ASC 460-10
Overall
460 Guarantees
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ASC 460-10 requires a guarantor to recognize a liability at the inception of a guarantee for the noncontingent "stand-ready" obligation it undertakes, generally measured at the fair value of the guarantee (with the premium received as a practical expedient), even if payment under the guarantee is not probable. It also imposes extensive disclosures about each guarantee (nature, term, triggering events, maximum potential undiscounted future payments, carrying amount, recourse and collateral) even when the likelihood of payment is remote. Separate Product Warranties Subsections apply ASC 450-20 loss-accrual conditions to warranty obligations and require a tabular rollforward of the aggregate product warranty liability.
Key points (7)
- The scope covers four contract types: contracts contingently requiring payment based on an underlying related to an asset, liability, or equity security of the guaranteed party; performance guarantees; indemnification agreements; and indirect guarantees of the indebtedness of others (460-10-15-4), with exclusions including lessee residual value guarantees, insurance contracts, vendor rebates, guarantees of the guarantor's own future performance, and credit derivatives at fair value under Topic 815 (460-10-15-7).
- A guarantee creates two obligations — a noncontingent stand-ready obligation and a contingent obligation to pay if triggering events occur — and no bifurcation is required unless the guarantee is within the scope of Subtopic 326-20, in which case expected credit losses are measured separately from the guarantee's fair value (460-10-25-2; 460-10-30-5).
- At inception the guarantor shall recognize a liability for the guarantee (460-10-25-4), and Section 450-20-25 does not prohibit that recognition merely because payment is not probable (460-10-25-3).
- Initial measurement objective is fair value — the premium received in a standalone arm's-length transaction is a practical expedient, and in a multiple-element transaction fair value must be estimated — but the liability is the greater of that fair value amount and any contingent loss required to be accrued under Section 450-20-30 (460-10-30-2 through 30-4).
- Certain guarantees are exempt from recognition and initial measurement but not from disclosure: derivatives at fair value, product warranties and guarantees whose underlying relates to the function of nonfinancial assets, contingent consideration in a business combination, equity-classified obligations, and intercompany/parent-subsidiary guarantees (460-10-25-1; 460-10-15-10).
- The initial liability is typically reduced by a credit to earnings as the guarantor is released from risk (upon expiration or settlement, by systematic and rational amortization, or as fair value changes), but fair value may not be used subsequently unless justified under GAAP; the contingent aspect follows Subtopic 450-20 (or 326-20 or 815) (460-10-35-1 through 35-4).
- Disclosure is required for each guarantee or group of similar guarantees even if payment is remote — nature and term, triggering events, payment/performance risk status, maximum potential undiscounted future payments, carrying amount, recourse and collateral (460-10-50-4) — while product warranties are exempt from the maximum-payment disclosure but require a policy disclosure and a tabular reconciliation of the aggregate warranty liability, which is accrued under the 450-20-25-2 conditions (460-10-25-5; 460-10-50-8).
For students. The classic exam trap is thinking a guarantee liability arises only when loss is probable under ASC 450-20; ASC 460 instead requires day-one recognition of the stand-ready obligation at fair value even when payment is remote, and the disclosure requirements (including maximum potential undiscounted payments) reach many guarantees that are exempt from recognition, such as product warranties and intercompany guarantees.
stand-ready obligationnoncontingent versus contingent aspectguarantee liability at inceptionfair value practical expedientmaximum potential amount of future paymentsproduct warranty liability rollforwardindemnification agreementindirect guarantee of indebtedness of others
Machine-generated study aid for ASC 460-10. Check the source paragraphs below.
460-10-00Status
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460-10-00-1
The following table identifies the changes made to this Subtopic.
460-10-05Overview and Background
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460-10-05-1
The Guarantees Topic establishes the accounting and disclosure requirements to be met by a guarantor for certain guarantees issued and outstanding. This Topic contains only the Overall Subtopic. The guidance in this Subtopic is presented in the following two Subsections:
- aGeneral
- bProduct Warranties.
460-10-05-2
The General Subsections address the recognition of a liability by a guarantor at the inception of a guarantee for the obligations the guarantor has undertaken in issuing that guarantee, and require certain disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees.
460-10-05-3
Additional guidance about certain guarantees, such as put options, is provided in other Topics. Section 460-10-60 provides links to those other Topics. Guarantees that are unique to a particular industry are discussed in the Topic for that industry.
Product Warranties
460-10-05-4
The Product Warranties Subsections address accounting for product warranties.
460-10-10Objectives
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460-10-10-1
The objective of the Guarantees Topic is to achieve transparency in a guarantor's financial reporting about the obligations and risks arising from issuing guarantees in the following two ways:
- aTo provide informative disclosures about the nature and amount of guarantees in the financial statements of guarantors
- bTo help ensure comparability of financial reporting for guarantees issued with a separately identified premium and guarantees issued without a separately identified premium by requiring recognition of a liability for the obligation incurred by a guarantor in issuing a guarantee.
460-10-15Scope and Scope Exceptions
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Overall Guidance
460-10-15-1
The General Subsection of this Section establishes the pervasive scope for the Guarantees Topic, with specific exceptions noted in the other Subsections of this Section.
Entities
460-10-15-2
The guidance in the Guarantees Topic applies to all entities.
Transactions
460-10-15-3
The transactions guidance for the scope of the Guarantees Topic is organized as follows:
- aTransactions that are within the scope of this Topic
- bTransactions that are excluded from the scope of this Topic.
460-10-15-4
Except as provided in paragraph 460-10-15-7, the provisions of this Topic apply to the following types of guarantee contracts:
- a Contracts that contingently require a guarantor to make payments (as described in the following paragraph) to a guaranteed party based on changes in an underlying that is related to an asset, a liability, or an equity security of the guaranteed party. For related implementation guidance, see paragraph 460-10-55-2.
- b Contracts that contingently require a guarantor to make payments (as described in the following paragraph) to a guaranteed party based on another entity's failure to perform under an obligating agreement (performance guarantees). For related implementation guidance, see paragraph 460-10-55-12.
- c Indemnification agreements (contracts) that contingently require an indemnifying party (guarantor) to make payments to an indemnified party (guaranteed party) based on changes in an underlying that is related to an asset, a liability, or an equity security of the indemnified party.
- d Indirect guarantees of the indebtedness of others, even though the payment to the guaranteed party may not be based on changes in an underlying that is related to an asset, a liability, or an equity security of the guaranteed party.
460-10-15-5
Payments by a guarantor (referred to in the preceding paragraph) could be either in cash, financial instruments, other assets, shares of its stock, or provision of services. Further, a guarantor's payments could involve a gross settlement, in which certain assets are concurrently transferred to the guarantor in exchange for the specified consideration (as in the settlement of an exercised put option or other contingent forward contract), or a net settlement. Thus, both financial and nonfinancial contracts are included in the scope of paragraph 460-10-15-4.
