# ASC 460-10-30: Guarantees — Overall — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/460/10/#30-initial-measurement) 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): 2026-09-10T00:29:41.991Z to 2026-09-10T00:29:41.991Z Record version: sha256:2b8086cbe9d6f568b695a1838d1f3537c07e61958d984b775bfb4e16ebf2f0dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 460-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/460/10/#30-initial-measurement) SEC content: no ##### [460-10-30-1](https://asc.understandingaccounting.org/asc/460/10/#460-10-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:41.991Z to 2026-09-10T00:29:41.991Z Record version: sha256:88aaf9b5aac34405a231248102e22304e2c9954a9312319d60e7cffce5f10a13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The types of guarantees identified in paragraph [460-10-25-1](https://asc.understandingaccounting.org/asc/460/10/#460-10-25-1) are not subject to the initial measurement provisions of this Subsection. #### Fair Value Objective ##### [460-10-30-2](https://asc.understandingaccounting.org/asc/460/10/#460-10-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:41.991Z to 2026-09-10T00:29:41.991Z Record version: sha256:005ad516b6790f3bceadcb755b5026e0f876dbb47c0401a81e2f1ad9b612a1de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as indicated in paragraphs [460-10-30-3 through 30-5](https://asc.understandingaccounting.org/asc/460/10/#460-10-30-3) , 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-55-14). #### Guarantees Not within the Scope of Subtopic 326-20 ##### [460-10-30-3](https://asc.understandingaccounting.org/asc/460/10/#460-10-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:41.991Z to 2026-09-10T00:29:41.991Z Record version: sha256:3b3114e238644ccc9005a16b6649b5161fbc51911f68ed73b8c0ca9ac87e4733 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [460-10-30-4](https://asc.understandingaccounting.org/asc/460/10/#460-10-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:41.991Z to 2026-09-10T00:29:41.991Z Record version: sha256:003b75b30e557b01d82849209ad2ba6a8751594a7a91d33e36a9ef344c8a52b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.")) 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:29:41.991Z to 2026-09-10T00:29:41.991Z Record version: sha256:d635a09f5fab3bd3af3031afaf851f2658608363a0f0b32bee97b44b9ce08039 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/460/10/#460-10-30-2) 2. b The contingent liability related to the expected credit loss for the guarantee measured under Subtopic 326-20.