# ASC Topic 470: Debt Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/470/) 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): 2026-09-10T00:30:14.064Z to 2026-09-10T00:35:24.744Z Record version: sha256:b5cb87ffaca91b85236c06a16cde4276d4665b66fc0c94c185a3c4f59b8e6f15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 470 covers a borrower's (issuer's) accounting for debt across its life cycle: balance sheet classification of short-term and callable obligations (470-10), convertible debt and debt with warrants (470-20), participating mortgages (470-30), product financing arrangements (470-40), modifications and extinguishments (470-50), troubled debt restructurings (470-60), plus industry-specific rules for oil and gas, insurance surplus notes, depository institutions, health care, not-for-profit conduit bonds, regulated operations, and real estate special assessments/TIF debt. The unifying theme is substance over form — obligations are classified and measured by their economic reality (e.g., a "sale" of future revenue, a "conveyance," or a product financing arrangement can all be borrowings), and current versus noncurrent classification turns on the creditor's demand rights at the balance sheet date. The two most heavily tested mechanics are the 470-10-45-14 refinancing exception for excluding short-term obligations from current liabilities and the 470-50-40-10 "10 percent cash flow test" that determines whether a modification or exchange is an extinguishment (new debt at fair value, gain or loss in income) or merely a continuation (new effective interest rate, no gain or loss). Troubled debt restructurings under 470-60 sit outside that model, using fair value for asset/equity settlements and prospective interest-rate adjustment for modifications of terms. Source downloaded (UTC): 2026-09-10T00:30:14.064Z to 2026-09-10T00:31:04.047Z Record version: sha256:f898f591fca07f08a38195886e12f3ba58a8ef83f6f1b68e90e2ed7985fe632c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10: Debt — Overall ### Machine-generated study aids ```json { "summary": "ASC 470-10 is the Overall subtopic of the Debt topic and governs a borrower's balance sheet classification (current vs. noncurrent) of specific obligations: short-term obligations expected to be refinanced, due-on-demand loans, callable debt and covenant violations, revolving credit agreements with lock-box arrangements and subjective acceleration clauses, increasing-rate debt, sales of future revenue, and indexed debt. Core rules: callable and demand obligations are current unless a waiver/cure exception applies (470-10-45-10 through 45-11), and a short-term obligation may be excluded from current liabilities only if the entity intends to refinance long term and demonstrates ability via post-balance-sheet issuance of long-term debt/equity or a qualifying financing agreement (470-10-45-14). It also sets debt-versus-deferred-income classification for proceeds from sales of future revenue and disclosure requirements for maturities, unused lines of credit, and refinancings.", "key_points": [ "Obligations due on demand, or that will become due on demand within one year (or operating cycle, if longer) of the balance sheet date, are current liabilities even if liquidation is not expected; a demand provision is not a subjective acceleration clause (470-10-45-10).", "Long-term obligations that are or will be callable because of a covenant violation at the balance sheet date are current liabilities unless the creditor has waived or lost the right to demand repayment for more than one year, or it is probable the violation will be cured within a stated grace period (470-10-45-11).", "Where a lender waives its call right for more than one year while retaining future covenant tests, the debt is noncurrent unless both a violation existed (or would have absent modification) at the balance sheet date and it is probable the borrower cannot cure at measurement dates within the next 12 months (470-10-45-1; Example 1 at 470-10-55-2).", "A short-term obligation is excluded from current liabilities only if the entity intends to refinance on a long-term basis and that intent is supported by post-balance-sheet-date issuance of long-term debt or equity securities, or by a financing agreement meeting the noncancelable/objectively determinable-covenant, no-violation, and financially capable lender conditions (470-10-45-14); the excluded amount is capped by proceeds or amounts available (470-10-45-16 through 45-19).", "Repaying a short-term obligation with current assets after the balance sheet date and later replenishing working capital with long-term financing does not permit exclusion from current liabilities (470-10-45-15; Example 5 at 470-10-55-33).", "Revolver borrowings subject to both a subjective acceleration clause and a lock-box arrangement are short-term obligations classified as current unless the 470-10-45-14 refinancing conditions are met under a separate agreement (470-10-45-5); a springing lock-box arrangement leaves the borrowings long term, with the subjective acceleration clause evaluated under 470-10-45-2.", "For sales of future revenue, factors such as the transaction not purporting to be a sale, significant continuing involvement, cancelability, a capped investor return, or investor recourse create a rebuttable presumption of debt classification (470-10-25-2); debt is amortized under the interest method and deferred income under the units-of-revenue method (470-10-35-3)." ], "categories": [ "Presentation", "Debt and equity", "Disclosure", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "Balance sheet classification of debt is a recurring exam and practice issue: the classic trap is assuming that a post-year-end covenant waiver or a rollover of short-term borrowings automatically supports noncurrent classification — the waiver must extend more than one year (or a grace-period cure must be probable), and refinancing ability must be demonstrated by an actual long-term issuance or a qualifying, noncancelable financing agreement before the statements are issued.", "related_topics": [ "470-20", "470-50", "470-60", "480-10", "835-30", "210-10" ], "key_concepts": [ "current versus noncurrent classification", "short-term obligations expected to be refinanced", "subjective acceleration clause", "lock-box arrangement", "debt covenant violation and waiver", "callable debt", "sales of future revenue", "increasing-rate debt" ] } ``` Source downloaded (UTC): 2026-09-10T00:30:14.064Z to 2026-09-10T00:30:14.064Z Record version: sha256:7e08ea693d20dbbf7542b1adc379921ed5bab8035e4055f2f16836fe5a9ac2ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/10/#00-status) SEC content: no ##### [470-10-00-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:14.064Z to 2026-09-10T00:30:14.064Z Record version: sha256:a4d5f4bae14b0e68725d1b1039ac76bed02fb4dd681e68d7207fc7c3c3772cbe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Not-for-Profit EntityAddedAccounting Standards Update No. 2023-0610/09/2023
Operating CycleAddedAccounting Standards Update No. 2012-0410/01/2012
Public Business EntityAddedAccounting Standards Update No. 2023-0610/09/2023
SecurityAddedAccounting Standards Update No. 2023-0610/09/2023
470-10-05-5AmendedAccounting Standards Update No. 2012-0410/01/2012
470-10-15-1AmendedAccounting Standards Update No. 2023-0610/09/2023
470-10-25-3AddedAccounting Standards Update No. 2012-0410/01/2012
470-10-25-4AddedAccounting Standards Update No. 2012-0410/01/2012
470-10-35-4AddedAccounting Standards Update No. 2012-0410/01/2012
470-10-45-10AmendedAccounting Standards Update No. 2012-0410/01/2012
470-10-45-14AmendedAccounting Standards Update No. 2012-0410/01/2012
470-10-45-19AmendedAccounting Standards Update No. 2012-0410/01/2012
470-10-45-21AmendedAccounting Standards Update No. 2012-0410/01/2012
470-10-50-1AmendedAccounting Standards Update No. 2020-0608/05/2020
470-10-50-6AddedAccounting Standards Update No. 2023-0610/09/2023
470-10-50-7AddedAccounting Standards Update No. 2023-0610/09/2023
470-10-55-11AmendedAccounting Standards Update No. 2020-0608/05/2020
470-10-55-12AmendedAccounting Standards Update No. 2020-0608/05/2020
470-10-55-18AmendedMaintenance Update 2016-11 (PDF)06/27/2016
470-10-60-2SupersededAccounting Standards Update No. 2020-0608/05/2020
470-10-60-4AmendedAccounting Standards Update No. 2016-0202/25/2016
Source downloaded (UTC): 2026-09-10T00:30:16.675Z to 2026-09-10T00:30:16.675Z Record version: sha256:aa7364508f35e456f083baddee39fc4a98cdd5f47eb738773b089a74a841f738 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/10/#05-overview-and-background) SEC content: no ##### [470-10-05-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:16.675Z to 2026-09-10T00:30:16.675Z Record version: sha256:1273dc3ffd4080c39987f2f62f576f9c4d801611feeadc3e5a3e2b35e1fbe10a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Codification contains several Topics that address certain aspects of the accounting for debt. The Topics include: 1. a Liabilities 2. b Debt 3. c Distinguishing Liabilities from Equity. ##### [470-10-05-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:16.675Z to 2026-09-10T00:30:16.675Z Record version: sha256:b645014f9176d238d149d5b940de62037aa830e13262d634309cd7c6a5cccb5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Debt Topic provides accounting and reporting guidance for borrowers. This Topic includes the following Subtopics: 1. a Overall 2. b Debt with Conversion and Other Options 3. c Participating Mortgage Loans 4. d Product Financing Arrangements 5. e Modifications and Extinguishments 6. f Troubled Debt Restructurings by Debtors. ##### [470-10-05-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:16.675Z to 2026-09-10T00:30:16.675Z Record version: sha256:8e7d87118d3365f312555cad4c77bdfde10ed10bb017f0ff4fd56081432df060 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Liabilities Topic provides accounting and reporting guidance related to liabilities typically considered short-term in nature, and certain guidance that may apply broadly to any liability, including those addressed in this Topic. ##### [470-10-05-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:16.675Z to 2026-09-10T00:30:16.675Z Record version: sha256:42d87ae0c7acd8543f3ca27f8b61257eaf2eac74f41116dea23a82561398557b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Distinguishing Liabilities from Equity Topic provides accounting and reporting guidance for determining whether a transaction represents a liability or equity. ##### [470-10-05-5](https://asc.understandingaccounting.org/asc/470/10/#470-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:16.675Z to 2026-09-10T00:30:16.675Z Record version: sha256:fe46cd647b8d3a976ab49c7545be22c46a3d76e113f5a0b899335c5e70d38e0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Overall Subtopic addresses classification determination for specific obligations, such as the following: 1. a Short-term obligations expected to be refinanced on a long-term basis 2. b Due-on-demand loan arrangements 3. c Callable debt 4. d Sales of future revenue 5. e Increasing rate debt 6. f Debt that includes covenants 7. g Revolving credit agreements subject to lock-box arrangements and subjective acceleration clauses 8. h Indexed debt. ##### [470-10-05-6](https://asc.understandingaccounting.org/asc/470/10/#470-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:16.675Z to 2026-09-10T00:30:16.675Z Record version: sha256:6c701913f84c8ea25c8f168dbe63f2d858061b6064d9d9ee95679307858d925f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-10-05-7](https://asc.understandingaccounting.org/asc/470/10/#470-10-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:16.675Z to 2026-09-10T00:30:16.675Z Record version: sha256:ba9fbf427897b93a44bb83786fd283f6f87834ee993e40e5a7320414801168a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T00:30:19.735Z to 2026-09-10T00:30:19.735Z Record version: sha256:703e7a8d0955e29d4fb7ff64ad2eb906ec83c428f3a79f0f25087518d0d14b5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/10/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-10-15-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-15-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:30:19.735Z to 2026-09-10T00:30:19.735Z Record version: sha256:51e74ca570f0761452b402f283fd0c17552504f82e0c6858fc19f251ab9f5fc9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities. Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance: [105-10-65-7](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-7) The guidance in this Subtopic applies to all entities, excluding paragraph [470-10-50-7](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-7), which applies to [public business entities](https://asc.understandingaccounting.org/glossary/p/#public-business-entity "A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC.") only. #### Transactions ##### [470-10-15-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:19.735Z to 2026-09-10T00:30:19.735Z Record version: sha256:1120ddffb4be4e72a7a7661b63991136337614c8b5ff061eb562861e3cf92e1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic that relates to separate classification of current assets and current liabilities (that is, a classified balance sheet) applies only when an entity is preparing a classified balance sheet for financial accounting and reporting purposes. Source downloaded (UTC): 2026-09-10T00:30:25.339Z to 2026-09-10T00:30:25.339Z Record version: sha256:becd8ab8c570815a9c22105ada44ec7cdc0a9345c06e8b488e36e5ecbb5a3a69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/10/#25-recognition) SEC content: no #### Sales of Future Revenues or Various Other Measures of Income ##### [470-10-25-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:25.339Z to 2026-09-10T00:30:25.339Z Record version: sha256:6bb304c7240285054e6869f47e9e9aea0f5631c96b1fc9843ed84a6379b1c7c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity receives cash from an investor and agrees to pay to the investor for a defined period a specified percentage or amount of the revenue or of a measure of income (for example, gross margin, operating income, or pretax income) of a particular product line, business segment, trademark, patent, or contractual right. It is assumed that immediate income recognition is not appropriate due to the facts and circumstances. The payment to the investor and the future revenue or income on which the payment is based may be denominated in a foreign currency. ##### [470-10-25-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:25.339Z to 2026-09-10T00:30:25.339Z Record version: sha256:fbb2aff9579f0a03f75145f4cb23f5964677fd63251e5f03de856b088b1d0f09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While the classification of the proceeds from the investor as debt or deferred income depends on the specific facts and circumstances of the transaction, the presence of any one of the following factors independently creates a rebuttable presumption that classification of the proceeds as debt is appropriate: 1. a The transaction does not purport to be a sale (that is, the form of the transaction is debt). 2. b The entity has significant continuing involvement in the generation of the cash flows due the investor (for example, active involvement in the generation of the operating revenues of a product line, subsidiary, or business segment). 3. c The transaction is cancelable by either the entity or the investor through payment of a lump sum or other transfer of assets by the entity. 4. d The investor's rate of return is implicitly or explicitly limited by the terms of the transaction. 5. e Variations in the entity's revenue or income underlying the transaction have only a trifling impact on the investor's rate of return. 6. f The investor has any recourse to the entity relating to the payments due the investor. #### Indexed Debt ##### [470-10-25-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:25.339Z to 2026-09-10T00:30:25.339Z Record version: sha256:2d97ff207486f01eb13d06921d12ec2bf95bd6d157fdf44379236d7a35762101 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Debt instruments may be issued with both guaranteed and contingent payments. The contingent payments may be linked to the price of a specific commodity (for example, oil) or a specific index (for example, the S&P 500). In some instances, the investor's right to receive the contingent payment (an indexing feature) is separable from the debt instrument. If the indexing feature does not warrant separate accounting under Topic 815 or the instrument does not meet the definition of a derivative under Topic 815, the entire instrument shall be accounted for in accordance with paragraphs [470-10-25-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-25-4) and [470-10-35-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-4). ##### [470-10-25-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:25.339Z to 2026-09-10T00:30:25.339Z Record version: sha256:90f727c316b98101e7083165f835422d7ba1356236eeeab74c1cca85aa90fa31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the investor's right to receive the contingent payment is separable, the proceeds shall be allocated between the debt instrument and the investor's stated right to receive the contingent payment. The premium or discount on the debt resulting from the allocation shall be accounted for in accordance with Subtopic 835-30. Source downloaded (UTC): 2026-09-10T00:30:29.055Z to 2026-09-10T00:30:29.055Z Record version: sha256:88b5e2b41a8f97e638eb8e432e17e7e0cf3b0b2221d8642015d27355a395d78c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/470/10/#35-subsequent-measurement) SEC content: no #### Increasing Rate Debt ##### [470-10-35-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:29.055Z to 2026-09-10T00:30:29.055Z Record version: sha256:7cf462807e59bc568deb335f3a55bbe772baa4f17eb293e313a7c38447aeedec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debt instrument may have a maturity date that can be extended at the option of the borrower at each maturity date until final maturity. In such cases, the interest rate on the note increases a specified amount each time the note is renewed. For guidance on accounting for interest, see Subtopic 835-30. ##### [470-10-35-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:29.055Z to 2026-09-10T00:30:29.055Z Record version: sha256:d8e2fa2bd69bc3b0c85aab8ef7b40d4e6d09590171498c1ddabb3c7cafed9dbf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The borrower's periodic interest cost shall be determined using the interest method based on the estimated outstanding term of the debt. In estimating the term of the debt, the borrower shall consider its plans, ability, and intent to service the debt. Debt issue costs shall be amortized over the same period used in the interest cost determination. The term-extending provisions of the debt instrument should be analyzed to determine whether those provisions constitute an embedded derivative that warrants separate accounting as a derivative under Subtopic 815-10. #### Sale of Future Revenues or Various Other Measures of Income ##### [470-10-35-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:29.055Z to 2026-09-10T00:30:29.055Z Record version: sha256:909723d2791adda2d6169918ee7931cb44cc0be7a81c875ca1f370a69b597903 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts recorded as debt shall be amortized under the interest method (see Subtopic 835-30) and amounts recorded as deferred income shall be amortized under the [units-of-revenue method](https://asc.understandingaccounting.org/glossary/u/#units-of-revenue-method "A method of amortizing deferred revenue that arises under certain sales of future revenues. Under this method, amortization for a period is calculated by computing a ratio of the proceeds received from the investor to the total payments expected to be made to the investor over the term of the agreement, and then applying that ratio to the period's cash payment."). #### Indexed Debt ##### [470-10-35-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:29.055Z to 2026-09-10T00:30:29.055Z Record version: sha256:aec9a2a4f70ff76257bf4bf2055068e8155e4910615fff667aed7de1265a6983 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As the applicable index value increases such that an issuer would be required to pay an investor a contingent payment at maturity, the issuer shall recognize a liability for the amount that the contingent payment exceeds the amount, if any, originally attributed to the contingent payment feature. The liability for the contingent payment feature shall be based on the applicable index value at the balance sheet date and shall not anticipate any future changes in the index value. When no proceeds are allocated originally to the contingent payment, the additional liability resulting from the fluctuating index value shall be accounted for as an adjustment of the carrying amount of the debt obligation. Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:8a0f9bdbdd67c9ccc915286c598665ac807f29ba1d020ce788f4748f31885afb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/10/#45-other-presentation-matters) SEC content: no #### Classification of Debt That Includes Covenants ##### [470-10-45-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:8e25756b836659db06df286bd55a9022880f1b8c0bb745cd63cec04e461b708b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some long-term loans require compliance with certain covenants that must be met on a quarterly or semiannual basis. If a covenant violation occurs that would otherwise give the lender the right to call the debt, a lender may waive its call right arising from the current violation for a period greater than one year while retaining future covenant requirements. Unless facts and circumstances indicate otherwise, the borrower shall classify the obligation as noncurrent, unless both of the following conditions exist: 1. a A covenant violation that gives the lender the right to call the debt has occurred at the balance sheet date or would have occurred absent a loan modification. 