460-10-15-6
For guarantees of debt, it does not matter whether the guaranteed party is the creditor or the debtor, that is, whether the guarantor is required to pay the creditor or the debtor (who would then have the funds to pay its debt to the creditor). The underlying (that is, the debtor's failure to make scheduled payments or the occurrence of other events of default) could be related to either the creditor's receivable or the debtor's liability.
460-10-15-7
The guidance in this Topic does not apply to the following types of guarantee contracts:
- a A guarantee or an indemnification that is excluded from the scope of Topic 450 (see paragraph 450-20-15-2—primarily employment-related guarantees)
- b A lessee's guarantee of the residual value of the underlying asset at the expiration of the lease term under Topic 842
- c A contract that meets the characteristics in paragraph 460-10-15-4(a) but is accounted for as variable lease payments under Topic 842
- d A guarantee (or an indemnification) that is issued by either an insurance entity or a reinsurance entity and accounted for under Topic 944 (including guarantees embedded in either insurance contracts or investment contracts)
- e A contract that meets the characteristics in paragraph 460-10-15-4(a) but provides for payments that constitute a vendor rebate (by the guarantor) based on either the sales revenues of, or the number of units sold by, the guaranteed party
- f A contract that provides for payments that constitute a vendor rebate (by the guarantor) based on the volume of purchases by the buyer (because the underlying relates to an asset of the seller, not the buyer who receives the rebates)
- g A guarantee or an indemnification whose existence prevents the guarantor from being able to either account for a transaction as the sale of an asset that is related to the guarantee's underlying or recognize in earnings the profit from that sale transaction
- h A registration payment arrangement within the scope of Subtopic 825-20 (see Section 825-20-15)
- i A guarantee or an indemnification of an entity's own future performance (for example, a guarantee that the guarantor will not take a certain future action)
- j A guarantee that is accounted for as a credit derivative at fair value under Topic 815.
- k A sales incentive program in which a manufacturer contractually guarantees to reacquire the equipment at a guaranteed price or guaranteed prices at a specified time, or at specified time periods (for example, the entity is obligated to reacquire the equipment or the entity is obligated at the customer's request to reacquire the equipment). That program shall be evaluated in accordance with Topic 606 on revenue from contracts with customers, specifically the implementation guidance on repurchase agreements in paragraphs .
For related implementation guidance, see Section 460-10-55.
Product Warranties
Overall Guidance
460-10-15-8
The Product Warranties Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Section, see paragraph 460-10-15-1, with specific transaction exceptions noted below.
Transactions
460-10-15-9
The guidance in the Product Warranties Subsections applies only to product warranties, which include all of the following:
- aProduct warranties issued by the guarantor, regardless of whether the guarantor is required to make payment in services or cash
- bSeparately priced extended warranty or product maintenance contracts and warranties that provide a customer with a service in addition to the assurance that the product complies with agreed-upon specifications (see paragraphs for guidance on determining whether a warranty provides a customer with a service in addition to the assurance that the product complies with agreed-upon specifications)
- cWarranty obligations that are incurred in connection with the sale of the product, that is, obligations in which the customer does not have the option to purchase the warranty separately and that do not provide the customer with a service in addition to the assurance that the product complies with agreed-upon specifications.
Other Considerations
460-10-15-10
The guidance in the General Subsections of Sections 460-10-25 and 460-10-30 does not apply to guarantee contracts within the scope of the Product Warranties Subsections. Those guarantee contracts are subject, however, to the requirements in the General Subsection of Section 460-10-50.
460-10-25Recognition
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460-10-25-1
The following types of guarantees are not subject to the recognition provisions of this Subsection:
- aA guarantee that is accounted for as a derivative instrument at fair value under Topic 815.
- bA product warrantyor other guarantee for which the underlying is related to the performance (regarding function, not price) of nonfinancial assets that are owned by the guaranteed party (see paragraph 460-10-15-9 for related guidance).
- cA guarantee issued in a business combination or an acquisition by a not-for-profit entity that represents contingent consideration (as addressed in Subtopics 805-30 and 958-805).
- d
- eA guarantee by an original lessee that has become secondarily liable under a new lease that relieved the original lessee from being the primary obligor (that is, principal debtor) under the original lease, as discussed in paragraph 842-20-40-3. This exception shall not be applied by analogy to other secondary obligations.
- fA guarantee issued either between parents and their subsidiaries or between corporations under common control.
- gA parent's guarantee of its subsidiary's debt to a third party (whether the parent is a corporation or an individual).
- hA subsidiary's guarantee of the debt owed to a third party by either its parent or another subsidiary of that parent.
460-10-25-2
The issuance of a guarantee obligates the guarantor (the issuer) in two respects:
- aThe guarantor undertakes an obligation to stand ready to perform over the term of the guarantee in the event that the specified triggering events or conditions occur (the noncontingent aspect).
- bThe guarantor undertakes a contingent obligation to make future payments if those triggering events or conditions occur (the contingent aspect).
460-10-25-3
Because the issuance of a guarantee imposes a noncontingent obligation to stand ready to perform in the event that the specified triggering events or conditions occur, the provisions of Section 450-20-25 regarding a guarantor's contingent obligation under a guarantee should not be interpreted as prohibiting a guarantor from initially recognizing a liability for a guarantee even though it is not probable that payments will be required under that guarantee. Similarly, for guarantees within the scope of Subtopic 326-20, the requirement to measure a guarantor's expected credit loss on the guarantee should not be interpreted as prohibiting a guarantor from initially recognizing a liability for the noncontingent aspect of a guarantee.
460-10-25-4
At the inception of a guarantee, a guarantor shall recognize in its statement of financial position a liability for that guarantee. This Subsection does not prescribe a specific account for the guarantor's offsetting entry when it recognizes a liability at the inception of a guarantee. That offsetting entry depends on the circumstances in which the guarantee was issued. See paragraph 460-10-55-23 for implementation guidance.
Product Warranties
Warranty Obligations Incurred in Connection with the Sale of Goods or Services
460-10-25-5
Because of the uncertainty surrounding claims that may be made under warranties, warranty obligations fall within the definition of a contingency. Losses from warranty obligations shall be accrued when the conditions in paragraph 450-20-25-2 are met.
460-10-25-6
The condition in paragraph 450-20-25-2(a) is met at the date of an entity's financial statements if, based on available information, it is probable that customers will make claims under warranties relating to goods or services that have been sold. Satisfaction of the condition in paragraph 450-20-25-2(b) will normally depend on the experience of an entity or other information. In the case of an entity that has no experience of its own, reference to the experience of other entities in the same business may be appropriate. Inability to make a reasonable estimate of the amount of a warranty obligation at the time of sale because of significant uncertainty about possible claims (that is, failure to satisfy condition [b] in that paragraph) precludes accrual and, if the range of possible loss is wide, may raise a question about whether a sale should be recorded before expiration of the warranty period or until sufficient experience has been gained to permit a reasonable estimate of the obligation.
