{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/470/944/","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.","number":"470-944","topic":"470","title":"Financial Services—Insurance","area":"Liabilities","paragraphs":8,"summary":"This subtopic governs how an insurance entity that issues surplus notes (also called certificates of contribution, surplus debentures, or capital notes) accounts for them under GAAP. The core rule is that surplus notes are debt, not equity: they are presented as liabilities and interest is accrued over the note's life even though the domiciliary state insurance commissioner must approve each principal and interest payment (470-944-25-1, 35-1, 45-1).","concepts":["surplus notes","certificates of contribution","domiciliary state insurance commissioner approval","debt versus equity classification","interest accrual","subordination","statutory surplus","issuer disclosure"],"categories":["Debt and equity","Presentation","Disclosure","Industry-specific"],"level":"intermediate","topic_title":"Debt","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"470-944-00-1","para":"00-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following table identifies the changes made to this Subtopic.</div><div class=\"norm-text\"><table class=\"asc-table\" id=\"SL50305124-203111\"><tr><td class=\"entry\"><strong class=\"ph b\">Paragraph</strong></td><td class=\"entry\"><strong class=\"ph b\">Action</strong></td><td class=\"entry\"><strong class=\"ph b\">Accounting Standards Update</strong></td><td class=\"entry\"><strong class=\"ph b\">Date</strong></td></tr><tr><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td></tr><tr><td class=\"entry\"><a href=\"/glossary/r/#readily-determinable-fair-value\" class=\"term\" title=\"An equity security has a readily determinable fair value if it meets any of the following conditions: The fair value of an equity security is readily determinable if sales prices or bid-and-asked quotations are currently available on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market, provided that those prices or quotations for the over-the-counter market are publicly reported by the National Association of Securities Dealers Automated Quotations systems or by OTC Markets Group Inc. Restricted stock meets that definition if the restriction terminates within one year. The fair value of an equity security traded only in a foreign market is readily determinable if that foreign market is of a breadth and scope comparable to one of the U.S. markets referred to above. The fair value of an equity security that is an investment in a mutual fund or in a structure similar to a mutual fund (that is, a limited partnership or a venture capital entity) is readily determinable if the fair value per share (unit) is determined and published and is the basis for current transactions.\"><span>Readily Determinable Fair Value</span></a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2015-10/\" class=\"xref\">Accounting Standards Update No. 2015-10</a></td><td class=\"entry\">06/12/2015</td></tr><tr><td class=\"entry\"><a href=\"/glossary/r/#readily-determinable-fair-value\" class=\"term\" title=\"An equity security has a readily determinable fair value if it meets any of the following conditions: The fair value of an equity security is readily determinable if sales prices or bid-and-asked quotations are currently available on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market, provided that those prices or quotations for the over-the-counter market are publicly reported by the National Association of Securities Dealers Automated Quotations systems or by OTC Markets Group Inc. Restricted stock meets that definition if the restriction terminates within one year. The fair value of an equity security traded only in a foreign market is readily determinable if that foreign market is of a breadth and scope comparable to one of the U.S. markets referred to above. The fair value of an equity security that is an investment in a mutual fund or in a structure similar to a mutual fund (that is, a limited partnership or a venture capital entity) is readily determinable if the fair value per share (unit) is determined and published and is the basis for current transactions.\"><span>Readily Determinable Fair Value</span></a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2014-06/\" class=\"xref\">Accounting Standards Update No. 2014-06</a></td><td class=\"entry\">03/14/2014</td></tr></table></div></div>","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nReadily Determinable Fair Value | Amended | Accounting Standards Update No. 2015-10 | 06…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c4312ffed0c707da0e9499ab06ecd19c8b89e1d1ecfa6e50c6bb21b5d30f1bf9","downloaded_from":"2026-09-10T00:34:11.077Z","last_downloaded_at":"2026-09-10T00:34:11.077Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477757","source_sha256":"aac7c79db9e79cfb68a8969d921dc976750af9c7abede8dfc30973d59c2b7174"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a77e6e5da16e9776cbaf054e788b698a57dd786b597c3223ceeef691d7d3d1fd","downloaded_from":"2026-09-10T00:34:11.077Z","last_downloaded_at":"2026-09-10T00:34:11.077Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477757","source_sha256":"aac7c79db9e79cfb68a8969d921dc976750af9c7abede8dfc30973d59c2b7174"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:073b8dfa292373985754ec4c01e5688aa2d60e847c9f72a2ba09424f0c5fa5c3","downloaded_from":"2026-09-10T00:34:11.077Z","last_downloaded_at":"2026-09-10T00:34:11.077Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477757","source_sha256":"aac7c79db9e79cfb68a8969d921dc976750af9c7abede8dfc30973d59c2b7174"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"470-944-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_053D382C-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Subtopic