2. b It is probable that the borrower will not be able to cure the default (comply with the covenant) at measurement dates that are within the next 12 months. See Example 1 (paragraph [470-10-55-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-2)) for an illustration of this classification guidance. #### Subjective Acceleration Clauses and Debt Classification ##### [470-10-45-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:3400a220bab21cb06b9b03f5ef2c3e3c64353554ad6c2274bd142fa8f4cd1046 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some situations, the circumstances (for example, recurring losses or liquidity problems) would indicate that long-term debt subject to a [subjective acceleration clause](https://asc.understandingaccounting.org/glossary/s/#subjective-acceleration-clause "A subjective acceleration clause is a provision in a debt agreement that states that the creditor may accelerate the scheduled maturities of the obligation under conditions that are not objectively determinable (for example, if the debtor fails to maintain satisfactory operations or if a material adverse change occurs).") should be classified as a current liability. Other situations would indicate only disclosure of the existence of such clauses. Neither reclassification nor disclosure would be required if the likelihood of the acceleration of the due date were remote, such as if the lender historically has not accelerated due dates of loans containing similar clauses and the financial condition of the borrower is strong and its prospects are bright. #### Classification of Revolving Credit Agreements Subject to Lock-Box Arrangements and Subjective Acceleration Clauses ##### [470-10-45-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:ea2ee386c628ed17a9e8e2de58a6691cc31d1bf851c60d8e23e7bb054f98234a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance does not apply to lock-box arrangements that are maintained at the discretion of the borrower. ##### [470-10-45-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:34dac90fe206bb406e1b407047627e29cd028fcb5743fa985c4c45fb1fab638f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Borrowings outstanding under certain revolving credit agreements are considered long-term debt because the borrowings are due at the end of a specified period (for example, 3 years) rather than when short-term notes roll over (for example, every 90 days). Borrowings may be collateralized, but the only note is the overall note signed at the agreement's inception. Some agreements require that the borrower maintain a [lock-box arrangement](https://asc.understandingaccounting.org/glossary/l/#lock-box-arrangement "An arrangement with a lender whereby the borrower's customers are required to remit payments directly to the lender and amounts received are applied to reduce the debt outstanding. A lock-box arrangement refers to any situation in which the borrower does not have the ability to avoid using working capital to repay the amounts outstanding. That is, the contractual provisions of a loan arrangement require that, in the ordinary course of business and without another event occurring, the cash receipts of a debtor are used to repay the existing obligation."). If borrowings outstanding under the agreement are considered [long-term obligations](https://asc.understandingaccounting.org/glossary/l/#long-term-obligations "Long-term obligations are those scheduled to mature beyond one year (or the operating cycle, if applicable) from the date of an entity's balance sheet."), the effect of a subjective acceleration clause on balance sheet classification is determined based on the criteria in paragraph [470-10-45-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-2). If borrowings outstanding are considered short-term obligations, and the borrower intends to refinance the obligation on a long-term basis, paragraph [470-10-45-13](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-13) applies and the debt shall be classified as a current liability because of the existence of the subjective acceleration clause. ##### [470-10-45-5](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:5d7668617be9289971fecdde1d551c545b807672b6c9af111d086fc10940418b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Borrowings outstanding under a revolving credit agreement that includes both a subjective acceleration clause and a requirement to maintain a lock-box arrangement shall be considered short-term obligations. Accordingly, because of the subjective acceleration clause, the debt shall be classified as a current liability unless the conditions in paragraph [470-10-45-14](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14) are met based on an agreement, other than the revolving credit agreement, to refinance the obligation after the balance sheet date on a long-term basis. ##### [470-10-45-5A](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-5A) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:153628d96ca0d3a1ddfd4413e6ae920ba7914c50699be504b43271fda11e17cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The term _lock-box arrangement_ as used in this guidance refers to any situation in which the borrower does not have the ability to avoid using working capital to repay the amounts outstanding. That is, if the contractual provisions of a loan arrangement require that, in the ordinary course of business and without another event occurring, the cash receipts of a debtor be used to repay the existing obligation, the credit agreement shall be considered a short-term obligation. ##### [470-10-45-6](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:a301912024c8f81c7582659e04eac42c22f31568077e659e34f0840b1903bc18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Borrowings outstanding under a revolving credit agreement that includes both a subjective acceleration clause and a requirement to maintain a [springing lock-box arrangement](https://asc.understandingaccounting.org/glossary/s/#springing-lock-box-arrangement "Some borrowings outstanding under a revolving credit agreement include both a subjective acceleration clause and a requirement to maintain a springing lock-box arrangement, whereby remittances from the borrower's customers are forwarded to the debtor's general bank account and do not reduce the debt outstanding until and unless the lender exercises the subjective acceleration clause.") shall be considered long-term obligations since the remittances do not automatically reduce the debt outstanding without another event occurring. The effect of the agreement's subjective acceleration clause shall be determined based on the provisions of paragraph [470-10-45-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-2). #### Classification of Increasing-Rate Debt ##### [470-10-45-7](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:ec851d034f6389338a634cab620f4f354089355e045810875a1f4a56ae979ea1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Classification of increasing-rate debt as current or noncurrent would reflect the borrower's anticipated source of repayment that is, current assets or a new short-term debt borrowing versus a long-term refinancing agreement that meets the requirements of this Subtopic and need not be consistent with the time frame used to determine periodic interest cost. ##### [470-10-45-8](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:8ca6371443fbae7d698248fb63ead8d591ae7df659ffdf717ef148b87c5c4975 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the debt is paid at par before its estimated maturity, any excess interest accrued shall be an adjustment of interest expense. #### Due on Demand Loan Arrangements ##### [470-10-45-9](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:245e5e64ca906450cbafe13db5e09e2cead2b5f75df8ac1993986b5886b2e39e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Loan agreements may specify the debtor's repayment terms but also enable the creditor, at his discretion, to demand payment at any time. Those loan arrangements may have wording such as either of the following: 1. a "The term note shall mature in monthly installments as set forth therein or on demand, whichever is earlier." 2. b "Principal and interest shall be due on demand, or if no demand is made, in quarterly installments beginning on...." ##### [470-10-45-10](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:f9d7edef9b9e0ff812b9f816dee5f2d7c99f1280448c1c80acb5e30631a5ae2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The current liability classification shall include obligations that, by their terms, are due on demand or will be due on demand within one year (or [operating cycle](https://asc.understandingaccounting.org/glossary/o/#operating-cycle "The average time intervening between the acquisition of materials or services and the final cash realization constitutes an operating cycle."), if longer) from the balance sheet date, even though liquidation may not be expected within that period. The demand provision is not a subjective acceleration clause as discussed in paragraph [470-10-45-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-2). #### Callable Debt ##### [470-10-45-11](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:378256a01b8cac819cde6ecd1b9f55bd73dc1be64b61e0ae06a84fc6b3abe70b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Current liabilities shall include long-term obligations that are or will be callable by the creditor either because the debtor's [violation of a provision](https://asc.understandingaccounting.org/glossary/v/#violation-of-a-provision "The failure to meet a condition in a debt agreement or a breach of a provision in the agreement for which compliance is objectively determinable, whether or not a grace period is allowed or the creditor is required to give notice of its intention to demand repayment.") of the debt agreement at the balance sheet date makes the [obligation callable](https://asc.understandingaccounting.org/glossary/o/#callable-obligation "An obligation is callable at a given date if the creditor has the right at that date to demand, or to give notice of its intention to demand, repayment of the obligation owed to it by the debtor.") or because the violation, if not cured within a specified grace period, will make the obligation callable. Accordingly, such callable obligations shall be classified as current liabilities unless either of the following conditions is met: 1. a The creditor has waived or subsequently lost (for example, the debtor has cured the violation after the balance sheet date and the obligation is not callable at the time the financial statements are issued or are available to be issued \[as discussed in Section 855-10-25\]) the right to demand repayment for more than one year (or operating cycle, if longer) from the balance sheet date. If the obligation is callable because of violations of certain provisions of the debt agreement, the creditor needs to waive its right with regard only to those violations. 2. b For long-term obligations containing a grace period within which the debtor may cure the violation, it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the violation will be cured within that period, thus preventing the obligation from becoming callable. ##### [470-10-45-12](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:68347ba81a82894fef0a47a492aeb072854a1cc740d4493765a59877f0380a3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Drawing a distinction between significant violations of critical conditions and technical violations is not practicable. A violation that a debtor considers to be technical may be considered critical by the creditor. Furthermore, a creditor may choose to use a technical violation as a means to withdraw from its lending relationship with the debtor. If the violation is considered insignificant by the creditor, then the debtor should be able to obtain a waiver as discussed in the preceding paragraph. #### Short-Term Obligations Expected to Be Refinanced ##### [470-10-45-12A](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-12A) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:c87270ea387b25f49d91dfbdcb7435cbcebdd3b4ba6aa6b64fe3ad7a60c6e84c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some short-term obligations are expected to be refinanced on a long-term basis and, therefore, are not expected to require the use of working capital during the ensuing fiscal year. Examples include commercial paper, construction loans, and the currently maturing portion of long-term debt. ##### [470-10-45-12B](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-12B) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:7dc27367d940405335b83115ad0ddabd3c72a5911929610857806703614dc65e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Refinancing a short-term obligation on a long-term basis means either replacing it with a long-term obligation or with equity securities or renewing, extending, or replacing it with short-term obligations for an uninterrupted period extending beyond one year (or the operating cycle, if applicable) from the date of an entity's balance sheet. ##### [470-10-45-13](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:6c11c7220c8b9d3403c0fcd550298a479e5551665233aff04c7c7911d64eaf42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Short-term obligations arising from transactions in the normal course of business that are due in customary terms shall be classified as current liabilities. A short-term obligation shall be excluded from current liabilities only if the conditions in the following paragraph are met. Funds obtained on a long-term basis before the balance sheet date would be excluded from current assets if the obligation to be liquidated is excluded from current liabilities. #### Intent and Ability to Refinance on a Long-Term Basis ##### [470-10-45-14](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:d0e43cb19ecfaca132f10770df0c1a7917a91c244916dda0ee02f8c69e8936b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A short-term obligation shall be excluded from current liabilities if the entity intends to refinance the obligation on a long-term basis (see paragraph [470-10-45-12B](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-12B)) and the intent to refinance the short-term obligation on a long-term basis is supported by an ability to consummate the refinancing demonstrated in either of the following ways: 1. a Post-balance-sheet-date issuance of a long-term obligation or equity securities. After the date of an entity's balance sheet but before that balance sheet is issued or is available to be issued (as discussed in Section 855-10-25), a long-term obligation or equity securities have been issued for the purpose of refinancing the short-term obligation on a long-term basis. If equity securities have been issued, the short-term obligation, although excluded from current liabilities, shall not be included in owners' equity. 2. b Financing agreement. Before the balance sheet is issued or is available to be issued (as discussed in Section 855-10-25), the entity has entered into a financing agreement that clearly permits the entity to refinance the short-term obligation on a long-term basis on terms that are readily determinable, and all of the following conditions are met: 1. 1 The agreement does not expire within one year (or operating cycle) from the date of the entity's balance sheet and during that period the agreement is not cancelable by the lender or the prospective lender or investor (and obligations incurred under the agreement are not callable during that period) except for violation of a provision with which compliance is objectively determinable or measurable. For purposes of this Subtopic, violation of a provision means failure to meet a condition set forth in the agreement or breach or violation of a provision such as a restrictive covenant, representation, or warranty, whether or not a grace period is allowed or the lender is required to give notice. Financing agreements cancelable for violation of a provision that can be evaluated differently by the parties to the agreement (such as a material adverse change or failure to maintain satisfactory operations) do not comply with this condition. 2. 2 No violation of any provision in the financing agreement exists at the balance sheet date and no available information indicates that a violation has occurred thereafter but before the balance sheet is issued or is available to be issued (as discussed in Section 855-10-25), or, if one exists at the balance sheet date or has occurred thereafter, a waiver has been obtained. 3. 3 The lender or the prospective lender or investor with which the entity has entered into the financing agreement is expected to be financially capable of honoring the agreement. ##### [470-10-45-15](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:138ce12888b0b64010cbd0207f78de1d799025a55652537f4b4085dff7bed960 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Repayment of a short-term obligation before funds are obtained through a long-term refinancing requires the use of current assets. Therefore, if a short-term obligation is repaid after the balance sheet date and subsequently a long-term obligation or equity securities are issued whose proceeds are used to replenish current assets before the balance sheet is issued or is available to be issued (as discussed in Section 855-10-25), the short-term obligation shall not be excluded from current liabilities at the balance sheet date. See Example 5 (paragraph [470-10-55-33](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-33)) for an illustration of this guidance. ##### [470-10-45-16](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:a5d50b0314af7fda81e10af50689f2340055b2e80e99c4ef6bc6d8f29ca0f0fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity's ability to consummate an intended refinancing of a short-term obligation on a long-term basis is demonstrated by post-balance-sheet-date issuance of a long-term obligation or equity securities (see paragraph [470-10-45-14(a)](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14)), the amount of the short-term obligation to be excluded from current liabilities shall not exceed the proceeds of the new long-term obligation or the equity securities issued. ##### [470-10-45-17](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:05cdc5dff50800c138158f4e5244855e43506d50d6bfd13164674f355e82865a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If ability to refinance is demonstrated by the existence of a financing agreement (see paragraph [470-10-45-14(b)](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14)), the amount of the short-term obligation to be excluded from current liabilities shall be reduced to the amount available for refinancing under the agreement if the amount available is less than the amount of the short-term obligation. ##### [470-10-45-18](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:e3098234c7be5df2e7d812d060463615ec3e6d75868002136c34741549860a2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount to be excluded shall be reduced further if information (such as restrictions in other agreements or restrictions as to transferability of funds) indicates that funds obtainable under the agreement will not be available to liquidate the short-term obligation. ##### [470-10-45-19](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:0c9ab91b192cc8db43673d1568bb075c1ada44b29bd456d771ecb8cfa2d08270 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Further, if amounts that could be obtained under the financing agreement fluctuate (for example, in relation to the entity's needs, in proportion to the value of collateral, or in accordance with other terms of the agreement), the amount to be excluded from current liabilities shall be limited to a reasonable estimate of the minimum amount expected to be available at any date from the scheduled maturity of the short-term obligation to the end of the fiscal year (or operating cycle). If no reasonable estimate can be made, the entire outstanding short-term obligation shall be included in current liabilities. ##### [470-10-45-20](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:b93862cfbbf87f615f058efa029ae07f431d08495787e997c5b43721433201fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity may intend to seek an alternative source of financing rather than to exercise its rights under the existing agreement when the short-term obligation becomes due. The entity must intend to exercise its rights under the existing agreement, however, if that other source does not become available. The intent to exercise may not be present if the terms of the agreement contain conditions or permit the prospective lender or investor to establish conditions, such as interest rates or collateral requirements, that are unreasonable to the entity. #### Transactions after the Balance Sheet Date ##### [470-10-45-21](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:33.212Z to 2026-09-10T00:30:33.212Z Record version: sha256:825929513f563d48cb6b93b0b507745480712afff115a996020880973067f700 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Replacement of a short-term obligation with another short-term obligation after the date of the balance sheet but before the balance sheet is issued or is available to be issued (as discussed in Section 855-10-25) is not, by itself, sufficient to demonstrate an entity's ability to refinance the short-term