460-10-25-7
The conditions in paragraph 450-20-25-2 may be considered in relation to individual sales made with warranties or in relation to groups of similar types of sales made with warranties. If those conditions are met, accrual shall be made even though the particular parties that will make claims under warranties may not be identifiable.
Separately Priced Extended Warranty or Product Maintenance Contracts
460-10-25-8
Topic 606 on revenue from contracts with customers, and specifically the guidance on warranties in paragraphs , provide guidance on revenue recognition by sellers of extended warranty or product maintenance contracts and warranties that provide a customer with a service in addition to the assurance that the product complies with agreed-upon specifications.
460-10-25-8A
Paragraph 605-20-25-6 provides guidance on recognizing a loss on separately priced extended warranty and product maintenance contracts.
460-10-30Initial Measurement
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460-10-30-1
The types of guarantees identified in paragraph 460-10-25-1 are not subject to the initial measurement provisions of this Subsection.
Fair Value Objective
460-10-30-2
Except as indicated in paragraphs , the objective of the initial measurement of a guarantee liability is the fair value of the guarantee at its inception. For example:
- aIf a guarantee is issued in a standalone arm's-length transaction with an unrelated party, the liability recognized at the inception of the guarantee shall be the premium received or receivable by the guarantor as a practical expedient.
- bIf a guarantee is issued as part of a transaction with multiple elements with an unrelated party (such as in conjunction with selling an asset), the liability recognized at the inception of the guarantee should be an estimate of the guarantee's fair value. In that circumstance, a guarantor shall consider what premium would be required by the guarantor to issue the same guarantee in a standalone arm's-length transaction with an unrelated party as a practical expedient.
- cIf a guarantee is issued as a contribution to an unrelated party, the liability recognized at the inception of the guarantee shall be measured at its fair value, consistent with the requirement to measure the contribution made at fair value, as prescribed in Section 720-25-30. For related implementation guidance, see paragraph 460-10-55-14.
Guarantees Not within the Scope of Subtopic 326-20
460-10-30-3
In the event that, at the inception of the guarantee, the guarantor is required to recognize a liability under Section 450-20-25 for the related contingent loss, the liability to be initially recognized for that guarantee shall be the greater of the following:
- aThe amount that satisfies the fair value objective as discussed in the preceding paragraph
- bThe contingent liability amount required to be recognized at inception of the guarantee by Section 450-20-30.
460-10-30-4
For many guarantors, it would be unusual at the inception of the guarantee for the contingent liability amount under (b) in the preceding paragraph to exceed the amount that satisfies the fair value objective under (a) in the preceding paragraph. An example of that unusual circumstance is a guarantee for which, at inception, there is a high (probable) likelihood that the guarantor will be required to pay the maximum potential settlement at the end of the six-month term and a low likelihood that the guarantor will not be required to make any payment at the end of the six-month term. The amount that satisfies the fair value objective would include consideration of the low likelihood that no payment will be required, but the accrual of the contingent loss under Section 450-20-30 would be based solely on the best estimate of the settlement amount whose payment is probable (the maximum potential settlement amount in this case). This example is considered to be an unusual circumstance because of the high likelihood at inception that the maximum potential settlement amount will be paid, resulting in a substantial initial fair value for that guarantee. Another example in which the contingent liability amount required to be recognized under (b) in the preceding paragraph exceeds the fair value at inception under (a) in the preceding paragraph would involve an undiscounted accrual under Subtopic 450-20 for a guarantee payment that is expected to occur many years in the future.
Guarantees within the Scope of Subtopic 326-20
460-10-30-5
At the inception of a guarantee within the scope of Subtopic 326-20 on financial instruments measured at amortized cost, the guarantor is required to recognize both of the following as liabilities:
- aThe amount that satisfies the fair value objective in accordance with paragraph 460-10-30-2
- bThe contingent liability related to the expected credit loss for the guarantee measured under Subtopic 326-20.
460-10-35Subsequent Measurement
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460-10-35-1
This Subsection does not describe in detail how the guarantor's liability for its obligations under the guarantee would be measured after its initial recognition. The liability that the guarantor initially recognized under paragraph 460-10-25-4 would typically be reduced (by a credit to earnings) as the guarantor is released from risk under the guarantee.
460-10-35-2
Depending on the nature of the guarantee, the guarantor's release from risk has typically been recognized over the term of the guarantee using one of the following three methods:
- aOnly upon either expiration or settlement of the guarantee
- bBy a systematic and rational amortization method
- cAs the fair value of the guarantee changes.
460-10-35-4
The discussion in paragraph 460-10-35-2 about how a guarantor typically reduces the liability that it initially recognized does not encompass the recognition and subsequent adjustment of the contingent liability related to the contingent loss for the guarantee. The contingent aspect of the guarantee shall be accounted for in accordance with Subtopic 450-20unless the guarantee is accounted for as a derivative instrument under Topic 815or the guarantee is within the scope of Subtopic 326-20 on financial instruments measured at amortized cost. For guarantees within the scope of Subtopic 326-20, the expected credit losses (the contingent aspect) of the guarantee shall be accounted for in accordance with that Subtopic in addition to and separately from the fair value of the guarantee liability (the noncontingent aspect) accounted for in accordance with paragraph 460-10-30-5.
460-10-45Other Presentation Matters
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460-10-45-1
Paragraph 326-20-45-2 states that an accrual for credit loss on a financial instrument with off-balance-sheet risk (including financial guarantees and financial standby letters of credit) shall be a liability that is recorded separate from a valuation account related to a recognized financial instrument.
460-10-50Disclosure
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Information about Each Guarantee or Group of Similar Guarantees
460-10-50-1
The requirements in paragraphs apply to guarantees, including guarantees that are outside the scope of paragraph 460-10-15-4; however, they do not apply to guarantees described in paragraph 460-10-15-7.
460-10-50-2
An entity shall disclose certain loss contingencies even though the possibility of loss may be remote. The common characteristic of those contingencies is a guarantee that provides a right to proceed against an outside party in the event that the guarantor is called on to satisfy the guarantee. Examples include the following:
- aGuarantees of indebtedness of others, including indirect guarantees of indebtedness of others
- bObligations of commercial banks under standby letters of credit
- cGuarantees to repurchase receivables (or, in some cases, to repurchase the related property) that have been sold or otherwise assigned
- dOther agreements that in substance have the same guarantee characteristic.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1For interim and annual reporting periods, an entity shall disclose certain loss contingencies even though the possibility of loss may be remote. The common characteristic of those contingencies is a guarantee that provides a right to proceed against an outside party in the event that the guarantor is called on to satisfy the guarantee. Examples include the following: - aGuarantees of indebtedness of others, including indirect guarantees of indebtedness of others
- bObligations of commercial banks under standby letters of credit
- cGuarantees to repurchase receivables (or, in some cases, to repurchase the related property) that have been sold or otherwise assigned
- dOther agreements that in substance have the same guarantee characteristic.