provides guidance on accounting, financial statement presentation, and disclosure by the issuers of <a href=\"/glossary/s/#surplus-notes\" class=\"term\" title=\"Surplus notes are financial instruments issued by insurance entities that are includable in surplus for statutory accounting purposes as prescribed or permitted by state laws and regulations.\"><span>surplus notes</span></a>. </span></span><span class=\"sfragment\" id=\"sfr_053D39CC-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The term surplus notes is the most common term applied to these financial instruments. Some jurisdictions refer to these financial instruments as certificates of contribution, surplus debentures, or capital notes. </span></span><span class=\"sfragment\" id=\"sfr_053D3B32-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The following are some general characteristics of surplus notes: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D3C79-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Approval of the issuance by the domiciliary state insurance commissioner </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D3DC4-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Stated maturity date in most but not all cases </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D3F1C-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Scheduled interest payments </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">d</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D4064-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Approval of the payment of principal and interest by the domiciliary state insurance commissioner </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">e</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D41AA-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Nonvoting </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">f</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D42F0-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Subordinate to all claims except those of shareholders for stock entities </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">g</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D4438-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Subordinate to all claims except policyholder residuals for mutual entities (after policyholder liabilities are settled) </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">h</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D4575-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">No or limited acceleration rights other than for rehabilitation, liquidation, or reorganization of the insurer by a governmental agency </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">i</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_053D46A9-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Proceeds from issuance in the form of cash, cash equivalent, or some other asset with a <a href=\"/glossary/r/#readily-determinable-fair-value\" class=\"term\" title=\"An equity security has a readily determinable fair value if it meets any of the following conditions: The fair value of an equity security is readily determinable if sales prices or bid-and-asked quotations are currently available on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market, provided that those prices or quotations for the over-the-counter market are publicly reported by the National Association of Securities Dealers Automated Quotations systems or by OTC Markets Group Inc. Restricted stock meets that definition if the restriction terminates within one year. The fair value of an equity security traded only in a foreign market is readily determinable if that foreign market is of a breadth and scope comparable to one of the U.S. markets referred to above. The fair value of an equity security that is an investment in a mutual fund or in a structure similar to a mutual fund (that is, a limited partnership or a venture capital entity) is readily determinable if the fair value per share (unit) is determined and published and is the basis for current transactions.