obligation on a long-term basis. If, for example, the replacement is made under the terms of a revolving credit agreement that provides for renewal or extension of the short-term obligation for an uninterrupted period extending beyond one year (or operating cycle) from the date of the balance sheet, the revolving credit agreement must meet the conditions in paragraph [470-10-45-14(b)](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14) to justify excluding the short-term obligation from current liabilities. Similarly, if the replacement is a rollover of commercial paper accompanied by a standby credit agreement, the standby agreement must meet the conditions in that paragraph to justify excluding the short-term obligation from current liabilities. Source downloaded (UTC): 2026-09-10T00:30:35.359Z to 2026-09-10T00:30:35.359Z Record version: sha256:689b129565311eebc43c59ea52017163fee5951adc0f4a2d0661e700957051cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/10/#50-disclosure) SEC content: no #### Disclosure of Long-Term Obligations ##### [470-10-50-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:35.359Z to 2026-09-10T00:30:35.359Z Record version: sha256:bca4230e39f508a9de5663ca42d9e2ef9a13652737bee3c3e1bce7c5d7ef37d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The combined aggregate amount of maturities and sinking fund requirements for all long-term borrowings shall be disclosed for each of the five years following the date of the latest balance sheet presented. (See paragraph [505-10-50-11](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-11) for related disclosure guidance on redeemable securities). See Example 3 (paragraph [470-10-55-10](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-10)) for an illustration of this disclosure requirement. ##### [470-10-50-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:35.359Z to 2026-09-10T00:30:35.359Z Record version: sha256:f6b99c8ce6acce4763ac129cf8f6e0b78ea92da96f5dab80ab385cbe5c62fdad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an obligation under paragraph [470-10-45-11(b)](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-11) is classified as a long-term liability (or, in the case of an unclassified balance sheet, is included as a long-term liability in the disclosure of debt maturities), the circumstances shall be disclosed. #### Subjective Acceleration Clauses ##### [470-10-50-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:35.359Z to 2026-09-10T00:30:35.359Z Record version: sha256:4c9907bd7df0e1dfdd9ebac34eca435be21fba7e8111688f9a60a00476562494 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [470-10-45-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-2), in some situations long-term debt subject to a [subjective acceleration clause](https://asc.understandingaccounting.org/glossary/s/#subjective-acceleration-clause "A subjective acceleration clause is a provision in a debt agreement that states that the creditor may accelerate the scheduled maturities of the obligation under conditions that are not objectively determinable (for example, if the debtor fails to maintain satisfactory operations or if a material adverse change occurs).") shall be reclassified. That paragraph explains that other situations would indicate only disclosure of the existence of such clauses. That paragraph states further that neither reclassification nor disclosure is required if the likelihood of the acceleration of the due date is remote, such as when the lender historically has not accelerated due dates of loans containing similar clauses and the financial condition of the borrower is strong and its prospects are bright. #### Short-Term Obligations Expected to Be Refinanced ##### [470-10-50-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:35.359Z to 2026-09-10T00:30:35.359Z Record version: sha256:1566dfab24ad40f53ebc7dccd3af64e3558f5ced5ba51f51003455db0bb8b37e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a short-term obligation is excluded from current liabilities pursuant to the provisions of this Subtopic, the notes to financial statements shall include a general description of the financing agreement and the terms of any new obligation incurred or expected to be incurred or equity securities issued or expected to be issued as a result of a refinancing. #### Summary Disclosure of Securities Outstanding ##### [470-10-50-5](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:35.359Z to 2026-09-10T00:30:35.359Z Record version: sha256:e5f42c71606dc5868385e053be57962411b51b1b7408a62c3e602e3a259748eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [505-10-50-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-3) requires that an entity explain, in summary form within its financial statements, the pertinent rights and privileges of various securities outstanding. #### Unused Commitments and Lines of Credit ##### [470-10-50-6](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-6) Pending content: yes Source downloaded (UTC): 2026-09-10T00:30:35.359Z to 2026-09-10T00:30:35.359Z Record version: sha256:77e3d7a143cfc97fb1efe6af2079ea3a8dca99db8cfaa1351fcac8212c0385ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance: [105-10-65-7](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-7)An entity shall separately disclose the following in the notes to financial statements: 1. a The amount and terms of unused commitments for long-term financing arrangements (including commitment fees and the conditions under which commitments may be withdrawn) 2. b The amount and terms of unused lines of credit for short-term financing arrangements (including commitment fees and the conditions under which lines may be withdrawn) and the amount of those lines of credit that support commercial paper borrowing arrangements or similar arrangements. #### Weighted-Average Interest Rate on Short-Term Borrowings ##### [470-10-50-7](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-7) Pending content: yes Source downloaded (UTC): 2026-09-10T00:30:35.359Z to 2026-09-10T00:30:35.359Z Record version: sha256:b64771fbcb79d244ada086d1f3794e81817487b50acc2576b03a6ac2da0673f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance: [105-10-65-7](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-7)A [public business entity](https://asc.understandingaccounting.org/glossary/p/#public-business-entity "A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC.") shall disclose the weighted-average interest rate on short-term borrowings outstanding as of the date of each balance sheet presented. Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:2d3e8f714b2d0f317bed2f19643102b54355acadb42619dd111d1376a48cac13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [470-10-55-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:cd0118d6641110c5f0665a603af3cce71f7618f928124810e47b052a31309645 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under paragraph [470-10-45-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-2), the lender has already loaned money on a long-term basis. To continue long-term classification requires a judgment about the likelihood of acceleration of the due date. Paragraphs [470-10-45-13 through 45-20](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-13) cover circumstances in which the obligation is by its terms short-term. For such an obligation to be excluded from current liabilities, the lender must advance new funds or refinance the short-term obligation on a long-term basis based on conditions existing on the date of the new loan or refinancing. Therefore, to classify an obligation as long-term, paragraphs [470-10-45-13 through 45-20](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-13) require a higher standard for a financing agreement that permits an entity to refinance a short-term obligation on a long-term basis than paragraph [470-10-50-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-2) requires for an existing long-term loan for which early repayment might be requested. #### Illustrations ##### [470-10-55-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:d2775f57c0d55546654555d39e3f9b2325d617a694a7eb0058d40b2b6837618a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [470-10-45-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-1) for the classification of long-term debt when a debt covenant violation is waived by a lender for a period greater than a year. ##### [470-10-55-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:fb1097d0340e558250d996d08b4bb27142e7d5d4cece460cfcd634f8c599ade7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A borrower has a long-term loan that requires compliance with certain covenants, such as maintenance of a minimum current ratio, minimum debt-to-equity ratio, or minimum level of shareholders' equity. The borrower must meet the covenants on a quarterly or semiannual basis. At one of the compliance dates, the borrower violates a covenant. That violation gives the lender the right to call the debt. The lender waives that right for a period greater than one year but retains the future covenant requirements. ##### [470-10-55-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:fc7d66ea3ef6b1feae4d0ba52580f4e92857d3423ea722b48dd80d6fd9f1eda3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The issue is whether the waiver of the lender's rights resulting from the violation of the covenant with the retention of the periodic covenant tests represents, in substance, a grace period. If viewed as a grace period, the borrower would classify the debt as current (see paragraph [470-10-45-11](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-11)) unless it is probable that the borrower can cure the violation (comply with the covenant) within the grace period. Specifically, the balance sheet classification of an obligation is considered in the following situations: 1. a The debt covenants are applicable only after the balance sheet date, and it is probable that the borrower will fail to meet the covenant requirement at the compliance date three months after the balance sheet date. 2. b The borrower meets the current covenant requirement at the balance sheet date, and it is probable that the borrower will fail to meet the same covenant requirement at the compliance date in three months. 3. c The borrower meets the current covenant requirement, and it is probable that the borrower will fail to meet a more restrictive covenant requirement applicable at the compliance date in three months. 4. d The borrower has met the covenant requirement in the prior quarter but before the balance sheet date negotiates a modification of the loan agreement that eliminates the covenant requirement at the balance sheet date or modifies the requirement so that the borrower will comply. Absent the modification, the borrower would have been in violation of the covenant at the balance sheet date. The same or a more restrictive covenant must be met at the compliance date in three months, and it is probable that the borrower will fail to meet that requirement at that subsequent date. 5. e The borrower is in violation of the current covenant requirement at the balance sheet date and, after the balance sheet date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), obtains a waiver. The same or a more restrictive covenant must be met at the compliance date in three months, and it is probable that the borrower will fail to meet that requirement at that subsequent date. ##### [470-10-55-5](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:4c779ef22e24022b9cd9ef1b68c61ca00a1674b8df5f50db62faaaaf5cc2ef18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the situations described in (a) through (c) of the preceding paragraph, the debt would be classified as noncurrent, in which case the borrower would be required to disclose the adverse consequences of its probable failure to satisfy future covenants. ##### [470-10-55-6](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:471c7601bf1e8b7a255c85d3fb4cb544680f08bd06ad5b490786b85b23b235e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the situations described in paragraph [470-10-55-4(d) through (e)](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-4), the debt would be classified as current. However, if the debt is expected to be refinanced on a long-term basis and the borrower meets the provisions of paragraphs [470-10-45-13 through 45-20](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-13) , the debt would be classified as noncurrent. ##### [470-10-55-7](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:bdb5d6804f9e71724045af3e7a2d363843115b05573755e8782c8a03fb04258a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance for the appropriate classification by the issuer of debt if all of the following conditions exist: 1. a The debt has a long-term maturity (for example, 30 to 40 years). 2. b The debt holder may redeem or put the bond on short notice (7 to 30 days). 3. c The issuer has a remarketing agreement that states that the agent will make its best effort to remarket the bond when redeemed. 4. d The debt is secured by a short-term letter of credit that provides protection to the debt holder in the event that the redeemed debt cannot be remarketed. (Amounts drawn against the letter of credit are payable back to the issuer of the letter of credit by the issuer of the redeemable debt instrument on the same day that the drawdown occurs.) ##### [470-10-55-8](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:9cc95ce64bcbb5124d2e419ff2f8f16a10aa5b3e28cabd9b73d149931b2da289 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Debt agreements that allow a debt holder to redeem (or put) a debt instrument on demand (or within one year) should be classified as short-term liabilities despite the existence of a best-efforts remarketing agreement. That is, unless the issuer of the redeemable debt instrument has the ability and intent to refinance the debt on a long-term basis as provided for in paragraph [470-10-45-14](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14), the debt should be classified as a current liability. ##### [470-10-55-9](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:49b30a0b030977296f11e934085b44680676a51b14e1ad4640c4204e65da771e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, the obligation would be classified by the issuer as noncurrent only if the letter-of-credit arrangement meets the requirements of paragraph [470-10-45-14(b)](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14). ##### [470-10-55-10](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:f3232e6ec316836839b4297b9fd49dff33cfa9088f3e74a86cd5ac63a79b9344 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example provides an illustration of the guidance in paragraph [470-10-50-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-1) for disclosures for long-term borrowings and preferred stock with mandatory redemption requirements. This Example has the following assumptions. ##### [470-10-55-11](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:c298ee3d7d9542c24ad197e474b17d94d3a39dbfb8bf050792fd6b323eab7961 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity D has outstanding two long-term loans, one convertible debt, and one issue of preferred stock with mandatory redemption requirements. The first loan is a $100 million sinking fund debenture with annual sinking fund payments of $10 million in 19X2, 19X3, and 19X4, $15 million in 19X5 and 19X6, and $20 million in 19X7 and 19X8. The second loan is a $50 million note due in 19X5. The convertible debt has a principal amount of $70 million that is not convertible before maturity in 19X9. This convertible debt requires a 2 percent annual cumulative sinking fund payment of $1.4 million until settled. The $30 million issue of preferred stock requires a 5 percent annual cumulative sinking fund payment of $1.5 million until retired. ##### [470-10-55-12](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:704ac13cfbb73bf2f5efcf36993e42de5098e323819039e519caad8dc468a043 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity D's disclosure might be as follows. - Maturities and sinking fund requirements on long-term loans and convertible debt and sinking fund requirements on preferred stock subject to mandatory redemption are as follows (in thousands). - ![](https://asc.understandingaccounting.org/asc-img/GUID-BEA56435-5D55-4747-8D67-DC82D27E26D9-low.gif) Long-term loans Preferred stock Convertible debt 19X2 " $10,000 " " $1,500 " " $1,400 " 19X3 " 10,000 " " 1,500 " " 1,400 " 19X4 " 10,000 " " 1,500 " " 1,400 " 19X5 " 65,000 " " 1,500 " " 1,400 " 19X6 " 15,000 " " 1,500 " " 1,400 " ##### [470-10-55-13](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:dcfb9b84943ceea46d6fb0ec474c7c12b8ff0b49316b239ab21025c923363f99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate various scenarios for refinancing the current portion of long-term debt and notes payable as discussed in paragraphs [470-10-45-13 through 45-20](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-13) : 1. a Entity refinances on long-term basis the current maturity of long-term debt and notes payable (Case A). 2. b Laws prohibit the transfer of funds (Case B). 3. c Entity issues debentures to liquidate the debt (Case C). 4. d Entity negotiates a revolving credit agreement (Case D). 5. e Entity negotiates a revolving credit agreement with borrowing limits (Case E). 6. f Entity refinances commercial paper (Case F). 7. g Case illustrates balance sheet presentation (Case G). ##### [470-10-55-14](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:b8eccac5d2e1c98a1635c9f9e63270c35e48ae6ad83e253e27109da4055dfe76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Cases in this Example do not comprehend all possible circumstances and do not include all the disclosures that would typically be made regarding long-term debt or current liabilities. ##### [470-10-55-15](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:25cb5516eb29d8817c72e1b5ef974282d7e2a85ae6f700a7753dcd2244a942ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A through G share all of the following assumptions: 1. a Entity A's fiscal year-end is December 31, 19X5. 2. b The date of issuance of the December 31, 19X5, financial statements is March 31, 19X6; the Entity's practice is to issue a classified balance sheet. 3. c At December 31, 19X5, short-term obligations include $5,000,000 representing the portion of 6 percent long-term debt maturing in February 19X6 and $3,000,000 of 9 percent notes payable issued in November 19X5 and maturing in July 19X6. 4. d The Entity intends to refinance on a long-term basis both the current maturity of long-term debt and the 9 percent notes payable. 5. e Accounts other than the long-term debt maturing in February 19X6 and the notes payable maturing in July 19X6 are as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-59C0DF67-5F7E-4AB2-80D7-D6770804EC7A-low.gif) Current assets " $30,000,000 " Other assets " $50,000,000 " Accounts payable and accruals " $10,000,000 " Other long-term debt " $25,000,000 " Shareholders' equity " $37,000,000 " 6. f Unless otherwise indicated, the Cases also assume that the lender or prospective lender is expected to be capable of honoring the agreement, that there is no evidence of a violation of any provision, and that the terms of borrowings available under the agreement are readily determinable. ##### [470-10-55-16](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:1239d5f4fa7ba562766ede177d7a6a05d28f708f56e4892bb1e3ebc34642074f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Entity negotiates a financing agreement with a commercial bank in December 19X5 for a maximum borrowing of $8,000,000 at any time through 19X7 with the following terms: 1. a Borrowings are available at Entity A's request for such purposes as it deems appropriate and will mature three years from the date of borrowing. 2. b Amounts borrowed will bear interest at the bank's prime rate. 3. c An annual commitment fee of 1/2 of 1 percent is payable on the difference between the amount borrowed and $8,000,000. 4. d The agreement is cancelable by the lender only if any of the following occur: 1. 1 The Entity's [working capital](https://asc.understandingaccounting.org/glossary/w/#working-capital "Working capital (also called net working capital) is represented by the excess of current assets over current liabilities and identifies the relatively liquid portion of total entity capital that constitutes a margin or buffer for meeting obligations within the ordinary operating cycle of the entity."), excluding borrowings under the agreement, falls below $10,000,000. 2. 2 The Entity becomes obligated under lease agreements to pay an annual rental in excess of $1,000,000. 3. 3 Treasury stock is acquired without the prior approval of the prospective lender. 4. 