460-10-50-3
The disclosure shall include the nature and amount of the guarantee. Consideration should be given to disclosing, if estimable, the value of any recovery that could be expected to result, such as from the guarantor's right to proceed against an outside party.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1For interim and annual reporting periods, the disclosure shall include the nature and amount of the guarantee. Consideration should be given to disclosing, if estimable, the value of any recovery that could be expected to result, such as from the guarantor's right to proceed against an outside party. 460-10-50-4
A guarantor shall disclose all of the following information about each guarantee, or each group of similar guarantees, even if the likelihood of the guarantor's having to make any payments under the guarantee is remote:
- aThe nature of the guarantee, including all of the following:
- 1The approximate term of the guarantee
- 2How the guarantee arose
- 3The events or circumstances that would require the guarantor to perform under the guarantee
- 4The current status (that is, as of the date of the statement of financial position) of the payment/performance risk of the guarantee (for example, the current status of the payment/performance risk of a credit-risk-related guarantee could be based on either recently issued external credit ratings or current internal groupings used by the guarantor to manage its risk)
- 5If the entity uses internal groupings for purposes of item (a)(4), how those groupings are determined and used for managing risk.
- 1
- bAll of the following information about the maximum potential amount of future payments under the guarantee:
- 1The maximum potential amount of future payments (undiscounted) that the guarantor could be required to make under the guarantee, which shall not be reduced by the effect of any amounts that may possibly be recovered under recourse or collateralization provisions in the guarantee (which are addressed under (d) and (e))
- 2If the terms of the guarantee provide for no limitation to the maximum potential future payments under the guarantee, that fact
- 3If the guarantor is unable to develop an estimate of the maximum potential amount of future payments under its guarantee, the reasons why it cannot estimate the maximum potential amount.
- 1
- cThe current carrying amount of the liability, if any, for the guarantor's obligations under the guarantee (including the amount, if any, recognized under Section 450-20-30 or Subtopic 326-20 on financial instruments measured at amortized cost), regardless of whether the guarantee is freestanding or embedded in another contract
- dThe nature of any recourse provisions that would enable the guarantor to recover from third parties any of the amounts paid under the guarantee
- eThe nature of any assets held either as collateral or by third parties that, upon the occurrence of any triggering event or condition under the guarantee, the guarantor can obtain and liquidate to recover all or a portion of the amounts paid under the guarantee
- fIf estimable, the approximate extent to which the proceeds from liquidation of assets held either as collateral or by third parties would be expected to cover the maximum potential amount of future payments under the guarantee.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1For interim and annual reporting periods, a guarantor shall disclose all of the following information about each guarantee, or each group of similar guarantees, even if the likelihood of the guarantor's having to make any payments under the guarantee is remote: - aThe nature of the guarantee, including all of the following:
- 1The approximate term of the guarantee
- 2How the guarantee arose
- 3The events or circumstances that would require the guarantor to perform under the guarantee
- 4The current status (that is, as of the date of the statement of financial position) of the payment/performance risk of the guarantee (for example, the current status of the payment/performance risk of a credit-risk-related guarantee could be based on either recently issued external credit ratings or current internal groupings used by the guarantor to manage its risk)
- 5If the entity uses internal groupings for purposes of item (a)(4), how those groupings are determined and used for managing risk.
- 1
- bAll of the following information about the maximum potential amount of future payments under the guarantee:
- 1The maximum potential amount of future payments (undiscounted) that the guarantor could be required to make under the guarantee, which shall not be reduced by the effect of any amounts that may possibly be recovered under recourse or collateralization provisions in the guarantee (which are addressed under (d) and (e))
- 2If the terms of the guarantee provide for no limitation to the maximum potential future payments under the guarantee, that fact
- 3If the guarantor is unable to develop an estimate of the maximum potential amount of future payments under its guarantee, the reasons why it cannot estimate the maximum potential amount.
- 1
- cThe current carrying amount of the liability, if any, for the guarantor's obligations under the guarantee (including the amount, if any, recognized under Section 450-20-30 or Subtopic 326-20 on financial instruments measured at amortized cost), regardless of whether the guarantee is freestanding or embedded in another contract
- dThe nature of any recourse provisions that would enable the guarantor to recover from third parties any of the amounts paid under the guarantee
- eThe nature of any assets held either as collateral or by third parties that, upon the occurrence of any triggering event or condition under the guarantee, the guarantor can obtain and liquidate to recover all or a portion of the amounts paid under the guarantee
- fIf estimable, the approximate extent to which the proceeds from liquidation of assets held either as collateral or by third parties would be expected to cover the maximum potential amount of future payments under the guarantee.
Effect of the Guarantee Disclosure Requirements on the Disclosure Requirements of Other Topics
460-10-50-5
The disclosures required by this Subsection do not eliminate or affect the following disclosure requirements:
- aThe requirements in the General Subsection of Section 825-10-50 that certain entities disclose the fair value of their financial guarantees issued
- bThe requirements in paragraphs that an entity disclose a contingent loss that has a reasonable possibility of occurring
- cThe requirements in the Disclosure Sections of Topic 815, which apply to guarantees that are accounted for as derivatives
- dThe requirements in Section 275-10-50 that an entity disclose information about risks and uncertainties that could significantly affect the amounts reported in the financial statements in the near term. See Example 1 (paragraph 460-10-55-25) for an illustration of the required disclosure.
- eThe requirements in Section 326-20-50 that an entity disclose information on the measurement of credit loss.
460-10-50-6
Some guarantees are issued to benefit entities that are related parties such as joint ventures, equity method investees, and certain entities for which the controlling financial interest cannot be assessed by analyzing voting interests. In those cases, the disclosures required by this Topic are incremental to the disclosures required by Topic 850.
Product Warranties
460-10-50-7
Paragraph 460-10-25-6 states that an inability to make a reasonable estimate of the amount of a warranty obligation at the time of sale because of significant uncertainty about possible claims precludes accrual. That paragraph also addresses related implications. Paragraphs provide disclosure guidance for circumstances in which no accrual is made for a loss contingency. In those circumstances, the disclosures required by that paragraph shall be made.