\"><span>readily determinable fair value</span></a> satisfactory to the domiciliary state insurance commissioner. </span></span></div></li></ol></div></div>","snippet":"This Subtopic provides guidance on accounting, financial statement presentation, and disclosure by the issuers of surplus notes. The term surplus notes is the most common term applied to these financial instruments. Some…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe28270641ede4e96427b1f48de647da05d3403c44c191c2ec6362063ccba897","downloaded_from":"2026-09-10T00:34:13.964Z","last_downloaded_at":"2026-09-10T00:34:13.964Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479040","source_sha256":"22c6a073f6c45f496542ac4f8c0c2ac35af4a677ba5b354b513372025a04816b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e22c046a977990c98f258aa34387f8a18985f60f3959e14db838e3094ec414ea","downloaded_from":"2026-09-10T00:34:13.964Z","last_downloaded_at":"2026-09-10T00:34:13.964Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479040","source_sha256":"22c6a073f6c45f496542ac4f8c0c2ac35af4a677ba5b354b513372025a04816b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:107f863f46298a9044c2cfa7cd4d1c384c445722b3b00f902afe3b673bc5d341","downloaded_from":"2026-09-10T00:34:13.964Z","last_downloaded_at":"2026-09-10T00:34:13.964Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479040","source_sha256":"22c6a073f6c45f496542ac4f8c0c2ac35af4a677ba5b354b513372025a04816b"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"470-944-15-1","para":"15-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section <a altsource=\"GUID-6D9C18A3-ADAA-4660-A6E4-06A364A6BB5D.ditamap\" class=\"ditamap\">944-10-15</a>, with specific entity exceptions noted below.</div></div>","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15, with specific entity exceptions noted below.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3dc33b6a4b19c3fae26ad0c366118d8bf50ac4cb330ba09bae9c71b317d7bbc0","downloaded_from":"2026-09-10T00:34:17.071Z","last_downloaded_at":"2026-09-10T00:34:17.071Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478252","source_sha256":"cf2270b1f7571fece8490830a5872183c77fd6073f9ae16ea1ed5e129ae5f2ac"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8721aba50edc526af387e1fbfd7c25c17c2cc895ad8bc4058c68f0d5637a3f0d","downloaded_from":"2026-09-10T00:34:17.071Z","last_downloaded_at":"2026-09-10T00:34:17.071Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478252","source_sha256":"cf2270b1f7571fece8490830a5872183c77fd6073f9ae16ea1ed5e129ae5f2ac"}},{"block":null,"heading":"Entities","paragraphs":[{"citation":"470-944-15-2","para":"15-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0547606C-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The guidance in this Subtopic does not apply to investors in <a href=\"/glossary/s/#surplus-notes\" class=\"term\" title=\"Surplus notes are financial instruments issued by insurance entities that are includable in surplus for statutory accounting purposes as prescribed or permitted by state laws and regulations.\"><span>surplus notes</span></a>. </span></span></div></div>","snippet":"The guidance in this Subtopic does not apply to investors in surplus notes.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:73e013f8eea79d265ea4c1142afbf5f83e91c28c21fb7d27aeecb79092ef2d6e","downloaded_from":"2026-09-10T00:34:17.071Z","last_downloaded_at":"2026-09-10T00:34:17.071Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478252","source_sha256":"cf2270b1f7571fece8490830a5872183c77fd6073f9ae16ea1ed5e129ae5f2ac"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:408c76d7538438feded52085c19474a484c2467983a31cd28f6e9f60bdfe9369","downloaded_from":"2026-09-10T00:34:17.071Z","last_downloaded_at":"2026-09-10T00:34:17.071Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478252","source_sha256":"cf2270b1f7571fece8490830a5872183c77fd6073f9ae16ea1ed5e129ae5f2ac"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d536ea5216e783ec48f5006512da93e6de1d9faaa0a16232c60bbb9ab5d24fe8","downloaded_from":"2026-09-10T00:34:17.071Z","last_downloaded_at":"2026-09-10T00:34:17.071Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478252","source_sha256":"cf2270b1f7571fece8490830a5872183c77fd6073f9ae16ea1ed5e129ae5f2ac"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Surplus Notes","paragraphs":[{"citation":"470-944-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_05525278-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"><a href=\"/glossary/s/#surplus-notes\" class=\"term\" title=\"Surplus notes are financial instruments issued by insurance entities that are includable in surplus for statutory accounting purposes as prescribed or permitted by state laws and regulations.\"><span>Surplus notes</span></a> shall be accounted for as debt instruments; equity treatment for surplus notes is inappropriate. </span></span></div></div>","snippet":"Surplus notes shall be accounted for as debt instruments; equity treatment for surplus notes is inappropriate.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c650e1a12f10b3fd092d93fdf4bd3646d40460b769cfe83da17e3d30806c6410","downloaded_from":"2026-09-10T00:34:21.457Z","last_downloaded_at":"2026-09-10T00:34:21.457Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478415","source_sha256":"9dc91dc7884b2451556ee28034730191dccdad328505e4319e401c90d4f41e0e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f863a31a6b362a6cd5a155a41122300d1409301c2690d40762b6581548292bfd","downloaded_from":"2026-09-10T00:34:21.457Z","last_downloaded_at":"2026-09-10T00:34:21.457Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478415","source_sha256":"9dc91dc7884b2451556ee28034730191dccdad328505e4319e401c90d4f41e0e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10f7e7904ec8a54b15e0d25616ddf6943cfa12a7231b540e25cd1abb794c7320","downloaded_from":"2026-09-10T00:34:21.457Z","last_downloaded_at":"2026-09-10T00:34:21.457Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478415","source_sha256":"9dc91dc7884b2451556ee28034730191dccdad328505e4319e401c90d4f41e0e"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Surplus