4 The Entity guarantees indebtedness of unaffiliated persons in excess of $500,000. ##### [470-10-55-17](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:3241ffca822eeec0b936e6456eeb8483c1ea3bf1166fca280b86ce2bbb091f9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Entity's intention to refinance meets the condition specified by paragraph [470-10-45-14](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14). Compliance with the provisions listed in (d) of the preceding paragraph is objectively determinable or measurable; therefore, the condition specified by paragraph [470-10-45-14(b)(1)](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14) is met. The proceeds of borrowings under the agreement are clearly available for the liquidation of the 9 percent notes payable and the long-term debt maturing in February 19X6. Both obligations, therefore, would be classified as other than current liabilities. ##### [470-10-55-18](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:42356bcb8ee1580a7e7d7169367c16facb886efab8754599e3dcd2d8529cf238 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Following are the liability section of Entity A's balance sheet at December 31, 19X5, and the related note disclosures required by this Subtopic, based on the information in paragraphs [470-10-55-15 through 55-16](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-15) . Because the balance sheet is issued subsequent to the February 19X6 maturity of the long-term debt, the note describes the refinancing of that obligation. - ![](https://asc.understandingaccounting.org/asc-img/GUID-37DFF29C-5D5B-46A5-A2FB-EEA74ED02CDC-low.gif) "December 31, 19X5 " Current Liabilities: Accounts payable and accruals " $10,000,000 " Total Current Liabilities " 10,000,000 " Long-Term Debt: 9% notes payable (Note A) " 3,000,000 " (a) 6% debt due February 19X6 (Note A) " 5,000,000 " (a) Other long-term debt " 25,000,000 " Total Long-Term Debt " 33,000,000 " Total Liabilities " $43,000,000 " (a) "These obligations may also be shown in captions distinct from both current liabilities and long-term debt, such as Interim Debt, Short-Term Debt Expected to Be Refinanced, and Intermediate Debt." - Note A - The Entity has entered into a financing agreement with a commercial bank that permits the Entity to borrow at any time through 19X7 up to $8,000,000 at the bank's prime rate of interest. The Entity must pay an annual commitment fee of 1/2 of 1 percent of the unused portion of the commitment. Borrowings under the financing agreement mature three years after the date of the loan. Among other things, the agreement prohibits the acquisition of treasury stock without prior approval by the bank, requires maintenance of working capital of $10,000,000 exclusive of borrowings under the agreement, and limits the annual rental under lease agreements to $1,000,000. In February 19X6, the Entity borrowed $5,000,000 at 8 percent and liquidated the 6 percent long-term debt, and it intends to borrow additional funds available under the agreement to refinance the 9 percent notes payable maturing in July 19X6. ##### [470-10-55-19](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:eee4f4e6157ad093a5c446f673de67fc04feaa0067b4ae8d9fcad70f46e2c41b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A foreign subsidiary of the Entity negotiates a financing agreement with its local bank in December 19X5. Funds are available to the subsidiary for its unrestricted use, including loans to affiliated entities; other terms are identical to those cited in Case A. Local laws prohibit the transfer of funds outside the country. ##### [470-10-55-20](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:0b8180ac2469d7d736b9e3d4633c18110e1a63fee47dbf6a8f663f24a383aac0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The requirement of paragraph [470-10-45-14(b)(1)](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14) is met because compliance with the provisions of the agreement is objectively determinable or measurable. Because of the laws prohibiting the transfer of funds, however, the proceeds from borrowings under the agreement are not available for liquidation of the debt maturing in February and July 19X6. Accordingly, both the 6 percent debt maturing in February 19X6 and the 9 percent notes payable maturing in July 19X6 would be classified as current liabilities. ##### [470-10-55-21](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:6ee0d4a6e2f4848e034d68cc0881fd96fb3ec501142fbb13d023f9f37dea9dca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, the Entity issues $8,000,000 of 10-year debentures to the public in January 19X6. The Entity intends to use the proceeds to liquidate the $5,000,000 debt maturing February 19X6 and the $3,000,000 of 9 percent notes payable maturing July 19X6. In addition, assume the debt maturing February 19X6 is paid before the issuance of the balance sheet, and the remaining proceeds from the sale of debentures are invested in a U.S. Treasury note maturing the same day as the 9 percent notes payable. ##### [470-10-55-22](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:e286bdec7c0ac0fcc2b51111ccd74a60d51d13ba4059abf5a90fb342847df1f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the Entity refinanced the long-term debt maturing in February 19X6 in a manner that meets the conditions set forth in paragraph [470-10-45-14](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14), that obligation would be excluded from current liabilities. In addition, the 9 percent notes payable maturing in July 19X6 would also be excluded because the Entity has obtained funds expressly intended to be used to liquidate those notes and not intended to be used in current operations. In balance sheets after the date of sale of the debentures and before the maturity date of the notes payable, the Entity would exclude the notes payable from current liabilities if the U.S. Treasury note is excluded from current assets (see paragraph [210-10-45-4](https://asc.understandingaccounting.org/asc/210/10/#210-10-45-4)). ##### [470-10-55-23](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:7937bd45aed94b5f6d7d03579e57480582cdf1a1b67da7873c9ac0f66b75c835 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the debentures had been sold before January 1, 19X6, the $8,000,000 of obligations to be paid would be excluded from current liabilities in the balance sheet at that date if the $8,000,000 in funds were excluded from current assets. ##### [470-10-55-24](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:d62e47c4f5d5f9e6bfffcbebfbcae7f4383bfc916c4699eed994cb209033b7e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, instead of issuing the 10-year debentures, the Entity had issued $8,000,000 of equity securities and all other facts in this Case remained unchanged, both the 6 percent debt due February 19X6 and the 9 percent notes payable due July 19X6 would be classified as liabilities other than current liabilities, such as Indebtedness Due in 19X6 Refinanced in January 19X6. ##### [470-10-55-25](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:53591d30be7b1f925bee24771359f71b0ba27b9ed2d310e858b9b33a874a6bfc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In December 19X5 the Entity negotiates a revolving credit agreement providing for unrestricted borrowings up to $10,000,000. Borrowings will bear interest at 1 percent over the prevailing prime rate of the bank with which the agreement is arranged but in any event not less than 8 percent, will have stated maturities of 90 days, and will be continuously renewable for 90-day periods at the Entity's option for 3 years provided there is compliance with the terms of the agreement. Provisions of the agreement are similar to those cited in paragraph [470-10-55-16(d)](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-16). Further, the Entity intends to renew obligations incurred under the agreement for a period extending beyond one year from the balance sheet date. There are no outstanding borrowings under the agreement at December 31, 19X5. ##### [470-10-55-26](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:d190922490a2174a3675d3d868cff092dbc7df2f2358a37cf901d4bed9e0ddc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this instance, the long-term debt maturing in February 19X6 and the 9 percent notes payable maturing in July 19X6 would be excluded from current liabilities because the Entity consummated a financing agreement meeting the conditions set forth in paragraph [470-10-45-14(b)](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-14) before the issuance of the balance sheet. ##### [470-10-55-27](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:4b3b2b5de22651deb6a536add14dea66082fd1c6d82a73fb2f031bab83a72094 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that the agreement cited in Case D included an additional provision limiting the amount to be borrowed by the Entity to the amount of its inventory, which is pledged as collateral and is expected to range between a high of $8,000,000 during the second quarter of 19X6 and a low of $4,000,000 during the fourth quarter of 19X6. ##### [470-10-55-28](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:899c114acff9bcdab4dcbfb2d07fc7fcdb03a55ba289eb12fc7e12ab79e0a5d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The terms of the agreement comply with the conditions required by this Subtopic; however, because the minimum amount expected to be available from February to December 19X6 is $4,000,000, only that amount of short-term obligations can be excluded from current liabilities (see paragraphs [470-10-45-16 through 45-19](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-16) ). Whether the obligation to be excluded is a portion of the currently maturing long-term debt or some portions of both it and the 9 percent notes payable depends on the intended timing of the borrowing. ##### [470-10-55-29](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:a3527a214f09e665b3042a47aa6854a57cd0b20c76517f434741e74aee585b92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the Entity intended to refinance only the 9 percent notes payable due July 19X6 and the amount of its inventory is expected to reach a low of approximately $2,000,000 during the second quarter of 19X6 but be at least $3,000,000 in July 19X6 and thereafter during 19X6, the $3,000,000 9 percent notes payable would be excluded from current liabilities at December 31, 19X5 (see paragraphs [470-10-45-16 through 45-19](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-16) ). ##### [470-10-55-30](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:b9be4cd231d4f6f3d99895f258ef2a8b2674ee6651d60e28415aae5216abeb1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In lieu of the facts given in paragraph [470-10-55-15(c) through (d)](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-15), assume that during 19X5 the Entity entered into a contract to have a warehouse built. The warehouse is expected to be financed by issuance of the Entity's commercial paper. In addition, the Entity negotiated a standby agreement with a commercial bank that provides for maximum borrowings equal to the expected cost of the warehouse, which will be pledged as collateral. The agreement also requires that the proceeds from the sale of commercial paper be used to pay construction costs. Borrowings may be made under the agreement only if the Entity is unable to issue new commercial paper. The proceeds of borrowings must be used to retire outstanding commercial paper and to liquidate additional liabilities incurred in the construction of the warehouse. At December 31, 19X5, the Entity has $7,000,000 of commercial paper outstanding and $1,000,000 of unpaid construction costs resulting from a progress billing through December 31. ##### [470-10-55-31](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:ca1a8283bc677ba6f4944dce58ee9657229a25c02966989253dcfc34764baec9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the commercial paper will be refinanced on a long-term basis, either by uninterrupted renewal or, failing that, by a borrowing under the agreement, the commercial paper would be excluded from current liabilities. The $1,000,000 liability for the unpaid progress billing results from the construction of a noncurrent asset and will be refinanced on the same basis as the commercial paper and, therefore, it would also be excluded from current liabilities (see paragraph [470-10-45-13](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-13)). ##### [470-10-55-32](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:78c597319e15301b4275af6130e95885e8da2ff9e18ee831b007317b8777a28d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are two methods of presenting liabilities in Entity A's balance sheet at December 31, 19X5, assuming the Entity intends to refinance the 6 percent debt maturing in February 19X6 and the 9 percent notes payable maturing in July 19X6 but has not met the conditions required by this Subtopic to exclude those obligations from current liabilities. - ![](https://asc.understandingaccounting.org/asc-img/GUID-4118E428-5D95-480B-B90A-8265A0D73596-low.gif) Alternative 1 "December 31, 19X5" Current Liabilities: Accounts payable and accruals " $10,000,000 " "Notes payable, due July 19X6" " 3,000,000 " 6% debt due February 19X6 " 5,000,000 " Total Current Liabilities " 18,000,000 " Long-Term Debt " 25,000,000 " Total Liabilities " $43,000,000 " Alternative 2 "December 31, 19X5" Current Liabilities: Accounts payable and accruals " $10,000,000 " Short-term debt expected to be refinanced: "Notes payable, due July 19X6" " $3,000,000 " 6% debt due February 19X6 " 5,000,000 " " 8,000,000 " Total Current Liabilities " 18,000,000 " Long-Term Debt " 25,000,000 " Total Liabilities " $43,000,000 " ##### [470-10-55-33](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:dcee7d80e532ccff5f4fe7072866481056efd47cf3e7cddf2899ffca15810052 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [470-10-45-15](https://asc.understandingaccounting.org/asc/470/10/#470-10-45-15). ##### [470-10-55-34](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:eeb543ed392e42b979ab2f4e65649fd438d2a266fc80b71a7b32224104961f7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example has the following assumptions: 1. a An Entity has issued $3,000,000 of short-term commercial paper during the year to finance construction of a plant. 2. b At June 30, 1976, the Entity's fiscal year end, the Entity intends to refinance the commercial paper by issuing long-term debt. However, because the Entity temporarily has excess cash, in July 1976 it liquidates $1,000,000 of the commercial paper as the paper matures. 3. c In August 1976, the Entity completes a $6,000,000 long-term debt offering. 4. d Later during the month of August, it issues its June 30, 1976, financial statements. 5. e The proceeds of the long-term debt offering are to be used to do all of the following: 1. 1 Replenish $1,000,000 in working capital 2. 2 Pay $2,000,000 of commercial paper as it matures in September 1976 3. 3 Pay $3,000,000 of construction costs expected to be incurred later that year to complete the plant. ##### [470-10-55-35](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:a978044a5498ff43e56931d7ef866a7df1bc756a3e541348178c4e0a63dfa06c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The $1,000,000 of commercial paper liquidated in July would be classified as a current liability in the Entity's balance sheet at June 30, 1976. The $2,000,000 of commercial paper liquidated in September 1976 but refinanced by the long-term debt offering in August 1976 would be excluded from current liabilities in balance sheets at the end of June 1976, July 1976, and August 1976. It should be noted that the existence of a financing agreement at the date the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) rather than a completed financing at that date would not change these classifications. ##### [470-10-55-36](https://asc.understandingaccounting.org/asc/470/10/#470-10-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:39.266Z to 2026-09-10T00:30:39.266Z Record version: sha256:fde0ba72395151a03a2da5ee6dcfb8fe1c6ca36cf4143ee9c0d8548aa3d3138f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of August 1976, $2,000,000 of cash would be excluded from current assets or, if included in current assets, a like amount of debt would be classified as a current liability. Source downloaded (UTC): 2026-09-10T00:30:41.119Z to 2026-09-10T00:30:41.119Z Record version: sha256:181f2ef32abcae3a83c3bdec4f3d64db2118ab7803b4b86e4cb37d41fd57298b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/470/10/#60-relationships) SEC content: no #### Balance Sheet ##### [470-10-60-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:41.119Z to 2026-09-10T00:30:41.119Z Record version: sha256:365562160635ca16660b56a43334eeebb3ce8623c64d683d4d9aa0a3bca3cb77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For classification guidance on a liability representing the underfunded status of a single-employer defined benefit postretirement plan, see Subtopic 715-20. ##### [470-10-60-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:41.119Z to 2026-09-10T00:30:41.119Z Record version: sha256:bb68f6e6e28a8eb3262c83d32ad840eff386af0702d96a3e2a390d9131f46845 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Interest ##### [470-10-60-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:41.119Z to 2026-09-10T00:30:41.119Z Record version: sha256:9d87c0d01a7f1f65d9f8b9ffaf0f2c7780eb8a8e722bfed279e24411b2528451 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the appropriate accounting if the face amount of a note does not reasonably represent the present value of the consideration given or received in the exchange, see paragraphs [835-30-05-2 through 05-3](https://asc.understandingaccounting.org/asc/835/30/#835-30-05-2) . #### Leases ##### [470-10-60-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:41.119Z to 2026-09-10T00:30:41.119Z Record version: sha256:175d9bb72826fb4916f12e56e6c91d8754ddce563f834129634ff79947f09ce8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the classification of obligations under [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."), see paragraphs [842-20-45-1 through 45-4](https://asc.understandingaccounting.org/asc/842/20/#842-20-45-1) . Source downloaded (UTC): 2026-09-10T00:30:46.022Z to 2026-09-10T00:30:46.022Z Record version: sha256:f48a63feb4d4eff368b383626154ce3a2a26ca1c5aabf18dd94a632eb31570fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/10/#sec-00-status) SEC content: yes ##### [470-10-S00-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:46.022Z to 2026-09-10T00:30:46.022Z Record version: sha256:731dbad4f98c08c1a8aeae8ce5482c5ea01e60768531f5bfe5e997e4a9d12fd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Annual ReportSupersededAccounting Standards Update No. 2020-0910/22/2020
Finance SubsidiarySupersededAccounting Standards Update No. 2020-0910/22/2020
Full and Unconditional GuaranteeSupersededAccounting Standards Update No. 2020-0910/22/2020
Minor SubsidiarySupersededAccounting Standards Update No. 2020-0910/22/2020
Operating SubsidiarySupersededAccounting Standards Update No. 2020-0910/22/2020
Parent Company with No Independent Assets or OperationsSupersededAccounting Standards Update No. 2020-0910/22/2020
Quarterly ReportSupersededAccounting Standards Update No. 2020-0910/22/2020
Wholly Owned SubsidiarySupersededAccounting Standards Update No. 2020-0910/22/2020
470-10-S50-6 through S50-8
AmendedAccounting Standards Update No. 2020-0910/22/2020
470-10-S50-9 through S50-11
SupersededAccounting Standards Update No. 2020-0910/22/2020
470-10-S65-1AddedAccounting Standards Update No. 2020-0910/22/2020
470-10-S99-1AmendedAccounting Standards Update No. 2020-0910/22/2020
470-10-S99-1AmendedAccounting Standards Update No. 2019-0707/26/2019
470-10-S99-1AmendedAccounting Standards Update No. 2010-2108/02/2010
470-10-S99-1AAddedAccounting Standards Update No. 2020-0910/22/2020
470-10-S99-1BAddedAccounting Standards Update No. 2020-0910/22/2020
470-10-S99-3AmendedAccounting Standards Update No. 2012-0308/27/2012