460-10-50-8
A guarantor shall disclose all of the following information for product warranties and other guarantee contracts described in paragraph 460-10-15-9:
- aThe information required to be disclosed by paragraph 460-10-50-4 except that a guarantor is not required to disclose the maximum potential amount of future payments specified in paragraph 460-10-50-4(b)
- bThe guarantor's accounting policy and methodology used in determining its liability for product warranties
- cA tabular reconciliation of the changes in the guarantor's aggregate product warranty liability for the reporting period. That reconciliation shall include all of the following amounts:
- 1The beginning balance of the aggregate product warranty liability
- 2The aggregate reductions in that liability for payments made (in cash or in kind) under the warranty
- 3The aggregate changes in the liability for accruals related to product warranties issued during the reporting period
- 4The aggregate changes in the liability for accruals related to preexisting warranties (including adjustments related to changes in estimates)
- 5The ending balance of the aggregate product warranty liability.
- 1
Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:
220-40-65-1A guarantor shall disclose all of the following information for product warranties and other guarantee contracts described in paragraph 460-10-15-9: - aThe information required to be disclosed by paragraph 460-10-50-4 except that a guarantor is not required to disclose the maximum potential amount of future payments specified in paragraph 460-10-50-4(b)
- bThe guarantor's accounting policy and methodology used in determining its liability for product warranties
- cA tabular reconciliation of the changes in the guarantor's aggregate product warranty liability for the reporting period. That reconciliation shall include all of the following amounts:
- 1The beginning balance of the aggregate product warranty liability
- 2The aggregate reductions in that liability for payments made (in cash or in kind) under the warranty
- 3The aggregate changes in the liability for accruals related to product warranties issued during the reporting period
- 4The aggregate changes in the liability for accruals related to preexisting warranties (including adjustments related to changes in estimates)
- 5The ending balance of the aggregate product warranty liability.
- 1
See paragraphs for additional disclosure requirements.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1For interim and annual reporting periods, a guarantor shall disclose all of the following information for product warranties and other guarantee contracts described in paragraph 460-10-15-9: - aThe information required to be disclosed by paragraph 460-10-50-4 except that a guarantor is not required to disclose the maximum potential amount of future payments specified in paragraph 460-10-50-4(b)
- bThe guarantor's accounting policy and methodology used in determining its liability for product warranties
- cA tabular reconciliation of the changes in the guarantor's aggregate product warranty liability for the reporting period. That reconciliation shall include all of the following amounts:
- 1The beginning balance of the aggregate product warranty liability
- 2The aggregate reductions in that liability for payments made (in cash or in kind) under the warranty
- 3The aggregate changes in the liability for accruals related to product warranties issued during the reporting period
- 4The aggregate changes in the liability for accruals related to preexisting warranties (including adjustments related to changes in estimates)
- 5The ending balance of the aggregate product warranty liability.
- 1
See paragraphs for additional disclosure requirements.
460-10-55Implementation Guidance and Illustrations
Source downloaded: .Record version 18aeb38e739b. Effective date must be checked in the source.
Implementation Guidance
460-10-55-1
The implementation guidance for guarantees within the scope of this Topic is organized as follows:
- aFinancial guarantees, which contains scope guidance for paragraph 460-10-15-4(a)
- bPerformance guarantees, which contains scope guidance for paragraph 460-10-15-4(b)
- cIndemnifications, which contains scope guidance for paragraph 460-10-15-4(c)
- dIndirect guarantees of the indebtedness of others, which contains scope guidance for paragraph 460-10-15-4(d).
460-10-55-2
The following are examples of contracts of the type described in paragraph 460-10-15-4(a):
- a
- bA market value guarantee on either a financial asset (such as a security) or a nonfinancial asset owned by the guaranteed party
- cA guarantee of the market price of the common stock of the guaranteed party
- dA guarantee of the collection of the scheduled contractual cash flows from individual financial assets held by a special-purpose entity
- eA guarantee granted to a business or its owner(s) that the revenue of the business (or a specific portion of the business) for a specified period of time will be at least a specified amount.
460-10-55-3
Option-based contracts in which any net potential contingent payment can flow only from the guarantor to the guaranteed party may meet one of the characteristics in paragraph 460-10-15-4 and be included in the scope of this Topic. (Some guarantees obligate the guaranteed party to pay all or a portion of the premium to the guarantor at a later date; those premium payments are not contingent payments as discussed in the previous sentence.)
460-10-55-4
A put option is a market value guarantee because it gives the holder the right to sell a specified quantity of an asset related to the underlying to the writer of the option at a specified price (strike price) up to the expiration date. For example, paragraphs address the interaction of various Subtopics (including this Subtopic) in accounting for transactions that involve sale of a marketable security to a third-party buyer, with the buyer's having an option to put the security back to the seller at a specified future date or dates for a fixed price.
460-10-55-5
Paragraph 460-10-15-4(a) states that the provisions of this Topic apply to a guarantee contract that contingently requires a guarantor to make payments to a guaranteed party based on changes in an underlying that is related to an asset, a liability, or an equity security of the guaranteed party. This paragraph addresses whether the characteristic in paragraph 460-10-15-4(a) is met for a put option written by a guarantor that did not know whether the guaranteed party had an asset or liability related to the underlying described in paragraph 460-10-15-4(a). If, upon exercise, the put option requires gross settlement and the asset to be delivered under gross settlement is related to the underlying described in paragraph 460-10-15-4(a), characteristic (a) in paragraph 460-10-15-4 shall be considered to be met.
460-10-55-6
For example, if an investor entered into two separate contracts—a nonputtable bond and a freestanding put option contract that can be settled only by delivery of the bond—and was accounting for those contracts separately, that freestanding put option contract would be a guarantee that meets the characteristic in paragraph 460-10-15-4(a).
460-10-55-7
In contrast, if a put option permits or requires net settlement, the guarantor must consider its business relationship with the guaranteed party and the other circumstances involved in the issuance of the put option in deciding whether it is probable that the guaranteed party has, on or about the date of the put option's issuance, an asset or liability related to the underlying described in paragraph 460-10-15-4(a). If the guarantor has no basis for concluding that it is probable that the guaranteed party has that asset or liability, the characteristic in that paragraph would not be met for that written put option and it would not be within the scope of this Topic.
460-10-55-8
For a put option that permits or requires net settlement and for which the characteristic in paragraph 460-10-15-4(a) is considered to be met at inception, the guarantor shall continue complying with the disclosure requirements of the General Subsection of Section 460-10-50 over the term of the put option without an ongoing assessment of whether the guaranteed party continues to have the related asset or liability over that period.
460-10-55-9
Contingent forward contracts may meet one of the characteristics in paragraph 460-10-15-4 and be included in the scope of this Topic. A freestanding put option contract that can be settled only by delivery of the asset related to the underlying could be viewed as a contingent forward contract.
460-10-55-10
An example of the type of guarantee described in paragraph 460-10-55-2(e) is a minimum revenue guarantee granted to a new day-care center by a corporation as an incentive for the center to locate near the corporation's main plant. The corporation, as the guarantor, has agreed to make monthly payments to the day-care center (the guaranteed party) over a specified term for any shortfall from the guaranteed minimum amount of revenue for each month.
