all donor restrictions, the amounts and circumstances must be disclosed (450-958-50-3)." ], "categories": [ "Contingencies and guarantees", "Not-for-profit", "Recognition", "Disclosure" ], "audience_level": "intermediate", "student_note": "Remember that this Subtopic adds nothing to the probable/reasonably possible/remote framework — it just names the NFP-specific fact patterns that trigger it. A common misunderstanding is thinking donor-restriction noncompliance is only a disclosure matter; it can require accrual of a liability, and separate disclosure is required when the NFP failed to keep assets composed in amounts needed to satisfy donor restrictions.", "related_topics": [ "450-20", "958-10", "740-20", "958-605", "958-210", "205-40" ], "key_concepts": [ "loss contingency", "donor-imposed restrictions", "tax-exempt status", "determination letter", "reasonable possibility", "going concern", "composition of assets", "accrual of liability" ] } ``` Source downloaded (UTC): 2026-09-10T00:28:58.769Z to 2026-09-10T00:28:58.769Z Record version: sha256:0c7d616ece20ea78915803b44a37b558f298852d65d1af020e5ed06f3ac9040d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-958-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/450/958/#00-status) SEC content: no ##### [450-958-00-1](https://asc.understandingaccounting.org/asc/450/958/#450-958-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:28:58.769Z to 2026-09-10T00:28:58.769Z Record version: sha256:3a98b4fbf2d2e678c3bc722d8dc8b9dfbdd00374946af3ff0f1a2e50002b721c 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
ContributionAmendedAccounting Standards Update No. 2018-0806/21/2018
ContributionAmendedAccounting Standards Update No. 2010-0701/28/2010
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Donor-Imposed RestrictionAmendedAccounting Standards Update No. 2016-1408/18/2016
Promise to GiveAddedAccounting Standards Update No. 2018-0806/21/2018
Source downloaded (UTC): 2026-09-10T00:29:01.058Z to 2026-09-10T00:29:01.058Z Record version: sha256:10038204553444074fd6278fadd2edd5e0987378b3b23f0a333d38078ab310fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-958-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/450/958/#05-overview-and-background) SEC content: no ##### [450-958-05-1](https://asc.understandingaccounting.org/asc/450/958/#450-958-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:01.058Z to 2026-09-10T00:29:01.058Z Record version: sha256:05a609256c5d8faf174049a8b2e4f78d443057393b5d06c65f156a125f36077a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on contingencies 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). NFPs also shall comply with the applicable standards in Topic 450. Source downloaded (UTC): 2026-09-10T00:29:02.739Z to 2026-09-10T00:29:02.739Z Record version: sha256:ccc9cce4d83b8e480ba411e624f535f402567066ee1b408d2ccdab4fa35dcb4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-958-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/450/958/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [450-958-15-1](https://asc.understandingaccounting.org/asc/450/958/#450-958-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:02.739Z to 2026-09-10T00:29:02.739Z Record version: sha256:4ef4f2f61690d72e1c156aca1b9fd588ff496fae19becbeedd1d012ca68fd581 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): 2026-09-10T00:29:10.116Z to 2026-09-10T00:29:10.116Z Record version: sha256:3fc8c5a24b46d61255b6bcd7b2b9c4adfe5ab964a3eeaffe2df0f3b378c32a9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-958-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/450/958/#25-recognition) SEC content: no ##### [450-958-25-1](https://asc.understandingaccounting.org/asc/450/958/#450-958-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:10.116Z to 2026-09-10T00:29:10.116Z Record version: sha256:b3add84f19443ee85bc11063354da1f454ce4dea97b177cb4cd1a32d3f4f0509 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In conformity with Subtopic 450-20, a liability may have to be accrued for [loss contingencies](https://asc.understandingaccounting.org/glossary/l/#loss-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. The term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses."). Examples of circumstances that may result in such contingencies include the following: 1. a Noncompliance with [donor-imposed restrictions](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions.") on contributed assets, which, although rare, does occur, sometimes as a result of events occurring subsequent to receiving a [contribution](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") 2. b A problem with the [not-for-profit entity's](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.") (NFP's) tax-exempt status, or that a determination letter regarding that status has not been received. Section 450-20-25 applies if one of these circumstances raises the possibility that an NFP may have incurred a loss. Additionally, see Subtopic 740-20 about tax positions taken when classifying an entity as tax-exempt if there is a problem with an NFP's tax-exempt status or if a determination letter has not been received. Source downloaded (UTC): 2026-09-10T00:29:12.159Z to 2026-09-10T00:29:12.159Z Record version: sha256:ad721dfcba2589d96fc0406255cc0feebfc4c87e28e20fcb13f91203aa9fa333 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-958-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/450/958/#50-disclosure) SEC content: no ##### [450-958-50-1](https://asc.understandingaccounting.org/asc/450/958/#450-958-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:12.159Z to 2026-09-10T00:29:12.159Z Record version: sha256:a31007a05910d0bd4f2aa3ed8bab191660cc2e344168babadf94ee1764903149 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In conformity with Section 450-20-50, the notes to financial statements may have to include information about [loss contingencies](https://asc.understandingaccounting.org/glossary/l/#loss-contingency "An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. The term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses."). ##### [450-958-50-2](https://asc.understandingaccounting.org/asc/450/958/#450-958-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:12.159Z to 2026-09-10T00:29:12.159Z Record version: sha256:cc795468870de421cb5aaca00761ccf65a6adee170c29198c2ee0f4f82b97ded Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, noncompliance with [donor-imposed restrictions](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions.") shall be disclosed if either of the following is true: 1. a There is a reasonable possibility that a material contingent liability has been incurred at the date of the financial statements. 