Source downloaded (UTC): 2026-09-10T00:30:48.723Z to 2026-09-10T00:30:48.723Z Record version: sha256:ad5ada039e6e3c58dd4b9bbf6a06a0c4a581d683ac40283edecd4b91286018e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-S15: SEC 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/10/#sec-15-scope-and-scope-exceptions) SEC content: yes #### Compensating Balance Arrangements ##### [470-10-S15-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-S15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:48.723Z to 2026-09-10T00:30:48.723Z Record version: sha256:eedf955f452c0ebc6d10f125b6236b38c39db9ec8ec4a2cef9091d4ad944f648 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-2](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-2), SAB Topic 6.H.1, for SEC Staff views on the applicability of the disclosure requirements pertaining to compensating balances and short-term borrowing arrangements. Source downloaded (UTC): 2026-09-10T00:30:51.674Z to 2026-09-10T00:30:51.674Z Record version: sha256:d9a02ab5e35426adb0c6d0c56fbd35fe007750118e892b448f3967cabfc2f475 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-S35: SEC 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/470/10/#sec-35-subsequent-measurement) SEC content: yes #### Debt Issue Costs in Conjunction with a Business Combination ##### [470-10-S35-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-S35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:51.674Z to 2026-09-10T00:30:51.674Z Record version: sha256:b6537c8977f44d1479fcc68b4c6efdd36a856164f979d80dad4025c76a8f7693 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [340-10-S99-2](https://asc.understandingaccounting.org/asc/340/10/#340-10-S99-2), SAB Topic 2.A.6, Question 2, for SEC Staff views on the amortization of debt issue costs for interim "bridge financing." Source downloaded (UTC): 2026-09-10T00:30:53.362Z to 2026-09-10T00:30:53.362Z Record version: sha256:dd20a52dc8e7f53c06ede78498eb9622a2c86bf63d9d8b6dd05f39581ddbbf2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/10/#sec-45-other-presentation-matters) SEC content: yes #### Subsidiary's Loan Payable ##### [470-10-S45-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:53.362Z to 2026-09-10T00:30:53.362Z Record version: sha256:f10d0b1622dc5a9356bd3b3bbed6433d08523517b15fde5ae54adc79ec316867 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-4), SEC Observer Comment: Classification of Subsidiary's Loan Payable in Consolidated Balance Sheet when Subsidiary's and Parent's Fiscal Years Differ, for SEC Staff views on the presentation of such loans. #### Long-Term Debt ##### [470-10-S45-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-S45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:53.362Z to 2026-09-10T00:30:53.362Z Record version: sha256:c94964e3e56aedd057b91dc53cc85369d41c9972762a61842b6c6a9f081d5624 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rule 5-02.22, for presentation requirements for bonds, mortgages, and other long-term debt. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rule 5-02.23, for the presentation of long-term indebtedness to related parties. #### Construction Loans ##### [470-10-S45-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-S45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:53.362Z to 2026-09-10T00:30:53.362Z Record version: sha256:213e1e1a73dca9353b0ee0e50baf082ca3704c6de844f3be8e03f875d185013d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-3), SAB Topic 6.H.2, for SEC Staff views on the classification of revolving loans pertaining to construction of long-term projects. #### Subordinated Debt ##### [470-10-S45-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-S45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:53.362Z to 2026-09-10T00:30:53.362Z Record version: sha256:f777d095f472da9a2eccda7f12347e98effb55309fef9ef193ef5ed45ad987ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-2), SAB Topic 4.A, for SEC Staff views on the presentation of subordinated debt. Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:bc3b370bbeb0d0ea0cd1815ba76d1f2e6911a501df18d17e78c83042db18b94b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/10/#sec-50-disclosure) SEC content: yes #### Disclosure of Long-Term Obligations ##### [470-10-S50-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:1ed031fb1cdaa7031fd8e052dd6355636ce80191f38a8473c1b383920f3e8b5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rule 5-02.22, for disclosure requirements for bonds, mortgages, and other long-term debt. ##### [470-10-S50-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:cafb11061a81727fcb1ae3c431c187a3b2ba9fb9b15b8a18218e182fdf324eee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [235-10-S99-1](https://asc.understandingaccounting.org/asc/235/10/#235-10-S99-1), Regulation S-X Rule 4-08(f), for disclosure requirements for changes in bonds, mortgages, and other long-term debt. #### Short-Term Obligations ##### [470-10-S50-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:4fe965bfac83b24e2882286ebb3ef0c50466c637c5ae23cd0684ede4a29e3e7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rule 5-02.19(b), for disclosure requirements pertaining to short-term obligations. #### Defaults ##### [470-10-S50-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:b91853be37e75e2181c7986694fe94784649777ef6a8536e06cd8e380635d1fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [235-10-S99-1](https://asc.understandingaccounting.org/asc/235/10/#235-10-S99-1), Regulation S-X Rule 4-08(c), for disclosure requirements relating to defaults. #### Repurchase and Reverse Repurchase Agreements ##### [470-10-S50-5](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:7804cbc3a280a3ed503b8349edab964a1396d51c6aec47ea6b6ec9eb1bfc3a3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [235-10-S99-1](https://asc.understandingaccounting.org/asc/235/10/#235-10-S99-1), Regulation S-X Rule 4-08, for disclosure requirements for repurchase and reverse repurchase agreements. #### Guarantors and Issuers of Guaranteed Securities Registered or Being Registered ##### [470-10-S50-6](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:499e614634830d584f1f77200a73c5bc4dd3f3240a0f91dc1019d34d4c26473d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-1](https://asc.understandingaccounting.org/asc/470/10/#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. ##### [470-10-S50-7](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:fec3e117c5aff51b25ed3356a7cc0a71b28a840f0c848eaa3c8570d4002f4280 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-1A](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-1A), Regulation S-X Rule 13-01, for disclosure requirements about guarantors and issuers of guaranteed securities registered or being registered. #### Affiliates Whose Securities Collateralize Securities Registered or Being Registered ##### [470-10-S50-8](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:77816ba322a8f1f7d9958687b7923586f1a8648cbc62e6c9a8e97e72ad86c02e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-1B](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-1B), Regulation S-X Rule 13-02, for disclosure requirements about a registrant's affiliates whose securities collateralize any class of securities registered or being registered. ##### [470-10-S50-9](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:c2867736431383819251c85e53618a8f20aeb22698b9f0d18d0ebeaffd303224 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-09](https://asc.understandingaccounting.org/updates/asu-2020-09/). ##### [470-10-S50-10](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:6afcb3f4836d338d2e4262e3c285b8064d62febe57f6516d5ab2e5e89b0fd402 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-09](https://asc.understandingaccounting.org/updates/asu-2020-09/). ##### [470-10-S50-11](https://asc.understandingaccounting.org/asc/470/10/#470-10-S50-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:56.466Z to 2026-09-10T00:30:56.466Z Record version: sha256:4170ff4c8f8b9734e5e7417d782a087ce055ce14c7fc9a922fae647c0c31d04b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-09](https://asc.understandingaccounting.org/updates/asu-2020-09/). Source downloaded (UTC): 2026-09-10T00:30:58.375Z to 2026-09-10T00:30:58.375Z Record version: sha256:5367736e46c5566141a9e325b36da6bd02d1f2e7bc5fe16d4b0175bce445ccbe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-S65: SEC 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/470/10/#sec-65-transition-and-open-effective-date-information) SEC content: yes ##### [470-10-S65-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-S65-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:30:58.375Z to 2026-09-10T00:30:58.375Z Record version: sha256:06713fabebd38f4a66023ca8c1041ffdb66065fa0477f93d4b02da6b982b3abd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 08/19/2021 after the end of the transition period stated in SEC Release No. 33-10762, Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities. Source downloaded (UTC): 2026-09-10T00:31:04.047Z to 2026-09-10T00:31:04.047Z Record version: sha256:7c601dc9f634878bcdd4e2890e39f620df58e6fbf076e75b7f83d33f7b76ef01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/470/10/#sec-99-sec-materials) SEC content: yes #### SEC Rules, Regulations, and Interpretations ##### [470-10-S99-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:04.047Z to 2026-09-10T00:31:04.047Z Record version: sha256:d79000792243d4d48f523e86fb117224239b81f507a57684901c5e48ecac4103 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered (17 CFR 210.3-10). - (a) If an issuer or guarantor of a guaranteed security that is registered or being registered is required to file financial statements required by Regulation S-X with respect to the guarantee or guaranteed security, such financial statements may be omitted if the issuer or guarantor is a consolidated subsidiary of the parent company, the parent company's consolidated financial statements have been filed, and the conditions in paragraphs (a)(1) and (2) of this section have been met: - (1) The guaranteed security is debt or debt-like; and - (i) The parent company issues the security or co-issues the security, jointly and severally, with one or more of its consolidated subsidiaries; or - (ii) A consolidated subsidiary issues the security or co-issues the security with one or more other consolidated subsidiaries of the parent company, and the security is guaranteed fully and unconditionally by the parent company; and - (2) The parent company provides the disclosures specified in §210.13-01. - (b) For the purposes of this section and §210.13-01: - (1) The “parent company” is the entity that: - (i) Is an issuer or guarantor of the guaranteed security; - (ii) Is, or as a result of the subject Securities Act registration statement will be, an Exchange Act reporting company; and - (iii) Consolidates each subsidiary issuer and/or subsidiary guarantor of the guaranteed security in its consolidated financial statements. - (2) A security is “debt or debt-like” if it has the following characteristics: - (i) The issuer has a contractual obligation to pay a fixed sum at a fixed time; and - (ii) Where the obligation to make such payments is cumulative, a set amount of interest must be paid. - _Note 1 to paragraph (b)(2)._ Neither the form of the security nor its title will determine whether a security is debt or debt-like. Instead, the substance of the obligation created by the security will be determinative. - _Note 2 to paragraph (b)(2)._ The phrase “set amount of interest” is not intended to mean “fixed amount of interest.” Floating and adjustable rate securities, as well as indexed securities, may meet the criteria specified in paragraph (b)(2)(ii) of this section as long as the payment obligation is set in the debt instrument and can be determined from objective indices or other factors that are outside the discretion of the obligor. - (3) A guarantee is “full and unconditional,” if, when an issuer of a guaranteed security has failed to make a scheduled payment, the guarantor is obligated to make the scheduled payment immediately and, if it does not, any holder of the guaranteed security may immediately bring suit directly against the guarantor for payment of all amounts due and payable. - \[65 FR 51707, Aug. 24, 2000, as amended at 73 FR 952, Jan. 4, 2008; 73 FR 1009, Jan. 4, 2008; 74 FR 18615, Apr. 23, 2009; 85 FR 21999, Apr. 20, 2020\] ##### [470-10-S99-1A](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-1A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:04.047Z to 2026-09-10T00:31:04.047Z Record version: sha256:21bd756e842e7c874bf1c39fe20f9bef74acb9479c4543ed3221aaa04706596a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 13-01, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered (17 CFR 210.13-01). - - (a) For each guaranteed security subject to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and for each guaranteed security the offer and sale of which is being registered under the Securities Act of 1933, for which the registrant is the parent company (as that term is defined in §210.3-10(b)(1)) of one or more subsidiaries that issue or guarantee the guaranteed security, provide the following disclosures to the extent material: - (1) A description of the issuers and guarantors of the guaranteed security; - (2) A description of the terms and conditions of the guarantees, and how payments to holders of the guaranteed security may be affected by the composition of and relationships among the issuers, guarantors, and subsidiaries of the parent company that are not issuers or guarantors of the guaranteed security; - (3) A description of other factors that may affect payments to holders of the guaranteed security, such as contractual or statutory restrictions on dividends, guarantee enforceability, or the rights of a noncontrolling interest holder; - (4) Summarized financial information as specified in §210.1-02(bb)(1) of each issuer and guarantor of the guaranteed security as follows, with an accompanying note that briefly describes the basis of presentation: - (i) The summarized financial information of each such issuer and guarantor consolidated in the parent company's consolidated financial statements may be presented on a combined basis with the summarized financial information of the parent company; - (ii) Intercompany balances and transactions between issuers and guarantors whose summarized financial information is presented on a combined basis shall be eliminated; - (iii) The summarized financial information shall exclude subsidiaries that are not issuers or guarantors. An issuer's or guarantor's investment in a subsidiary that is not an issuer or guarantor shall not be presented. An issuer's or guarantor's amounts due from, amounts due to, and transactions with any of the following shall be presented in separate line items: - (A) Subsidiaries that are not issuers or guarantors; and - (B) Related parties; - (iv) If the information provided in response to the requirements of this section (e.g., factors that may affect payments to holders of the guaranteed security) is applicable to one or more, but not all, issuers and/or guarantors, separately disclose the summarized financial information applicable to those issuers and/or guarantors. In limited circumstances (i.e., where the separate financial information applicable to those issuers and/or guarantors can be easily explained and understood), narrative disclosure may be provided in lieu of the separate summarized financial information otherwise required by this paragraph (a)(4)(iv); - (v) Disclose this summarized financial information as of and for the most recently ended fiscal year and year-to-date interim period included in the parent company's consolidated financial statements; and - (vi) Notwithstanding that a parent company may omit this summarized financial information if not material, it may also be omitted if one of the following in paragraphs (a)(4)(vi)(A) through (D) of this section is true and disclosed. However, paragraph (a)(4)(vi)(A) does not apply if separate disclosure of summarized financial information applicable to one or more, but not all, issuers and/or guarantors is required by paragraph (a)(4)(iv) of this section. For the purposes of this section, a finance subsidiary is a subsidiary that has no assets or operations other than those related to the issuance, administration and repayment of the security being registered and any other securities guaranteed by its parent company: - (A) The assets, liabilities and results of operations of the combined issuers and guarantors of the guaranteed security are not materially different than corresponding amounts presented in the consolidated financial statements of the parent company; - (B) The combined issuers and guarantors, excluding investments in subsidiaries that are not issuers or guarantors, have no material assets, liabilities or results of operations; - (C) The issuer is a finance subsidiary of the parent company, the parent company has fully and unconditionally guaranteed the security, and no other subsidiary of the parent company guarantees the security; or - (D) The issuer is a finance subsidiary that co-issued the security, jointly and severally, with the parent company, and no other subsidiary of the parent company guarantees the security; - (5) In a Securities Act registration statement filed in connection with the offer and sale of the guaranteed security, if the parent company acquired a significant business after the date of the parent company's most recent balance sheet included in its consolidated financial statements and the acquired business, one or more of the acquired business's subsidiaries, or the acquired business and one or more of its subsidiaries are issuers or guarantors of the guaranteed securities, disclose pre-acquisition summarized financial information as specified in paragraph (a)(4) of this section for each such issuer or guarantor. The acquired business is significant if it meets any of the conditions specified in the definition of significant subsidiary in §210.1-02(w), substituting 20 percent for 10 percent each place it appears therein, based on a comparison of the most recent annual financial statements of the acquired business and the parent company's most recent annual consolidated financial statements filed at or prior to the date of acquisition. The determination of whether a business has been acquired shall be made in accordance with the guidance set forth in §210.11-01(d). Acquisitions of a group of related businesses shall be treated as if they are a single business acquisition for purposes of this comparison. The determination of whether a group of businesses are related shall be made in a manner consistent with §210.3-05(a)(3); - (6) Any financial and narrative information about each guarantor if the information would be material for investors to evaluate the sufficiency of the guarantee; and - (7) Sufficient information so as to make the financial and non-financial information presented not misleading. - (b) The parent company may elect to provide the disclosures required by this section in a footnote to its consolidated financial statements or alternatively, in management's discussion and analysis of financial condition and results of operations described in §229.303 (Item 303 of Regulation S-K) of this chapter. If not otherwise included in the consolidated financial statements or in management's discussion and analysis of financial condition and results of operations, the parent company must include the disclosures in its prospectus immediately following “Risk Factors,” if any, or otherwise, immediately following pricing information described in §229.105 (Item 105 of Regulation S-K) of this chapter. ##### [470-10-S99-1B](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-1B) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:04.047Z to 2026-09-10T00:31:04.047Z Record version: sha256:7cbcb6f3deeb9d6346480ce204b0cb4329a316c4adc5833ac6e197ecb6519cc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 13-02, Affiliates Whose Securities Collateralize Securities Registered or Being Registered (17 CFR 210.13-02). - The requirements of this section shall apply to each security registered or being registered that is issued on or after January 4, 2021, and to each registered security issued and outstanding before January 4, 2021, for which the registrant had prior to that date provided the financial statements specified in §210.3-16. - (a) For each security subject to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and for each security the offer and sale of which is being registered under the Securities Act of 1933, that is collateralized by a security of the registrant's affiliate or affiliates, provide the following disclosures to the extent material: - (1) A description of the securities pledged as collateral and the affiliates whose securities are pledged as collateral; - (2) A description of the terms and conditions of the collateral arrangement, including the events or circumstances that would require delivery of the collateral; - (3) A description of the trading market for the affiliate's security pledged as collateral or a statement that there is no market; - (4) Summarized financial information as specified in §210.1-02(bb)(1) of each affiliate whose securities are pledged as collateral as follows, with an accompanying note that briefly describes the basis of presentation: - (i) The summarized financial information of each such affiliate consolidated in the registrant's financial statements may be presented on a combined basis; - (ii) Intercompany balances and transactions between affiliates whose summarized financial information is presented on a combined basis shall be eliminated; - (iii) An affiliate's amounts due from, amounts due to, and transactions with any of the following shall be presented in separate line items: - (A) The registrant; - (B) Any of the registrant's subsidiaries not included in the summarized financial information of the affiliate(s); and - (C) Related parties; - (iv) If the information provided in response to the requirements of this section (e.g., the trading market for the affiliate's security pledged as collateral or a statement that there is no market) is applicable to one or more, but not all, affiliates, separately disclose the summarized financial information applicable to those affiliates. In limited circumstances (i.e., where the separate financial information applicable to those affiliates can be easily explained and understood), narrative disclosure may be provided in lieu of the separate summarized financial information otherwise required by this paragraph (a)(4)(iv); - (v) Disclose this summarized financial information as of and for the most recently ended fiscal year and year-to-date interim period included in the registrant's consolidated financial statements; and - (vi) Notwithstanding that a registrant may omit this summarized financial information if not material, it may also be omitted if one of the following in paragraph (a)(4)(vi)(A) or (B) of this section is true and disclosed. However, paragraph (a)(4)(vi)(A) does not apply if separate disclosure of summarized financial information applicable to one or more, but not all, affiliates is required by paragraph (a)(4)(iv) of this section: - (A) The assets, liabilities and results of operations of the combined affiliates whose securities are pledged as collateral are not materially different than the corresponding amounts presented in the consolidated financial statements of the registrant; or - (B) The combined affiliates whose securities are pledged as collateral have no material assets, liabilities or results of operations; - (5) In a Securities Act registration statement filed in connection with the offer and sale of the collateralized security, if the registrant acquired a significant business after the date of the registrant's most recent balance sheet included in its consolidated financial statements and the acquired business, one or more of the acquired business's subsidiaries, or the acquired business and one or more of its subsidiaries are affiliates whose securities collateralize the registrant's collateralized security, disclose pre-acquisition