460-10-55-11
Another example is a guarantee granted to a nonemployee physician by a not-for-profit health care facility that has recruited the physician to move to the facility's geographical area to establish a practice. The health care facility, as the guarantor, has agreed to make payments to the newly arrived physician (the guaranteed party) at the end of specific periods of time if the gross revenues (gross receipts) generated by the physician's new practice during that period of time do not equal or exceed a specific dollar amount. This Topic applies to minimum revenue guarantees granted to physicians regardless of whether the physician's practice qualifies as a business.
460-10-55-12
The following are examples of contracts of the type described in paragraph 460-10-15-4(b):
- a
- bBid bonds
- cPerformance bonds
- dOther contracts that are similar to performance standby letters of credit.
460-10-55-13
The following are examples of contracts of the type described in paragraph 460-10-15-4(c):
- aAn indemnification agreement (contract) that contingently requires the indemnifying party (guarantor) to make payments to the indemnified party (guaranteed party) based on an adverse judgment in a lawsuit or the imposition of additional taxes due to either a change in the tax law or an adverse interpretation of the tax law.
- bA lessee's indemnification of the lessor for any adverse tax consequences that may arise from a change in the tax laws, because only a legislative body can change the tax laws, and the lessee therefore has no control over whether payments will be required under that indemnification. In contrast, as discussed in paragraph 460-10-55-18(a), when a lessee indemnifies a lessor against adverse tax consequences that may arise from acts, omissions, and misrepresentations of the lessee, that indemnification is outside the scope of this Topic because the lessee is, in effect, guaranteeing its own future performance.
- cA seller's indemnification against additional income taxes due for years before a business combination, because the indemnification relates to the seller-guarantor's past performance, not its future performance.
460-10-55-14
The following is an example of a contract of the type described in paragraph 460-10-15-4(d).
460-10-55-15
A community foundation has a loan guarantee program to assist not-for-profit entities (NFPs) in obtaining bank financing at a reasonable cost. Under that program, the community foundation issues a guarantee of an NFP's bank debt. That guarantee is within the scope of this Topic, and on the issuance of the guarantee, the community foundation would recognize a liability for the fair value of that guarantee. The issuance of that guarantee would not be considered merely a conditional promise to give under paragraphs because, upon the issuance of the guarantee, the NFP will have received the gift of the community foundation's credit support. That credit support enables the NFP to obtain a lower interest rate on its borrowing.
460-10-55-16
The following are examples of contracts that are outside the scope of this Topic because they are not of any of the types described in paragraph 460-10-15-4:
- aCommercial letters of credit and other loan commitments, which are commonly thought of as guarantees of funding, are not included in the scope of this Topic because those instruments do not guarantee payment of a money obligation and do not provide for payment in the event of default by the account party.
- bA noncontingent forward contract for which net settlement could involve a net settlement payment from either party is not included in the scope of this Topic. However, as discussed in paragraph 460-10-55-9, a contingent forward contract may meet one of the characteristics in paragraph 460-10-15-4 and be included in the scope of this Topic.
- cA guarantee provision in a financial instrument that is commonly thought of as a market value guarantee of the other terms of that same financial instrument is not within the scope of this Topic unless that guarantee provision is accounted for separately as a derivative under Topic 815 (see paragraph 460-10-25-1(a)). For example, a put option that is embedded in a puttable bond (but is not accounted for separately as a derivative) could be viewed by the investor (the guaranteed party) as a guarantee against the fair value of the remaining instrument (a bond absent the put option) declining below the put price. The embedded put option does not meet the characteristic in paragraph 460-10-15-4(a) because the guaranteed party's asset is an investment in the entire contract, a puttable bond, and not an investment in a nonputtable bond. However, as noted in paragraph 460-10-55-6, if the investor purchased a freestanding put option on a nonputtable bond and accounted for them separately, that guarantee would be within the scope of this Topic.
- dAn arrangement, such as a securitization, that involves the subordination of the rights of some investors (or creditors) to the rights of others is commonly thought of as a guarantee issued by the subordinated investors. For example, the investors in one (subordinated) class or tranche of an entity's securities might not receive any cash flows until the investors in another (priority) class or tranche are fully paid. Although that type of subordination provides credit protection by the subordinated investors, it does not meet any of the characteristics in paragraph 460-10-15-4 and, thus, is not included in the scope of this Topic.
- eA written option that does not directly guarantee another entity's performance or the fair value of the guaranteed party's assets (such as a weather derivative) is not included in the scope of this Topic unless that written option is used as an indirect guarantee of the indebtedness of others.
- fA take-or-pay contract is not included in the scope of this Topic because the minimum payments under a take-or-pay contract are not contingent. A take-or-pay contract requires certain minimum payments irrespective of whether the buyer accepts delivery. Even if a take-or-pay contract were analyzed as though it were a guarantee by the buyer to pay for the portion of the minimum quantity of product or output of the guaranteed party for which the buyer refuses to order or accept delivery, a take-or-pay contract would not be included in the scope of this Topic because it would be a guarantee related to the buyer's future performance under the contract. (Take-or-pay contracts are further discussed in the Unconditional Purchase Obligations Subsections of Subtopic 440-10.)
- gA weather derivative is not included in the scope of this Topic because the climatic or geological variable is not an asset or liability of the guaranteed party. The characteristic in paragraph 460-10-15-4(a) requires payments to be based on changes in an underlying that is related only to an asset or liability of the guaranteed party.
460-10-55-17
The following is an example of a contract that is outside the scope of this Topic because it is of the type described in paragraph 460-10-15-7(g).
- a
- b
- cA transaction that involves sale of a marketable security to a third-party buyer with the buyer having an option to put the security back to the seller at a specified future date or dates for a fixed price, if the existence of the put option prevents the transferor from accounting for the transaction as a sale, as described in paragraphs .
- d
- e
460-10-55-18
The following are examples of contracts that are outside the scope of this Topic because these contracts are of the type described in paragraph 460-10-15-7(i):
- aA lessee will often indemnify a lessor for any adverse tax consequences that may arise from acts, omissions, and misrepresentations of the lessee (for example, using the leased asset outside the United States or subleasing to a tax-exempt entity). The lessee is, in effect, guaranteeing that its own future performance and actions with respect to the lease and the leased property will not result in adverse tax consequences to the lessor. Thus, that lessee's indemnification is not within the scope of this Topic. In contrast, as discussed in paragraph 460-10-55-13(b), a guarantee by a lessee regarding the effect of future changes in the tax law on the guaranteed party's tax liability is within the scope of this Topic because the lessee cannot change the tax law (or prevent a change) and thus cannot control whether payments will be required under the guarantee.
- bAn entity's guarantee of its own future performance, such as that entity's completion of a contract by a specified deadline is not within the scope of this Topic.
