# ASC 460-10-15: Guarantees — Overall — 15 Scope and Scope Exceptions Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/460/10/#15-scope-and-scope-exceptions) 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): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:aaaa6641d7f2e5ab291150575a7c3850b97abae6b698b1347dd88b5a903c967a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 460-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/460/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [460-10-15-1](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:dfe12d592cd6382e625025f3465e31278b9e641e22937b155c90f592ce8c6f48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:466855d0feffe9f35038e31bb057994ebd29008ab553952c305b342e919d0dfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Guarantees Topic applies to all entities. #### Transactions ##### [460-10-15-3](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:a63854c69bd34538136e5b377921421fa03d00172a720e9b109134d1c1f28ec6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transactions guidance for the scope of the Guarantees Topic is organized as follows: 1. a Transactions that are within the scope of this Topic 2. b Transactions that are excluded from the scope of this Topic. ##### [460-10-15-4](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:03fe68e243454f8896e37b39d663960a019753c6ae611bf818a0a077e2174789 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as provided in paragraph [460-10-15-7](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-7), the provisions of this Topic apply to the following types of guarantee contracts: 1. 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](https://asc.understandingaccounting.org/glossary/u/#underlying "A specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract). An underlying may be a price or rate of an asset or liability but is not the asset or liability itself. An underlying is a variable that, along with either a notional amount or a payment provision, determines the settlement of a derivative instrument.") 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-55-2). 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-55-12). 3. 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. 4. d [Indirect guarantees of the indebtedness](https://asc.understandingaccounting.org/glossary/i/#indirect-guarantee-of-indebtedness "An agreement that obligates the guarantor to transfer funds to a debtor upon the occurrence of specified events, under conditions whereby: After funds are transferred from the guarantor to the debtor, the funds become legally available to creditors through their claims against the debtor Those creditors may enforce the debtor's claims against the guarantor under the agreement. In contrast, with a direct guarantee of indebtedness, if the debtor defaults, the creditor has a direct claim on the guarantor. Examples of indirect guarantees include agreements to advance funds if a debtor's net income, coverage of fixed charges, or working capital falls below a specified minimum.") 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:f7ec30c06ccd9c0c713f7bb86651314e53f4c1093c9ae29d9eed1d309e784f37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4). ##### [460-10-15-6](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:4774392524304e0625438d7c5a0827d353717541e3cbce5ae790102893b61ef2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:c102296816d3288a06479807c96ba46cd4c0cc33ce2d90163177e3899ac5215e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Topic does not apply to the following types of guarantee contracts: 1. a A guarantee or an indemnification that is excluded from the scope of Topic 450 (see paragraph [450-20-15-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-15-2)—primarily employment-related guarantees) 2. b A lessee's guarantee of the residual value of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") at the expiration of the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") under Topic 842 3. c A contract that meets the characteristics in paragraph [460-10-15-4(a)](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4) but is accounted for as [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.") under Topic 842 4. d A guarantee (or an indemnification) that is issued by either an insurance entity or a [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.") entity and accounted for under Topic 944 (including guarantees embedded in either insurance contracts or investment contracts) 5. e A contract that meets the characteristics in paragraph [460-10-15-4(a)](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4) 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 6. 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) 7. 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 8. h A [registration payment arrangement](https://asc.understandingaccounting.org/glossary/r/#registration-payment-arrangement "An arrangement with both of the following characteristics: It specifies that the issuer will endeavor to do either of the following: File a registration statement for the resale of specified financial instruments and/or for the resale of equity shares that are issuable upon exercise or conversion of specified financial instruments and for that registration statement to be declared effective by the U.S. Securities and Exchange Commission (SEC) (or other applicable securities regulator if the registration statement will be filed in a foreign jurisdiction) within a specified grace period Maintain the effectiveness of the registration statement for a specified period of time (or in perpetuity). It requires the issuer to transfer consideration to the counterparty if the registration statement for the resale of the financial instrument or instruments subject to the arrangement is not declared effective or if effectiveness of the registration statement is not maintained. That consideration may be payable in a lump sum or it may be payable periodically, and the form of the consideration may vary. For example, the consideration may be in the form of cash, equity instruments, or adjustments to the terms of the financial instrument or instruments that are subject to the registration payment arrangement (such as an increased interest rate on a debt instrument).") within the scope of Subtopic 825-20 (see Section 825-20-15) 9. 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) 10. j A guarantee that is accounted for as a [credit derivative](https://asc.understandingaccounting.org/glossary/c/#credit-derivative "A derivative instrument that has both of the following characteristics: One or more of its underlyings are related to any of the following: The credit risk of a specified entity (or a group of entities) An index based on the credit risk of a group of entities. It exposes the seller to potential loss from credit-risk-related events specified in the contract. Examples of credit derivatives include, but are not limited to, credit default swaps, credit spread options, and credit index products.") at fair value under Topic 815. 11. 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](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.") request to reacquire the equipment). That program shall be evaluated in accordance with Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with customers, specifically the implementation guidance on repurchase agreements in paragraphs [606-10-55-66 through 55-78](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-66) . For related implementation guidance, see Section 460-10-55. ### Product Warranties #### Overall Guidance ##### [460-10-15-8](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:fd656f6b03cfcf1fd089f040b7f12b93efdd735ac9503b940fcb023737ce1ed9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-1), with specific transaction exceptions noted below. #### Transactions ##### [460-10-15-9](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:6109842766dae351afe1587e8d97792c5cc02d2eb95f68844ca37a91312adea4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Product Warranties Subsections applies only to product [warranties](https://asc.understandingaccounting.org/glossary/w/#warranty "A guarantee for which the underlying is related to the performance (regarding function, not price) of nonfinancial assets that are owned by the guaranteed party. The obligation may be incurred in connection with the sale of goods or services; if so, it may require further performance by the seller after the sale has taken place."), which include all of the following: 1. a Product warranties issued by the guarantor, regardless of whether the guarantor is required to make payment in services or cash 2. b Separately priced extended warranty or product maintenance [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") and warranties that provide a [customer](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.") with a service in addition to the assurance that the product complies with agreed-upon specifications (see paragraphs [606-10-55-30 through 55-35](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-30) 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) 3. c Warranty 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:33.929Z to 2026-09-10T00:29:33.929Z Record version: sha256:c2d987cb4a6ed284237e56dc06044af80319f3a302f5b3e0e8bafc21abb0f3ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/460/10/#50-disclosure) of Section 460-10-50.