{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/460/10/#30-initial-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"460","topic_title":"Guarantees","subtopic":"460-10","subtopic_title":"Overall","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"460-10-30-1","para":"30-1","html":"
The types of guarantees identified in paragraph 460-10-25-1 are not subject to the initial measurement provisions of this Subsection.
","snippet":"The types of guarantees identified in paragraph 460-10-25-1 are not subject to the initial measurement provisions of this Subsection.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:88aaf9b5aac34405a231248102e22304e2c9954a9312319d60e7cffce5f10a13","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c6699132c87c7482433e9e2bc195674c4eec85c04e2fd4fafbedc3998705f03e","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}},{"block":null,"heading":"Fair Value Objective","paragraphs":[{"citation":"460-10-30-2","para":"30-2","html":"
Except as indicated in paragraphs
460-10-30-3 through 30-5
, the objective of the initial measurement of a guarantee liability is the fair value of the guarantee at its inception. For example:
  1. a
    If 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.
  2. b
    If 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.
  3. c
    If 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.
","snippet":"Except as indicated in paragraphs 460-10-30-3 through 30-5, the objective of the initial measurement of a guarantee liability is the fair value of the guarantee at its inception. For example:\n(a) If a guarantee is issued…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:005ad516b6790f3bceadcb755b5026e0f876dbb47c0401a81e2f1ad9b612a1de","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:92c2806cc00b4dbc5c41977f0f9f0e2690deb8602759efc03dcb5d0c0f2ed381","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}},{"block":null,"heading":"Guarantees Not within the Scope of Subtopic 326-20","paragraphs":[{"citation":"460-10-30-3","para":"30-3","html":"
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:
  1. a
    The amount that satisfies the fair value objective as discussed in the preceding paragraph
  2. b
    The contingent liability amount required to be recognized at inception of the guarantee by Section 450-20-30.
","snippet":"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 guarante…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b3114e238644ccc9005a16b6649b5161fbc51911f68ed73b8c0ca9ac87e4733","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}},{"citation":"460-10-30-4","para":"30-4","html":"
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.
","snippet":"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) i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:003b75b30e557b01d82849209ad2ba6a8751594a7a91d33e36a9ef344c8a52b5","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58f8a59ecb61ee954ac4dc6237defe267516e313afab457dceb852e7b15a7b39","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}},{"block":null,"heading":"Guarantees within the Scope of Subtopic 326-20","paragraphs":[{"citation":"460-10-30-5","para":"30-5","html":"
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:
  1. a
    The amount that satisfies the fair value objective in accordance with paragraph 460-10-30-2
  2. b
    The contingent liability related to the expected credit loss for the guarantee measured under Subtopic 326-20.
","snippet":"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:\n(a) The amount that sa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d635a09f5fab3bd3af3031afaf851f2658608363a0f0b32bee97b44b9ce08039","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cb95f17af6b5c01b491941e11a8e66dffa8818724fb730e4a1c9061fa51ca966","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2b8086cbe9d6f568b695a1838d1f3537c07e61958d984b775bfb4e16ebf2f0dc","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2b8086cbe9d6f568b695a1838d1f3537c07e61958d984b775bfb4e16ebf2f0dc","downloaded_from":"2026-09-10T00:29:41.991Z","last_downloaded_at":"2026-09-10T00:29:41.991Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482486","source_sha256":"eb82149e4cd88c9f705b9336831b6432904950e78d36f4e3641419c14265bdee"}}