- cIn consolidated financial statements, a parent's guarantee of a subsidiary's debt to a third party would simply be a guarantee of the consolidated entity's own performance to make the scheduled payments on that consolidated liability, which is not a guarantee within the scope of this Topic for the consolidated reporting entity.
460-10-55-19
The following is an example of a contract that is not subject to the General Subsections of Sections 460-10-25 and 460-10-30 because it is of one of the types described in paragraph 460-10-25-1. The contract is subject to the General Subsection of Section 460-10-50.
460-10-55-20
If a guarantee contract stipulates that the guarantor's payment, if required, can be in the form of the guarantor's own equity shares at the guarantor's option, that obligation may, depending on the arrangements of the contract, be considered to be equity rather than a liability and, if so, the guarantee contract meets the characteristic in paragraph 460-10-25-1(d). To determine if a contract would be considered equity or a liability, see Topic 480 and Topic 505. See paragraph 460-10-55-24 if the guarantor's shares are placed in a trust or in some other similar arrangement to facilitate performance under the guarantee.
460-10-55-21
In many cases, the one-time premium received by a guarantor for issuing a guarantee will be an appropriate practical expedient for the initial measurement of the guarantee obligation (see paragraph 460-10-30-2[a]). However, if a one-time premium is specified for a guarantee that is issued in conjunction with another transaction (such as the sale of assets by the guarantor), the specified premium may not be an appropriate initial measurement of the guarantor's liability because the amount specified as being applicable to the guarantee may or may not be its fair value (see paragraph 460-10-30-2[b]).
460-10-55-22
In accordance with paragraph 460-10-30-2, a liability shall be recognized at the inception of the guarantee even if the guarantor does not receive a separately identified premium when it issues the guarantee. For example, in conjunction with the cash sale of equipment to a customer, a manufacturer may issue to its customer's bank a guarantee of the customer's loan for which the proceeds are used to pay for the equipment. There is no separately identified premium for the guarantee, although the sales arrangement may impound an implicit premium. The manufacturer may simply view the guarantee as an accommodation to its customer. The seller-guarantor has incurred an obligation identical to the obligation it would incur if it required its customer to pay an explicit premium for the guarantee. Thus, the seller-guarantor shall immediately recognize a liability for its obligations under a newly issued guarantee, even if a separately identified premium was not received. If an entity guaranteed a customer's bank loan purely as an accommodation to an important longstanding customer, unrelated to a specific transaction, the liability for the entity's obligations under the guarantee should be recognized.
460-10-55-23
Although paragraph 460-10-25-4 does not prescribe a specific account, the following illustrate a guarantor's offsetting entries when it recognizes the liability at the inception of the guarantee:
- aIf the guarantee were issued in a standalone transaction for a premium, the offsetting entry would be consideration received (such as cash or a receivable).
- bIf the guarantee were issued in conjunction with the sale of assets, a product, or a business, the overall proceeds (such as the cash received or receivable) would be allocated between the consideration being remitted to the guarantor for issuing the guarantee and the proceeds from the sale. That allocation would affect the calculation of the gain or loss on the sale transaction.
- cIf the guarantee were issued in conjunction with the formation of a partially owned business or a venture accounted for under the equity method, the recognition of the liability for the guarantee would result in an increase to the carrying amount of the investment.
- d
- eIf a guarantee were issued to an unrelated party for no consideration on a standalone basis (that is, not in conjunction with any other transaction or ownership relationship), the offsetting entry would be to expense.
460-10-55-23A
This implementation guidance addresses the application of this Subtopic to the recognition and initial measurement of a tax indemnification provided by a lessee to a lessor. Paragraph 460-10-25-4 requires that the lessee (guarantor) account for a tax indemnification provided to the lessor by recognizing a liability at lease inception (which is also the inception of the indemnification clause). Section 460-10-30 requires that the measurement objective of that initial recognition be the fair value of the lessee's obligation under the indemnification agreement.
460-10-55-24
Under some arrangements, a loss under a guarantee is settled by the guarantor's issuing a variable number of its own equity shares. Those arrangements are often called share-trust or share-collateral transactions, whereby some specified number of the guarantor's shares is put in a trust or in some other similar arrangement to facilitate performance under the guarantee. The use of collateral arrangements under that guarantee does not change the accounting for the guarantee; thus, those arrangements are subject to the recognition, measurement, and disclosure requirements of this Topic and Topic 450. See paragraph 460-10-55-20 for additional scope guidance. Furthermore, those arrangements also could affect the calculation of earnings per share (EPS) under Topic 260 and disclosures thereunder.
Illustrations
460-10-55-25
This Example illustrates the disclosure required by paragraph 275-10-50-15(j) of the potential near-term effect of a change in estimate of a contingent liability resulting from the guarantee of the debt of another entity. Entity A's loss of customers causes the potential for a near-term material change in that estimate within the next fiscal year. Although disclosure of Entity A's ongoing efforts to replace those customers is not required, this additional information may be presented.
460-10-55-26
Entity A operates a shipping center in Local City. In 19X0, Entity A decided to raise money for modernization of facilities through a debt offering. In order for the offering to take place, Entity B, a local manufacturer, agreed to guarantee the bonds if Entity A's revenues were insufficient to pay debt service. In May 19X4 (four years later when the bonds had an outstanding balance of $55 million), Entity A lost two of its major shipping customers, constituting 35 percent of its prior-year revenues, to a competitor in a neighboring port. At Entity B's June 30, 19X4, year end, Entity A was directing substantial efforts toward finding new customers. It is reasonably possible, however, that Entity A will not replace the lost revenue in time to pay debt service installments at December 30, 19X4, and June 30, 19X5, totaling $6 million.
460-10-55-27
Entity B would make the following disclosure.
- In 19X0, Entity B guaranteed the Series AA debt of Entity A, which operates a shipping center within Local City. Entity B continues as guarantor of such debt totaling $55 million. In May 19X4, Entity A lost two of its major customers. Although Entity A is directing substantial efforts toward obtaining new customers, it is at least reasonably possible that Entity A will not replace lost revenues sufficient to make its December 19X4 and June 19X5 debt service payments totaling $6 million. If so, Entity B will become responsible for repayment of at least a portion of that amount and possibly additional amounts over the debt term. A liability of $XX has been reported in Entity B's financial statements pending the outcome of Entity A's efforts during the next fiscal year.
Product Warranties
Implementation Guidance
460-10-55-28
A representation by a manufacturer to its customer that a particular engine would produce a specified savings in its energy consumption qualifies for the scope exception in paragraph 460-10-25-1(b) because that representation relates to how efficiently the engine operates.
460-10-55-29
In contrast, a service provider's representation as to the quality of its services does not need to qualify for that scope exception because it is a guarantee of the service provider's (guarantor's) future performance and, as such, is excluded from the scope of this Topic by paragraph 460-10-15-7(i).