Notes","paragraphs":[{"citation":"470-944-35-1","para":"35-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_055AE80A-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Interest shall be accrued over the life of the surplus note, irrespective of the approval of interest and principal payments by the domiciliary state insurance commissioner, and shall be recognized as an expense in the same manner as other debt. </span></span></div></div>","snippet":"Interest shall be accrued over the life of the surplus note, irrespective of the approval of interest and principal payments by the domiciliary state insurance commissioner, and shall be recognized as an expense in the s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a9bf7542cbb855aaa44abfb33469e2cb3d3237fab792fa69a2d031631acf6b45","downloaded_from":"2026-09-10T00:34:23.460Z","last_downloaded_at":"2026-09-10T00:34:23.460Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478587","source_sha256":"dd465819bd48498e2a89bbae35b3ba7d7165f4aed9b215c09272f514e66826d0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d367cd46f5a96332743c75d4f311ca447102cac16a8e66891cb2652f12878a6","downloaded_from":"2026-09-10T00:34:23.460Z","last_downloaded_at":"2026-09-10T00:34:23.460Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not 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class=\"sfragment\" id=\"sfr_0563CD64-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"><a href=\"/glossary/s/#surplus-notes\" class=\"term\" title=\"Surplus notes are financial instruments issued by insurance entities that are includable in surplus for statutory accounting purposes as prescribed or permitted by state laws and regulations.\"><span>Surplus notes</span></a> shall be presented as liabilities in the financial statements of the issuer; equity treatment for surplus notes is inappropriate. </span></span></div></div>","snippet":"Surplus notes shall be presented as liabilities in the financial statements of the issuer; equity treatment for surplus notes is 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id=\"sfr_056C91A7-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity shall disclose the domiciliary state insurance commissioner's role and ability to approve or disapprove any interest and principal payments. </span></span></div></div>","snippet":"An entity shall disclose the domiciliary state insurance commissioner's role and ability to approve or disapprove any interest and principal payments.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5828cb34a84c30066ca4705f91267031c95ca50933105322c8da8ed01bdd64da","downloaded_from":"2026-09-10T00:34:29.011Z","last_downloaded_at":"2026-09-10T00:34:29.011Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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timestamps","source_key":"1943274/2147477845","source_sha256":"ba1e1163e2f3de24c312755f35aaf4468a1f5a64f33999e9e89d9fb4793ce696"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a7e473981f4d6a332d1c8df6ee89e36543f0e6ccf5e07a2d6cbd60231d4e2485","downloaded_from":"2026-09-10T00:34:29.011Z","last_downloaded_at":"2026-09-10T00:34:29.011Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477845","source_sha256":"ba1e1163e2f3de24c312755f35aaf4468a1f5a64f33999e9e89d9fb4793ce696"}}],"enrichment":{"summary":"This subtopic governs how an insurance entity that issues surplus notes (also called certificates of contribution, surplus debentures, or capital notes) accounts for them under GAAP. The core rule is that surplus notes are debt, not equity: they are presented as liabilities and interest is accrued over the note's life even though the domiciliary state insurance commissioner must approve each principal and interest payment (470-944-25-1, 35-1, 45-1).","key_points":["Surplus notes shall be accounted for as debt instruments, and equity treatment is inappropriate (470-944-25-1).","Typical characteristics include commissioner approval of issuance and of principal/interest payments, a stated maturity in most cases, scheduled interest, nonvoting status, deep subordination, and limited acceleration rights only on rehabilitation, liquidation, or reorganization (470-944-05-1).","Interest shall be accrued over the life of the note irrespective of whether the domiciliary state insurance commissioner has approved interest and principal payments, and is expensed the same way as interest on other debt (470-944-35-1).","Surplus notes shall be presented as liabilities on the issuer's financial statements (470-944-45-1).","The issuer shall disclose the domiciliary state insurance commissioner's role and ability to approve or disapprove any interest and principal payments (470-944-50-1).","The guidance applies only to issuers; it does not apply to investors in surplus notes (470-944-15-2), and otherwise follows the scope in Section 944-10-15 (470-944-15-1)."],"categories":["Debt and equity","Presentation","Disclosure","Industry-specific"],"audience_level":"intermediate","student_note":"Surplus notes are the classic GAAP-versus-statutory divergence: statutory accounting treats them as surplus (equity-like), but GAAP insists they are liabilities with accrued interest. 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