2. b There is at least a reasonable possibility that the noncompliance could lead to a material loss of revenue or could cause an entity to be unable to continue as a going concern. ##### [450-958-50-3](https://asc.understandingaccounting.org/asc/450/958/#450-958-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:12.159Z to 2026-09-10T00:29:12.159Z Record version: sha256:2fd580a359cfeacd7b0cdeaaf0b6936d4ef5739c0c5f41a762450654a685ed07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the noncompliance results from a [not-for-profit entity's](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.") (NFP's) failure to maintain an appropriate composition of assets in amounts needed to comply with all donor restrictions, the amounts and circumstances shall be disclosed. Source downloaded (UTC): 2026-09-10T00:29:15.540Z to 2026-09-10T00:29:23.763Z Record version: sha256:8d771a6309e8695f1f8add3d0c47e5f898d923fb470cc65850a28cb13c02e0d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-980: Contingencies — Regulated Operations ### Machine-generated study aids ```json { "summary": "This subtopic addresses loss contingencies for entities with regulated operations (rate-regulated utilities). Its core rule: when a regulator allows an entity to recover an amount for a contingency in rates even though the amount does not meet the accrual criteria of 450-20-25-2, and the regulator requires the entity to remain accountable for amounts collected but not yet spent for the intended purpose, the increased charges to customers give rise to a liability rather than income.", "key_points": [ "Scope follows the general regulated-operations scope in Section 980-10-15 (450-980-15-1), i.e., entities whose rates are set by a regulator and are designed to recover specific costs.", "A regulator may direct inclusion of a contingency amount in allowable costs for rate-making purposes even when the probable-and-reasonably-estimable criteria of 450-20-25-2 are not met (450-980-25-1).", "Regulatory approval of rate recovery does not itself justify accruing a loss contingency under Subtopic 450-20.", "If the regulator requires the entity to remain accountable for amounts charged in rates and not yet expended for the intended purpose, the increased charges to customers create a liability (450-980-25-1).", "That liability is recognized under the regulatory-liability guidance in paragraph 980-405-25-1(b)." ], "categories": [ "Contingencies and guarantees", "Recognition", "Industry-specific" ], "audience_level": "intermediate", "student_note": "Tested point: rate recovery ordered by a regulator is not a substitute for the 450-20-25-2 accrual test — the amount collected is a regulatory liability, not a loss accrual or immediate revenue. Students often wrongly assume regulator-approved cost recovery automatically means the contingency is 'probable' and should be expensed.", "related_topics": [ "450-20", "980-10", "980-405", "980-340", "410-20" ], "key_concepts": [ "loss contingency", "rate-regulated operations", "allowable costs", "regulatory liability", "rate-making", "accountability to customers", "accrual criteria" ] } ``` Source downloaded (UTC): 2026-09-10T00:29:15.540Z to 2026-09-10T00:29:15.540Z Record version: sha256:47c86ca5bc3bca90069fac7c9a714a7fce0f0a514b7b0a1cdd75f3aded0dd4d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-980-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/450/980/#05-overview-and-background) SEC content: no ##### [450-980-05-1](https://asc.understandingaccounting.org/asc/450/980/#450-980-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:15.540Z to 2026-09-10T00:29:15.540Z Record version: sha256:00ce5d32cf7661436525fb4b91ab64e55b382d04c49a8a6a978be8f990d465c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for contingencies for entities with regulated operations. Source downloaded (UTC): 2026-09-10T00:29:17.238Z to 2026-09-10T00:29:17.238Z Record version: sha256:fb484d45be9367751bbc4f0206fb29e9c618c13a6cd08eaf1b154aa49ac9f207 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-980-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/450/980/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [450-980-15-1](https://asc.understandingaccounting.org/asc/450/980/#450-980-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:17.238Z to 2026-09-10T00:29:17.238Z Record version: sha256:74bd8f5e9469b298c846dab30a3055361b7582f5e76dcdd8dedaab7d92e661e8 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): 2026-09-10T00:29:23.763Z to 2026-09-10T00:29:23.763Z Record version: sha256:c7842b423f8ae931038f0207101ec7c25fef201827208bfab6727f4e8543b59b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 450-980-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/450/980/#25-recognition) SEC content: no ##### [450-980-25-1](https://asc.understandingaccounting.org/asc/450/980/#450-980-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:23.763Z to 2026-09-10T00:29:23.763Z Record version: sha256:f12000a03a42b1759ca9d0f95026570d53fa06dbf993be3cf62db42c146dd6c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) specifies criteria for recording estimated losses from loss contingencies. A regulator may direct a regulated entity to include an amount for a contingency in [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.") for rate-making purposes even though the amount does not meet those criteria for recording. If 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 resulting increased charges to customers create a liability (see paragraph [980-405-25-1(b)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1)).