Illustrations
460-10-55-30
This Example illustrates the application of the scope of this Topic to a licensee indemnification.
460-10-55-31
As an element of its standard commercial terms, a software vendor-licensor includes an indemnification clause in a software licensing agreement that indemnifies the licensee against liability and damages (including legal defense costs) arising from any claims of patent, copyright, trademark, or trade secret infringement by the software vendor's software. That indemnification arrangement constitutes a guarantee that is not subject to the recognition requirements or the initial measurement requirements of the General Subsections of Sections 460-10-25 or 460-10-30, respectively.
460-10-55-32
That arrangement exhibits the characteristic in paragraph 460-10-15-4(c): the indemnification obligates the seller-licensor (guarantor) to make a payment to the buyer-licensee (guaranteed party) based on changes in an underlying related to the software license (an asset of the guaranteed party). In this situation, the underlying is the occurrence of an infringement claim against the licensee that results in any liabilities or damages related to the licensed software (the asset) of the licensee (the indemnified party).
460-10-55-33
Nonetheless, because a possibility exists, regardless of how remote, that an infringement claim covered by the indemnification could impair the licensee's ability to use the licensed software (for example, if an injunction is issued or the claim is ultimately proven), the underlying is also related to the performance (regarding function, not price) of that licensed software—that is, the licensed software cannot function as intended until the seller-licensor cures the alleged infringement defect. Thus, the arrangement qualifies for the scope exception in paragraph 460-10-25-1(b).
460-10-55-34
However, it would be subject to the disclosure requirements of the General Subsection of Section 460-10-50, as well as the disclosure requirements specified in the Product Warranties Subsection of that Section.
460-10-60Relationships
Source downloaded: .Record version 34faf9ac511a. Effective date must be checked in the source.
Investments—Equity Method and Joint Ventures
460-10-60-1
For guaranteed obligations of an investee that is accounted for using the equity method, see paragraph 323-10-35-20.
Other Assets and Deferred Costs
460-10-60-2
For contractual guarantees for reimbursement of design and development costs related to long-term supply arrangements, see paragraph 340-10-25-3.
Property, Plant, and Equipment
460-10-60-3
For a seller's guarantee of a return of the buyer's investment in real estate or a seller's guarantee of a return on that investment for an extended period, see Subtopic 842-40 for sale and leaseback transactions.
Liabilities
460-10-60-4
For the guarantee obligation that results if a primary debtor becomes secondarily liable upon a release by a creditor, see paragraph 405-20-40-2.
Distinguishing Liabilities from Equity
460-10-60-5
For an entity's guarantee of the value of an asset, liability, or equity security of another entity that may require or permit settlement in the entity's equity shares, see paragraph 480-10-55-23.
460-10-60-6
For a freestanding put option indexed to a subsidiary's equity shares, see paragraphs .
460-10-60-7
For embedded put options indexed to the stock of a consolidated subsidiary, see paragraphs .
Compensation—Stock Compensation
460-10-60-11
For an employer's guarantee of the debt of an employee stock option plan, see paragraph 718-40-25-9.
Business Combinations
460-10-60-12
For guarantees that represent contingent consideration in a business combination, see Subtopic 805-30.
Consolidation
460-10-60-13
For guarantees of the value of the assets or liabilities of a variable interest entity (VIE), written put options on the assets of the VIE, or similar obligations, see paragraphs .
460-10-60-14
For freestanding derivative instruments indexed to, and potentially settled in, the stock of a consolidated subsidiary, see paragraphs 815-10-15-77 and 810-10-45-16A.
Derivatives and Hedging
460-10-60-15
For weather derivatives, see Subtopic 815-45.
Leases
460-10-60-16
For the effect on the lease term of a provision or condition that in substance is a guarantee of a lessor's debt or a loan to a lessor by the lessee that is related to the underlying asset but is structured in such a manner that it does not represent a direct guarantee or loan, see the definition of lease term.
460-10-60-17
For the effects on lease payments of a guarantee by the lessee of the lessor's debt, see paragraph 842-10-30-6.
460-10-60-18
For the effects on lease payments of a guarantee by the lessee of the residual value of the underlying asset at the expiration of the lease term, see paragraphs 842-10-30-5 and .
460-10-60-20
For a determination of whether a residual value guarantee is subject to the requirements of Topic 815, see paragraph 842-10-15-43.
460-10-60-21
For a commitment by a lessor to guarantee performance of the underlying asset in a manner more extensive than a typical product warranty or to effectively protect the lessee from obsolescence of the underlying asset, see paragraphs .
460-10-60-22
For a manufacturer's guarantee of the resale value of equipment to the purchaser, see paragraphs .
460-10-60-23
For a lessee's indemnification for environmental contamination, see paragraph 842-10-55-15.
460-10-60-24
For a guarantee by a lessee of the underlying asset's residual value in a lease transaction, see paragraphs 842-10-30-5 and .
460-10-60-32
For a guarantee by the seller-lessee of the underlying asset's residual value in a sale and leaseback transaction, see paragraphs .
Transfers and Servicing
460-10-60-36
For transactions that involve the sale of a marketable security to a third-party buyer, with the buyer's having an option to put the security back to the seller at a specified future date or dates for a fixed price, see the guidance beginning in paragraph 860-20-55-20.
460-10-60-37
For a sale of mortgage servicing rights with a subservicing agreement in which the seller-subservicer directly or indirectly guarantees a yield to the buyer, see paragraphs .
Plan Accounting—Defined Benefit Pension Plans
460-10-60-39
For guaranteed investment contracts held by defined benefit pension plans, see paragraph 960-325-35-3.
Real Estate—General
460-10-60-40
For an entity's agreement to either make up shortfalls in the annual debt service requirements or guarantee a tax increment financing entity's debt, see paragraph 970-470-25-3.
Product Warranties
Revenue Recognition
460-10-60-41
For recognition of revenue for a warranty that is identified as a separate performance obligation, see paragraphs .
460-10-S00StatusSEC
Source downloaded: .Record version a721c0c4fa5c. Effective date must be checked in the source.
460-10-S00-1
The following table identifies the changes made to this Subtopic.
| Paragraph | Action | Accounting Standards Update | Date |
| 460-10-S50-1 | Added | Accounting Standards Update No. 2020-09 | 10/22/2020 |
| 460-10-S50-2 | Added | Accounting Standards Update No. 2020-09 | 10/22/2020 |
460-10-S50DisclosureSEC
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Guarantors and Issuers of Guaranteed Securities Registered or Being Registered
460-10-S50-1
See paragraph 470-10-S99-1, Regulation S-X Rule 3-10 for requirements applicable to financial statements of guarantors and issuers of guaranteed securities registered or being registered.
460-10-S50-2
See paragraph 470-10-S99-1A, Regulation S-X Rule 13-01 for disclosure requirements about guarantors and issuers of guaranteed securities registered or being registered.