summarized financial information as specified in paragraph (a)(4) of this section for each such affiliate. The acquired business is significant if it meets any of the conditions specified in the definition of significant subsidiary in §210.1-02(w), substituting 20 percent for 10 percent each place it appears therein, based on a comparison of the most recent annual financial statements of the acquired business and the registrant's most recent annual consolidated financial statements filed at or prior to the date of acquisition. The determination of whether a business has been acquired shall be made in accordance with the guidance set forth in §210.11-01(d). Acquisitions of a group of related businesses shall be treated as if they are a single business acquisition for purposes of this comparison. The determination of whether a group of businesses are related shall be made in a manner consistent with §210.3-05(a)(3); - (6) Any financial and narrative information about each such affiliate if the information would be material for investors to evaluate the pledge of the affiliate's securities as collateral; and - (7) Sufficient information so as to make the financial and non-financial information presented not misleading. - (b) The registrant may elect to provide the disclosures required by this section in a footnote to its consolidated financial statements or alternatively, in management's discussion and analysis of financial condition and results of operations described in §229.303 (Item 303 of Regulation S-K) of this chapter. If not otherwise included in the consolidated financial statements or in management's discussion and analysis of financial condition and results of operations, the registrant must include the disclosures in its prospectus immediately following “Risk Factors,” if any, or otherwise, immediately following pricing information described in §229.105 (Item 105 of Regulation S-K) of this chapter. - \[85 FR 22001, Apr. 20, 2020\] #### SEC Staff Guidance ##### [470-10-S99-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:04.047Z to 2026-09-10T00:31:04.047Z Record version: sha256:682fbf7639799fb08427e1a08c73628446f9ecab5464e8bbcb84a6409600566a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 4.A, Subordinated Debt. - Facts: Company E proposes to include in its registration statement a balance sheet showing its subordinate debt as a portion of stockholders' equity. - Question: Is this presentation appropriate? - Interpretive Response: Subordinated debt may not be included in the stockholders' equity section of the balance sheet. Any presentation describing such debt as a component of stockholders' equity must be eliminated. Furthermore, any caption representing the combination of stockholders' equity and only subordinated debts must be deleted. ##### [470-10-S99-3](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:04.047Z to 2026-09-10T00:31:04.047Z Record version: sha256:0dd2813225bb1198e415848a10a87dfe9fc00b0819cfdb5fb8780bb34c0a2db2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 6.H.2, Classification of Short-term Obligations—Debt Related to Long-Term Projects. - Facts: Companies engaging in significant long-term construction programs frequently arrange for revolving cover loans which extend until the completion of long-term construction projects. Such revolving cover loans are typically arranged with substantial financial institutions and typically have the following characteristics: - 1\. A firm long-term mortgage commitment is obtained for each project. - 2\. Interest rates and terms are in line with the company's normal borrowing arrangements. - 3\. Amounts are equal to the expected full mortgage amount of all projects. - 4\. The company may draw down funds at its option up to the maximum amount of the agreement. - 5\. The company uses short-term interim construction financing (commercial paper, bank loans, etc.) against the revolving cover loan. Such indebtedness is rolled over or drawn down on the revolving cover loan at the company's option. The company typically has regular bank lines of credit, but these generally are not legally enforceable. - Question: Under FASB ASC Subtopic 470-10, Debt—Overall, will the classification of loans such as described above as long-term be acceptable? - Interpretive Response: Where such conditions exist providing for a firm commitment throughout the construction program as well as a firm commitment for permanent mortgage financing, and where there are no contingencies other than the completion of construction, the guideline criteria are met and the borrowing under such a program should be classified as long-term with appropriate disclosure. ##### [470-10-S99-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:04.047Z to 2026-09-10T00:31:04.047Z Record version: sha256:39b37961c3350fc3b740985276b479203312b504cfd5e9b787263b3e572369dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Observer Comment: Classification of Subsidiary's Loan Payable in Consolidated Balance Sheet when Subsidiary's and Parent's Fiscal Years Differ. - Issues periodically occur related to classification of a subsidiary's loan payable in a consolidated balance sheet when the subsidiary's and parent's fiscal years differ. For example, assume that a consolidated balance sheet prepared as of February 29, 1988, comprised of the parent company's balance sheet as of that date and the subsidiary's balance sheet as of December 31, 1987. The subsidiary's balance sheet included a material loan payable to a bank due January 31, 1989. The SEC staff would expect the debt in this case to be classified as current because to do otherwise would result in a material misclassification. Source downloaded (UTC): 2026-09-10T00:31:05.799Z to 2026-09-10T00:31:53.248Z Record version: sha256:4aa49f3b91656c603b934960442b88f363af0b7a1349ad0cd122dd0f8145f367 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20: Debt — Debt with Conversion and Other Options ### Machine-generated study aids ```json { "summary": "ASC 470-20 governs the issuer's accounting for debt with detachable warrants, convertible debt instruments, interest forfeited on conversion, induced conversions, conversions triggered by the issuer's call, and own-share lending arrangements entered into in contemplation of a convertible debt offering. After ASU 2020-06 eliminated the cash conversion and beneficial conversion feature models, the default rule is that convertible debt is accounted for in its entirety as a liability with no proceeds allocated to the conversion feature (470-20-25-12), unless the feature must be bifurcated as a derivative under 815-15 or the debt was issued at a substantial premium (470-20-25-13). Proceeds of debt issued with detachable warrants, by contrast, are allocated between the debt and the warrants based on relative fair values (470-20-25-2).", "key_points": [ "Proceeds from debt sold with detachable stock purchase warrants are allocated between the debt and the warrants based on their relative fair values at issuance, with the warrant portion credited to paid-in capital and the resulting debt discount accounted for under Topic 835 (470-20-25-2; 470-20-30-1); nondetachable warrants requiring surrender of the debt are treated like convertible debt (470-20-25-3).", "A convertible debt instrument is accounted for in its entirety as a liability with no proceeds allocated to the conversion feature, unless the feature must be separated as an embedded derivative under Subtopic 815-15 or the instrument was issued at a substantial premium, which is presumed to be paid-in capital (470-20-25-12; 470-20-25-13).", "Scope is applied only after considering the fair value option in 825-10 and embedded derivative bifurcation in 815-15; debt with a conversion option that continuously resets to deliver a fixed value of stock is stock-settled debt under Subtopic 480-10 or other Subtopics (470-20-15-2A through 15-2B; 470-20-25-14; 470-20-55-19).", "On conversion under the instrument's own terms, the carrying amount (including unamortized premium, discount, and issuance costs) is reduced by any cash or other assets transferred and the remainder is credited to the capital accounts, with no gain or loss recognized (470-20-40-4); forfeited accrued interest is charged to interest expense and credited to capital (470-20-35-11; 470-20-40-11).", "When equity is issued to settle debt that became convertible only upon the issuer's exercise of a call option, the transaction is a contractual conversion if the instrument had a substantive conversion feature at issuance and a debt extinguishment if it did not; a feature is substantive only if exercise was at least reasonably possible as of issuance (470-20-40-5 through 40-9).", "An induced conversion (changed conversion privileges exercisable for a limited time that still deliver all consideration issuable under the existing conversion privileges) requires the issuer to recognize debt conversion expense equal to the fair value of consideration transferred in excess of that issuable under the existing terms, measured at the date the offer is accepted (470-20-40-13 through 40-17).", "A share-lending arrangement on an entity's own shares executed in contemplation of a convertible debt offering is measured at fair value under Topic 820 and recognized as an issuance cost with an offset to APIC; loaned shares are excluded from basic and diluted EPS unless default becomes probable, at which point an expense equal to the fair value of unreturned shares net of probable recoveries is recognized (470-20-25-20A; 470-20-35-11A; 470-20-45-2A)." ], "categories": [ "Debt and equity", "Financial instruments", "Derecognition", "Disclosure" ], "audience_level": "intermediate", "student_note": "ASU 2020-06 gutted this Subtopic: the cash conversion and beneficial conversion feature separation models are gone, so most convertible debt is now a single liability — students who memorized the old bifurcation rules will get the answer wrong. Also remember the asymmetry: detachable warrants get proceeds allocated by relative fair value, while an embedded conversion option generally does not.", "related_topics": [ "815-15", "815-40", "470-50", "480-10", "825-10", "260-10" ], "key_concepts": [ "convertible debt instrument", "detachable warrants", "relative fair value allocation", "substantive conversion feature", "induced conversion", "debt conversion expense", "share-lending arrangement", "stock-settled debt" ] } ``` Source downloaded (UTC): 2026-09-10T00:31:05.799Z to 2026-09-10T00:31:05.799Z Record version: sha256:a2c2e84524b2889df2cd23dac570327e3984898e931965660b7dca8cd110db90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/20/#00-status) SEC content: no ##### [470-20-00-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:05.799Z to 2026-09-10T00:31:05.799Z Record version: sha256:8dbeb2a95cd0b7d15dd304ca079f6cace87dc202a354614cc807195183b16ee0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Beneficial Conversion FeatureSupersededAccounting Standards Update No. 2020-0608/05/2020
Contingently Convertible InstrumentsAddedAccounting Standards Update No. 2020-0608/05/2020
Convertible SecurityAddedAccounting Standards Update No. 2012-0410/01/2012
DebtSupersededAccounting Standards Update No. 2016-1912/14/2016
Firm Commitment (2nd def.)SupersededAccounting Standards Update No. 2020-0608/05/2020
Issued, Issuance, or Issuing of an Equity InstrumentSupersededAccounting Standards Update No. 2020-0608/05/2020
Not-for-Profit EntityAddedAccounting Standards Update No. 2020-0608/05/2020
ProbableAddedAccounting Standards Update No. 2009-1510/13/2009
Public Business EntityAddedAccounting Standards Update No. 2020-0608/05/2020
Public Entity (2nd def.)SupersededAccounting Standards Update No. 2020-0608/05/2020
Security (2nd def.)AddedAccounting Standards Update No. 2020-0608/05/2020
Troubled Debt RestructuringSupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-05-1AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-05-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-05-1AmendedAccounting Standards Update No. 2009-1510/13/2009
470-20-05-1ASupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-05-4 through 05-7
AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-05-5AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-05-6AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-05-7AAddedAccounting Standards Update No. 2020-0608/05/2020
470-20-05-8AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-05-8AAddedAccounting Standards Update No. 2020-0608/05/2020
470-20-05-9AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-05-10AmendedAccounting Standards Update No. 2024-0411/26/2024
470-20-05-12SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-05-12A through 05-12C
AddedAccounting Standards Update No. 2009-1510/13/2009
470-20-05-13SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-10-1SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-10-2SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-15-2AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-15-2AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-15-2AmendedAccounting Standards Update No. 2009-1510/13/2009
470-20-15-2A through 2DAddedAccounting Standards Update No. 2020-0608/05/2020
470-20-15-3 through 15-6
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-25-1AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-25-1AmendedAccounting Standards Update No. 2009-1510/13/2009
470-20-25-2AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-25-4 through 25-11
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-25-4AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-25-11AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-25-11AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-25-12AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-25-13AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-25-14AddedAccounting Standards Update No. 2020-0608/05/2020
470-20-25-15AddedAccounting Standards Update No. 2020-0608/05/2020
470-20-25-16 through 25-20
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-25-18AmendedMaintenance Update 2017-06 (PDF)04/07/2017
470-20-25-20AAddedAccounting Standards Update No. 2009-1510/13/2009
470-20-25-21 through 25-27
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-30-1AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-30-2AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-30-2AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-30-3 through 30-26
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-30-22AmendedAccounting Standards Update No. 2019-0811/11/2019
470-20-30-22 through 30-25
AmendedAccounting Standards Update No. 2018-0706/20/2018
470-20-30-26AAddedAccounting Standards Update No. 2009-1510/13/2009
470-20-30-27 through 30-31
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-35-1 through 35-5
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-35-4AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-35-6AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-35-7 through 35-10
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-35-7AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-35-7AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-35-11AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-35-11AAddedAccounting Standards Update No. 2009-1510/13/2009
470-20-35-12 through 35-20
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-40-1 through 40-3
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-40-4AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-40-4AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-40-4ASupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-40-5 through 40-7
AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-40-11AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-40-13 through 40-17
AmendedAccounting Standards Update No. 2024-0411/26/2024
470-20-40-13AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-40-13AAddedAccounting Standards Update No. 2024-0411/26/2024
470-20-40-16AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-40-18AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-40-19 through 40-26
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-45-1SupersededAccounting Standards Update No. 2015-0101/09/2015
470-20-45-1AAddedAccounting Standards Update No. 2020-0608/05/2020
470-20-45-1BAddedAccounting Standards Update No. 2020-0608/05/2020
470-20-45-2SupersededAccounting Standards Update No. 2015-0101/09/2015
470-20-45-2AAddedAccounting Standards Update No. 2009-1510/13/2009
470-20-45-3SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-45-3AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-50-1SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-50-1A through 50-1I
AddedAccounting Standards Update No. 2020-0608/05/2020
470-20-50-2A through 50-2C
AddedAccounting Standards Update No. 2009-1510/13/2009
470-20-50-2CAmendedAccounting Standards Update No. 2025-1112/08/2025
470-20-50-2CAmendedAccounting Standards Update No. 2024-0311/04/2024
470-20-50-3 through 50-6
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-55-1SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-55-1AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-55-1AAddedAccounting Standards Update No. 2020-0608/05/2020
470-20-55-1BAmendedAccounting Standards Update No. 2024-0411/26/2024
470-20-55-1BAddedAccounting Standards Update No. 2020-0608/05/2020
470-20-55-1CAddedAccounting Standards Update No. 2024-0411/26/2024
470-20-55-3 through 55-8
AmendedAccounting Standards Update No. 2024-0411/26/2024
470-20-55-3AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-55-4AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-55-5AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-55-6AmendedAccounting Standards Update No. 2012-0410/01/2012
470-20-55-7AAddedAccounting Standards Update No. 2024-0411/26/2024
470-20-55-9A through 55-9J
AddedAccounting Standards Update No. 2024-0411/26/2024
470-20-55-10 through 55-17
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-55-18AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-55-19AmendedAccounting Standards Update No. 2020-0608/05/2020
470-20-55-19A through 55-66
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-55-28AmendedMaintenance Update 2016-05 (PDF)04/12/2016
470-20-55-30AmendedAccounting Standards Update No. 2016-1912/14/2016
470-20-55-69A through 55-69F
AddedAccounting Standards Update No. 2020-0608/05/2020
470-20-55-69 through 55-82
SupersededAccounting Standards Update No. 2020-0608/05/2020
470-20-65-3AddedAccounting Standards Update No. 2009-1510/13/2009
470-20-65-4AddedAccounting Standards Update No. 2024-0411/26/2024
Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:0fd89de3aa62f369aa611d2756cb856cdfd8fff2a1230f215cb804f52fce6d65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/20/#05-overview-and-background) SEC content: no ##### [470-20-05-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:087c4169c17615909f32d37cf2959d1977516bf980d6ea13d5b193dfd5ac3a10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features and other options as follows: 1. a Debt instruments with detachable warrants 2. b Convertible debt instruments 3. c [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 4. d Interest forfeiture 5. e Induced conversions 6. f Conversion upon issuer's exercise of call option 7. g [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 8. h Own-share lending arrangements issued in contemplation of convertible debt issuance or other financing. ##### [470-20-05-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-1A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:6e0e97b7e848a7d09d2eb0fecc13778ccfcdb03e29ad07a2463bdcfdfd8bf601 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Debt Instruments with Detachable Warrants ##### [470-20-05-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:4cc1a405835c607cc323f6b60622b3bff0bf964ac77ef0fa054ffcbf4abfe6ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unlike convertible debt, debt with detachable warrants (detachable call options) to purchase stock is usually issued with the expectation that the debt will be repaid when it matures. The provisions of the debt agreement are usually more restrictive on the issuer and more protective of the investor than those for convertible debt. The terms of the warrants are influenced by the desire for a successful debt financing. Detachable warrants often trade separately from the debt instrument. Thus, the two elements of the security exist independently and may be treated as separate securities. ##### [470-20-05-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:bae86f533d2c0b1d9a6e120d41fec617be6754dfa32e774af39f0eef2ae5412e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. From the point of view of the issuer, the sale of a debt security with warrants results in a lower cash interest cost than would otherwise be possible or permits financing not otherwise practicable. The issuer usually cannot force the holders of the warrants to exercise them and purchase the stock. The issuer may, however, be required to issue shares of stock at some future date at a price lower than the market price existing at that time, as is true in the case of the conversion option of convertible debt. Under different conditions the warrants may expire without exercise. The outcome of the warrant feature thus cannot be determined at [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval."). In either case the debt must generally be paid at maturity or earlier redemption date whether or not the warrants are exercised. #### Convertible Debt Instruments ##### [470-20-05-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:a2a14bdf6f5cce294402779c4dbc4a28de14365ad97041332eb891caba32e87e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A convertible debt instrument is a complex hybrid instrument bearing an option, the alternative choices of which cannot exist independently of one another. The holder ordinarily does not sell one right and retain the other. Furthermore, the two choices are mutually exclusive; they cannot both be consummated. Thus, the instrument will either be converted or be redeemed. The holder cannot exercise the option to convert unless he forgoes the right to redemption, and vice versa. ##### [470-20-05-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:0caff1c4fac2215baba7b60ca2295df5571c3cf0b877c3aaabb1e0ec76102877 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A convertible debt instrument may offer advantages to both the issuer and the purchaser. From the point of view of the issuer, convertible debt has a lower interest rate than does nonconvertible debt. Furthermore, the issuer of convertible debt instruments, in planning its long-range financing, may view convertible debt as essentially a means of raising equity capital. Thus, if the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the underlying common stock increases sufficiently in the future, the issuer can force conversion of the convertible debt into common stock by calling the issue for redemption. Under these market conditions, the issuer can effectively terminate the conversion option and eliminate the debt. If the fair value of the stock does not increase sufficiently to result in conversion of the debt, the issuer will have received the benefit of the cash proceeds to the scheduled maturity dates at a relatively low cash interest cost. ##### [470-20-05-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:18fb992d832a272642bcd3d9fc55da260c64f86a9d45dd97caea8c15ac493e38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the other hand, the purchaser obtains an option to receive either the face or redemption amount of the instrument or the number of common shares into which the instrument is convertible. If the fair value of the underlying common stock increases above the conversion price, the purchaser (either through conversion or through holding the convertible debt containing the conversion option) benefits through appreciation. The purchaser may at that time require the issuance of the common stock at a price lower than the fair value. However, should the fair value of the underlying common stock not increase in the future, the purchaser has the protection of a debt security. Thus, in the absence of default by the issuer, the purchaser would receive the principal and interest if the conversion option is not exercised. ##### [470-20-05-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:f725d6d2b69d6026abc57b2d0cfb6706a945ebccb22820468f0f074a9409d6b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities may issue convertible debt instruments that may be convertible into common stock at the lower of a conversion rate fixed at [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval.") and a fixed discount to the market price of the common stock at the date of conversion. ##### [470-20-05-7A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-7A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:a976a0091b387823ecc4203988c24b97bc1a757e7217a3f94bbfe0e8381d2ab8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities also may issue convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement. ##### [470-20-05-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:7667729413e3dc2d702e726e9e39da22acd310b7b9cff3cafb716c09a060b2d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain convertible debt instruments may have a contingently adjustable conversion ratio; that is, a conversion price that is variable based on future events such as any of the following: 1. a A liquidation or a change in control of an entity 2. b A subsequent round of financing at a price lower than the [convertible security's](https://asc.understandingaccounting.org/glossary/c/#convertible-security "A security that is convertible into another security based on a conversion rate. For example, convertible preferred stock that is convertible into common stock on a two-for-one basis (two shares of common for each share of preferred).")original conversion price 3. c An initial public offering at a share price lower than an agreed-upon amount. ##### [470-20-05-8A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-8A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:bac8ea1afa1d9fa9bdc83e8927aaf479188054b85e17415cfb31e8a3b8c20608 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain convertible debt instruments may become convertible only upon the occurrence of a future event that is outside the control of the issuer or holder. #### Interest Forfeiture ##### [470-20-05-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:7e9bd72d02dcf22398305647e18f32d9ea5ffa84b96bcc50b57ba85481085e3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a convertible debt instrument is converted to equity securities, sometimes the terms of conversion provide that any accrued but unpaid interest at the date of conversion is forfeited by the former debt holder. This occurs either because the conversion date falls between interest payment dates or because there are no interest payment dates (a zero coupon convertible debt instrument). #### Induced Conversions ##### [470-20-05-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-10) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:bafcad530e3fdc286836d19c06d4e783a5aea64edb5e7024ca77ae0d5cf7c337 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some convertible debt instruments include provisions allowing the debtor to alter terms of the debt to the benefit of debt holders. In some circumstances, conversion privileges for a convertible debt instrument are changed or additional consideration is paid to debt holders for the purpose of inducing prompt conversion of the debt to equity securities (sometimes referred to as a convertible debt sweetener). Such provisions may be general in nature, permitting the debtor or trustee to take actions to protect the interests of the debt holders, or they may be specific, for example, specifically authorizing the debtor to temporarily reduce the conversion price for the purpose of inducing conversion. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Some convertible debt instruments include provisions allowing the debtor to alter terms of the debt to the benefit of debt holders. In some circumstances, conversion privileges for a convertible debt instrument are changed or additional consideration is paid to debt holders for the purpose of inducing prompt conversion of the debt instrument (sometimes referred to as a convertible debt sweetener). Such provisions may be general in nature, permitting the debtor or trustee to take actions to protect the interests of the debt holders, or they may be specific, for example, specifically authorizing the debtor to temporarily reduce the conversion price for the purpose of inducing conversion. #### Conversion Upon Issuer's Exercise of Call Option ##### [470-20-05-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:d6c82ec50f54bc66e59ca07d1bd070f662bcb2188a680b40dfc997cc4eecc94d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may issue equity securities to settle a debt instrument that was not otherwise currently convertible but became convertible upon the issuer's exercise of a call option when the issuance of equity securities is pursuant to the instrument's original conversion terms. This Subtopic provides related guidance. ##### [470-20-05-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:61b1137944472edeebfbd0672977b1ba815ace2bb24a05a1001f45148e526169 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance or Other Financing ##### [470-20-05-12A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:5c21c9e065c4d3fa645752fa1e4883264789ab1cada5f3507cc1a846ca07d10d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity for which the cost to an investment banking firm (investment bank) or third-party investors (investors) of borrowing its shares is prohibitive (for example, due to a lack of liquidity or extensive open short positions in the shares) may enter into share-lending arrangements that are executed separately but in connection with a convertible debt offering. Although the convertible debt instrument is ultimately sold to investors, the share-lending arrangement is an agreement between the entity (share lender) and an investment bank (share borrower) and is intended to facilitate the ability of the investors to hedge the conversion option in the entity's convertible debt. ##### [470-20-05-12B](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12B) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:ff114041dc2f2385efdb456fdd892b89582d26027076f111037563b818aba88b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The terms of a share-lending arrangement require the entity to issue shares (loaned shares) to the investment bank in exchange for a nominal loan processing fee. Although the loaned shares are legally outstanding, the nominal loan processing fee is typically equal to the par value of the common stock, which is significantly less than the fair value of the loaned shares or the share-lending arrangement. Generally, upon maturity or conversion of the convertible debt, the investment bank is required to return the loaned shares to the entity for no additional consideration. ##### [470-20-05-12C](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12C) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:3d6234b7b351f68888e87a45ef9601e9948b7d74287cda47840099492b5663a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other terms of a share-lending arrangement typically require the investment bank to reimburse the entity for any dividends paid on the loaned shares. Typically, the arrangement precludes the investment bank from voting on any matters submitted to a vote of the entity's shareholders to the extent the investment bank is the owner of the shares. ### Cash Conversion ##### [470-20-05-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:09.755Z to 2026-09-10T00:31:09.755Z Record version: sha256:b1693eea84557c170bd76b86b9bfa83148855adda437fa0ab4c82aae277d7ae5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:13.819Z to 2026-09-10T00:31:13.819Z Record version: sha256:0d08e4f00c4928a1e6f6113b72d11f0bc4ddf6a631756d913ab2c43c08918ad7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/470/20/#10-objectives) SEC content: no ### Cash Conversion ##### [470-20-10-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:13.819Z to 2026-09-10T00:31:13.819Z Record version: sha256:2f35a4e61e1da8f756dc4535310fc52b8f4494fa6651a17e1d3908d3fa357e81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-10-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-10-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:13.819Z to 2026-09-10T00:31:13.819Z Record version: sha256:1c0109997f098af300942562d88a5ad8436f91dbda5838c3bb145a1de0f9d93f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:ca8df116030a781f2a1acd953661f6a3d662023dde74bbe52387c4e9d5b6e94d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/20/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-20-15-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:66807a27ea92751478cda2ff3147e5520e79115797284836de79336b4cdb0a03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities. #### Instruments ##### [470-20-15-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:6dda86c8238a25de2a4d1bea088266360ecba3545f72fa93ca0e47d1fa230272 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all debt instruments. The guidance on own-share lending arrangements applies to an equity-classified share-lending arrangement on an entity's own shares when executed in contemplation of a convertible debt offering or other financing. ##### [470-20-15-2A](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:296325d3bad3fd0ecf86813847308ab825e1636f768d761efa1e5f85402ca057 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance on convertible debt instruments in this Subtopic shall be considered after considering the guidance in the Fair Value Option Subsections of Subtopic 825-10 on financial instruments. ##### [470-20-15-2B](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2B) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:024ce589cea6dee277250809266afe9b6392a86c2bbb26a139ad9b71f87b0543 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance on convertible debt instruments in this Subtopic shall be considered after considering the guidance in Subtopic 815-15 on bifurcation of embedded derivatives for an embedded conversion option or other embedded feature (for example, an embedded prepayment option) as applicable (see paragraph [815-15-55-76A](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-76A)). The relevant guidance in this Subtopic does not affect an issuer's determination under Subtopic 815-15 of whether an embedded conversion option or other embedded feature shall be separately accounted for as a derivative instrument. ##### [470-20-15-2C](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2C) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:2963c321d167e2a06c91beb20c5447bebc23ac9809b74fe777b34a82625c5094 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to a convertible debt instrument award issued to a grantee that is subject to the guidance in Topic 718 on stock compensation unless the instrument is modified as described in and no longer subject to the guidance in that Topic. The guidance in this Subtopic does not apply to stock-settled debt that is subject to the guidance in Subtopic 480-10 on distinguishing liabilities from equity or other Subtopics (see paragraph [470-20-25-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-14)), unless the stock-settled debt also contains a substantive conversion feature (as discussed in paragraphs [470-20-40-7 through 40-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-7) ) for which all relevant guidance in this Subtopic shall be considered in addition to the relevant guidance in other Subtopics. ##### [470-20-15-2D](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2D) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:908cfafaf6bd00bea22583d354a0a730656c9fc1682beb7178e6200211a8602f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of determining whether an instrument is within the scope of this Subtopic, a convertible preferred stock shall be considered a convertible debt instrument if it has both of the following characteristics: 1. a It is a mandatorily redeemable financial instrument. 2. b It is classified as a liability under Subtopic 480-10. For related implementation guidance, see paragraph [470-20-55-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1A). ### Cash Conversion ##### [470-20-15-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:854df5fe3af95492aff445581ff13576f557700430e3912e8ac73d96b4fab5f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-15-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:dfc5d2df97d2b0d8ac82a21de997e3a2c69d52c8be91813c030b3224dca652da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-15-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:ba7243a2e5778f5010a1cc6e088374a16594437ecaba23bee28f67c3b51b2333 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-15-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:15.782Z to 2026-09-10T00:31:15.782Z Record version: sha256:446ec5dc9815269e3102f1011cebff11a5bbb029e59cee3b36d31bd550e13dad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:ba5952da4fdc9ca95500577ec689b42720a33f876d4d9224ec6f6d20b0eee27b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/20/#25-recognition) SEC content: no #### Overall ##### [470-20-25-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:0808a47cf7acea9dba8f6610ba1be4768d2b302d21becf453061de423456e002 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Section shall be considered after consideration of the guidance in the Fair Value Option Subsections of Subtopic 825-10 on financial instruments and the guidance in Subtopic 815-15 on bifurcation of embedded derivatives, as applicable. The guidance in this Section is organized as follows: 1. a Debt instruments with detachable warrants 2. b [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 3. c [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 4. d Convertible debt instruments 5. e [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 6. f Own-share lending arrangements issued in contemplation of convertible debt issuance. #### Debt Instruments with Detachable Warrants ##### [470-20-25-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:e98111dec0e5a0f59b8eabeb94c1664e257740a08c7869ed32f5eb0ce634fa55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Proceeds from the sale of a debt instrument with stock purchase warrants (detachable call options) shall be allocated to the two elements based on the relative [fair values](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the debt instrument without the warrants and of the warrants themselves at [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval."). The portion of the proceeds so allocated to the warrants shall be accounted for as paid-in capital. The remainder of the proceeds shall be allocated to the debt instrument portion of the transaction. This usually results in a discount (or, occasionally, a reduced premium), which shall be accounted for under Topic 835. ##### [470-20-25-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:ae29f5091fb86caefc9a1020a1eee300da1e932fc711708d83c49eb393c3fff3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The same accounting treatment applies to issues of debt instruments (issued with detachable warrants) that may be surrendered in settlement of the exercise price of the warrant. However, if stock purchase warrants are not detachable from the debt instrument and the debt instrument must be surrendered to exercise the warrant, the two instruments taken together are substantially equivalent to a convertible debt instrument and the accounting specified in paragraph [470-20-25-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-12) shall apply. ##### [470-20-25-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:99de836a69115f40530e577a2631c59877e798c256e0029d3efccefbaa778eb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:2a13685fda6e246d1b9f43cba899d98aa32ffddacd2f483644e5d8c8d0f246c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:f3cca43de3c8187e4e3e101aead5474771c27fc3b70dc03c2c223aaa4459517d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:37ca1e170fce1d0bd22ed178dae99cc5cbfa61ba9a1350125055d46458f61968 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:eb1e0398ac8c869a39a9de4bb25e8b7854ce8fe0766558f8e92b5041a5292172 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:e7dcb7356f05e62fd194cfe0e56b89968609ffc7724cfad6a041af9c2d4354d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Convertible Debt Instruments ##### [470-20-25-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:b3cb2cc6e884aefad5cb77122f4cdd7c50c1ee9b41e7124b1bec8ceb71b94aa0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:4333f54a63c9a820bd0c3a8cf15616a01d6d23bb3e2fe97ee9f01f1797ef8843 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:60f95b2c412511645143d2437938d88a4f449a24d6ebd6a57723b44f29c3817f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debt with an embedded conversion feature shall be accounted for in its entirety as a liability and no portion of the proceeds from the issuance of the convertible debt instrument shall be accounted for as attributable to the conversion feature unless the conversion feature is required to be accounted for separately as an embedded derivative under Subtopic 815-15 or the conversion feature results in a premium that is subject to the guidance in paragraph [470-20-25-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-13). ##### [470-20-25-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:5df4d57108694d788e13798a397aeb77ba6d2a3a937c200abd639a147eabc291 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a convertible debt instrument is issued at a substantial premium, there is a presumption that such premium represents paid-in capital. ##### [470-20-25-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:da0a646e727d0a25c51a454f923df0160d8b70834756333f99e5a97a33851ed4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a debt instrument has a conversion option that continuously resets as the underlying stock price increases or decreases so as to provide a fixed value of common stock to the holder at any conversion date, the instrument shall be considered stock-settled debt that is subject to the guidance in Subtopic 480-10 or other Subtopics (such as Subtopic 718-10, 815-15, or 825-10). Example 4 (see paragraph [470-20-55-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-18)) illustrates application of the guidance in this paragraph. ##### [470-20-25-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:56cb42f65c2d3f518f44356323541d6036830431eaeb38f6e846cef99af10643 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the issuance transaction for a convertible debt instrument within the scope of this Subtopic includes other unstated (or stated) rights or privileges in addition to the convertible debt instrument, a portion of the initial proceeds shall be attributed to those rights and privileges based on the guidance in other applicable U.S. generally accepted accounting principles (GAAP). ##### [470-20-25-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:1a66fb7e2d154ba6335dc45e41af20b6a9719c7e794bb5023202089549df290a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:eb12d27b409e5846e15527c48f0747577fbe5032af9b18174aacc22923faffbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:5d95bda23680b313babff8d0fc67c1615b6f74e39d207588c284825063a1daae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:fa52adb4d7fce495b47e9554befbf3a605f242666faf3b15fcc86245db4ad9dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:8330399cecb6b9ef5451e4da2dc09adcc27928b17368ce30adb69ce058534927 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance ##### [470-20-25-20A](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-20A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:3e4e394bbf08f3558f3d38d69f07c21db547cc171caf68b6e40db9e004bc8b6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the date of issuance, a share-lending arrangement entered into on an entity's own shares in contemplation of a convertible debt offering or other financing shall be measured at fair value (in accordance with Topic 820) and recognized as an issuance cost, with an offset to additional paid-in capital in the financial statements of the entity. ### Cash Conversion ##### [470-20-25-21](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:6080b601cd5c18e007be1fa731e71ce0aff08be3d3f900147735d73f1b8c1722 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-22](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:a4fce9c020729e2204fb025a2b61bbc2a983371b4b990c5f48eff5b0e1075003 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-23](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:4d12e81376cf03f1cb5f0975f7b6452a5a03815e8c6ccbc4a0cf3b0dddf5f04a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-24](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-24) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:905b9bc65e4390e18855eaa5c4b14fabf725346d62287a51d49e870704d575bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-25](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-25) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:35d1b507deb7c5b42c161955df1bf597417f6ac875a0bcf333207f6274588518 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-26](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-26) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:b9cef7ef30b8cb6273e27e6200bfe04cc740ee25bd1284be99f22bbd8a60803d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-25-27](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-27) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:23.281Z to 2026-09-10T00:31:23.281Z Record version: sha256:15bc242ff8f4519cee46be91f8a31f034f99fdcff52cc9c49c19a82fb3ba44de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:4ddd57e9bff3cf05b712963e354f09a42935173e0c3839210ae27a507435a4dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/470/20/#30-initial-measurement) SEC content: no #### Debt Instruments with Detachable Warrants ##### [470-20-30-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:3b5daa760595f2f1b9ddb0ed0e487454dcd29b0d517903c3ba6e260b3db2e6b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The allocation of proceeds under paragraph [470-20-25-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-2) shall be based on the relative [fair values](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the two instruments at [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval."). ##### [470-20-30-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:9fc5cb60b810fa947217cd3bbfc25fe3e0a34a9560781be15fc557c1a93cb8a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When detachable warrants (detachable call options) are issued in conjunction with a debt instrument as consideration in purchase transactions, the amounts attributable to each class of instrument issued shall be determined separately, based on values at time of issuance. The debt discount or premium shall be determined by comparing the value attributed to the debt instrument with the face amount thereof. ##### [470-20-30-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:1bc18797439021fda7224a1bcfa5a0d85bb79dce21fa163e033c580120f96251 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:4c622aaa96e82155970df30e04c396c7e07d0893e1974c1ef9c2f5c02995d570 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:439c3ffe03a6ca57ee248ca957dbd0bc530b15ae9c0043b41fb6d7940866b1e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:127970b73c384f1bc96eb16f54b473923bf6251515c0b49fdc620fe733393db0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:57e92269dc3b6109d7102edf1fa95a0e9dba57dced7154f5a7f4c92628fc1fb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:55c9cfb8aab40cfdf332fca9f803038adff5a9ff2e4a7aabe07bcba9121fed80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:c7355ac54651f143ff0ba9da56771f77b1b5d16e4e9de6a5be52d1d61208a269 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:ec11d485e9b8acea6d472f9b2fb056e27f1764cf26b1b518a982350d145ebde4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:0178ebdf932d88b8e61bd58f777cc95f8552d4cd2dfc5d26fab5facbb70889f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-20-30-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:cf37dcc0759aa2609b24fe8605242f7a8d8f76023428801294ade6a910b94d61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:1a8863c9ab9ae70c871c291d57e4948e32ec24d708ba5469be210218e31bf35c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:f77b3a018c8a0e4da76281a2fad04e076a9f8e8c0b812e3054e01b8aa9ed73d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:3c3975db265fba0e15162b0b88208aec16447ff18501fb390b6e0673b0bac108 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:792ae45e0fd39be992284def610d2a690334d1b0f95eb5a85a70b09fe32196a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:9c20f3c2308f45e3d13856b739d29664ebf32f26d934ed942dc416d02e6210c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:d7d1694f90831ce733a3957e57db51406697911cfe598c6a8066ecb6e6677da2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:58fb8a22e4348efaeab32a00beb4447648b191c5241fc2bc2754668b7c738e4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:a9fe655a036c006054def2d41c4766ee151fb64886b25dfff27cc84aca60eb97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-21](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:12cda52e98f6204ab211ddc99c945dca5f883a004e5e933798da960431125e1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-22](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:2db59f4b8a5c4c0665e83860e6c750c481ff49ddbdc9c7bc0a56445254b1ebea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-23](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:abd143e34b742c05f6885255766daa40cdc0ddf437140c2dbd6ee471b50cd7fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-24](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-24) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:0994f11e9b6610dadd1ac584a719f8b803d923af38f5f17f93d3c812cd9edde2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-25](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-25) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:ada74e13f57c2ac7b679fac413a433611054a43bf71018eb49c43a43a13057e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-26](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-26) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:3df662f287a03ce22b4af058843a36dc10b0632b8d70ce53d14e3adb99299946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance ##### [470-20-30-26A](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-26A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:1adb4685455842a375e5b2d5ccbcffe9381e5f8c0ecba581fd79251a8757d159 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the date of issuance, a share-lending arrangement entered into on an entity's own shares in contemplation of a convertible debt offering or other financing shall be measured at fair value in accordance with Topic 820. ### Cash Conversion ##### [470-20-30-27](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-27) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:e592f53a46896182f7221195acb492e7240ee4f2e9fff3df3430e7d957bb8b74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-28](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-28) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:befb1757fa859e10bf2e9d61b5ab9998b822cea64701352c4871e203c0f38c30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-29](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-29) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:c8e484d0bb723b373e2d8b54137a308b6ba475e0473527a95b1773b97f1d6d27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-30](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-30) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:3a0e47a5c324d1ac6af36d1c53453c3176536f408096da8672bf3597ad231ce7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-30-31](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-31) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:25.111Z to 2026-09-10T00:31:25.111Z Record version: sha256:cb4f8d17a27d9664da782eee44461d997d0b44eff4b2abb65d631126fbc318df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:814bfd60787d5bf0fde40044214ee744591b5f9e96b2b9205211c3f09c46bb36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/470/20/#35-subsequent-measurement) SEC content: no ##### [470-20-35-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:da007eaec262bc0f84868e625bdee21ced7cd547fda7ebe23a329d949f2d05f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:4fa977039a566d12eea515a3768b3b5a73431381795d63ae685de4efae3c0be9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:a69681e7fa5e1343700ea869ebbd99116dbc1077f2651b3f9daa85c63815c8bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:7a33f73216a8f29b6328d722288f89b9846389a5e1fb3eee522c8bef774426b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:3399ee8644b57763613a91c1df5b74ed2c67288faf5337d76c853c08665e4cdc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Interest Expense ##### [470-20-35-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:afe8832ac136b348c6233515804340e5c78ab71ae847e688d04a3fe736652081 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 835-10 provides overall guidance on accretion and amortization of debt premium or discount and debt issuance costs. This guidance addresses the incremental matter related to interest forfeiture. 1. a [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 3. c [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:1511e45f5712079624cb0ba4caa038d9309983030e9c949a4ddc504a82aaa355 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:c4e6ccb51802630da18d1f8fa0bb8dd1f79e8c5050d87f97d2bf05d800e862db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:a8c7d41ae309f0b9a1233bdc26eb3eb473ab5f29ced70e24a5e5a380c75248fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:57bb5bc3d608a2cf6f89ea5041cf0ef0d6c96d56024efcbd594be2373b43fe4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:bd511250f695f05cec777936928d5318923216ec9ea6c1c93b49ba0ead60fe8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the terms of conversion of a convertible debt instrument provide that any accrued but unpaid interest at the date of conversion is forfeited by the former debt holder, that interest should be accrued or imputed to the date of conversion of the debt instrument. #### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance ##### [470-20-35-11A](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-11A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:3ce61ede41655a83210abfe3503d075ba7c461e0b2091a6e085532ae261c2903 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it becomes [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the counterparty to a share-lending arrangement will default, the issuer of the share-lending arrangement shall recognize an expense equal to the then fair value of the unreturned shares, net of the fair value of probable recoveries, with an offset to additional paid-in capital. The issuer of the share-lending arrangement shall remeasure the fair value of the unreturned shares each reporting period through earnings until the arrangement consideration payable by the counterparty becomes fixed. Subsequent changes in the amount of the probable recoveries should also be recognized in earnings. ### Cash Conversion ##### [470-20-35-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:8fb4d3715201c06a85c8e4aed6b50f687a6bb3a6111cd8fd837f445a09ac4796 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:253ec59d366f7025eb5fbe0ff5a433711dbd7318c8b54bad831c6ebac1801dd4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:aa39b6d4f5eabb97354d18aea8db98a4fd35ac0b2a799c5d89f7b1063e8ac49b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:589312695b8c724d90af69ec6e7037551b101bb86651b9951c089919a5c1a361 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:e2fbe45cc1b74c5c2d6ff0031792d5ed1d4f86378a8029b54ff91f33fb11a0cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:af289e0039fe1994ac6bcca8dc187830a340cf230a50b6b85a55a224bfddd0c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:686aea885a228efc874d4bfc814bb4e51220677c5294da24f30509a244a521ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:33ea004d80436ae9ba60ea3fc7af77655e17ba2e63e03f961201a47004afaab4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-35-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:28.520Z to 2026-09-10T00:31:28.520Z Record version: sha256:1f79c1a3e93fc8e7444158cf7c0a4f450538dc31b791bcaa2a9747b076f46b0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:212e2be433a17502c1d996079e1ae9457bf719f140b33d2a950941ff8bd328b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/470/20/#40-derecognition) SEC content: no ##### [470-20-40-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:bd4d710e66e0637d5d14a92e5f12d345910b9df169110c1c248b9a64575d70ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:8f98dbd624999cb9f51a80926a4cbdc53a335280783a1a2b92c8ec9bb1ce03c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:141d861c1c08ad3f332a5141917338ca13e72d10d7acbe1c3866089c12786f8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Contractual Conversion ##### [470-20-40-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:e42795ce4d2129be67ab357a1836bc37120a1d662647510456170f004a8b5004 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a convertible debt instrument accounted for in its entirety as a liability under paragraph [470-20-25-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-12) is converted into shares, cash (or other assets), or any combination of shares and cash (or other assets), in accordance with the conversion privileges provided in the terms of the instrument, upon conversion the carrying amount of the convertible debt instrument, including any unamortized premium, discount, or issuance costs, shall be reduced by, if any, the cash (or other assets) transferred and then shall be recognized in the capital accounts to reflect the shares issued and no gain or loss is recognized. ##### [470-20-40-4A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-4A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:57d58e803a0ec7ba774b915fcb3041f5c808265ab6de1c102f50f3527250322f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Conversion upon Issuer's Exercise of Call Option ##### [470-20-40-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:1c88721ac927c22cf75d85e78babee9a09f5d097a89e838f1a9ef083f9cf7929 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses accounting for the issuance of equity securities to settle a debt instrument (pursuant to the instrument's original conversion terms) that became convertible upon the issuer's exercise of a call option: 1. a [Substantive conversion feature](https://asc.understandingaccounting.org/glossary/s/#substantive-conversion-feature "A conversion feature that is at least reasonably possible of being exercisable in the future absent the issuer's exercise of a call option."). If the debt instrument contained a substantive conversion feature as of [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval."), the issuance of equity securities shall be accounted for as a contractual conversion. That is, no gain or loss shall be recognized related to the equity securities issued to settle the instrument. 2. b No substantive conversion feature. If the debt instrument did not contain a substantive conversion feature as of time of issuance, the issuance of equity securities shall be accounted for as a debt extinguishment. That is, the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the equity securities issued should be considered a component of the reacquisition price of the debt. ##### [470-20-40-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:57158180c88bc6d673173683f2001fab09af257114d0388f2591be63db44c760 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment of whether the conversion feature is substantive may be performed after time of issuance but shall be based only on assumptions, considerations, and marketplace information available as of time of issuance. ##### [470-20-40-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:a6018aeff1fd9b12b0d73714c9449c80cea7bb7eaaa5ef1ebac380c32e5272d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. By definition, a substantive conversion feature is at least [reasonably possible](https://asc.understandingaccounting.org/glossary/r/#reasonably-possible "The chance of the future event or events occurring is more than remote but less than likely.") of being exercised in the future. If the conversion price of an instrument at issuance is extremely high so that conversion of the instrument is not deemed at least reasonably possible as of time of issuance, then the conversion feature would not be considered substantive. ##### [470-20-40-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:05a63c87337a6990eb80bd9988f96321dbe85ca54af85c22a994e1aadfb4fe77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of determining whether a conversion feature is reasonably possible of being exercised, the assessment of the holder's intent is not necessary. Therefore, even if such an instrument included a conversion feature that provided for conversion due solely to the passage of time (for example, the instrument will become convertible at a date before its maturity date), it would be inappropriate to conclude that the conversion feature is substantive. Also, an instrument that became convertible only upon the issuer's exercise of its call option does not possess a substantive conversion feature. ##### [470-20-40-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:cbcb7940fdcf07cc0b945940b81822e3cf33933805cf21aec03b370236d6d6f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Methods that may be helpful in assessing whether a conversion feature is substantive include the following: 1. a The fair value of the conversion feature relative to the fair value of the debt instrument. Comparing the fair value of a conversion feature to the fair value of the debt instrument (that is, the complete instrument as issued) may provide evidence that the conversion feature is substantive. 2. b The effective annual interest rate per the terms of the debt instrument relative to the estimated effective annual rate of a nonconvertible debt instrument with an equivalent expected term and credit risk. Comparing the effective annual interest rate of the debt instrument to the effective annual rate the issuer estimates it could obtain on a similar nonconvertible instrument may provide evidence that a conversion feature is substantive. 3. c The fair value of the debt instrument relative to an instrument that is identical except for which the conversion option is not contingent. Comparing the fair value of the debt instrument to the fair value of an identical instrument for which conversion is not contingent isolates the effect of the contingencies and may provide evidence about the substance of a conversion feature. If the fair value of the debt instrument is similar to the fair value of an identical convertible debt instrument for which conversion is not contingent, then it may indicate that the conversion feature is substantive. However, this approach may not be appropriate unless it is clear that the conversion feature, not considering the contingencies, is substantive. 4. d Qualitative evaluation of the conversion provisions. The nature of the conditions under which the instrument may become convertible may provide evidence that the conversion feature is substantive. For example, if an instrument may become convertible upon the occurrence of a specified contingent event, the likelihood that the contingent event will occur before the instrument's maturity date may indicate that the conversion feature is substantive. However, this approach may not be appropriate unless it is clear that the conversion feature, not considering the contingencies, is substantive. ##### [470-20-40-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:8233c6420a03049bd9654ab4a78aee44874d40a93ece2eed9812446df837fd35 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [470-20-40-7 through 40-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-7) does not address the treatment of an instrument for purposes of applying Subtopic 260-10. #### Interest Forfeiture ##### [470-20-40-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:7dae1c8f9e47f6f3c790f20b19145d563cb541c256a35b9d554d590e3ef63710 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the terms of conversion of a convertible debt instrument provide that any accrued but unpaid interest at the date of conversion is forfeited by the former debt holder, accrued interest from the last interest payment date, if applicable, to the date of conversion, net of related income tax effects, if any, shall be charged to interest expense and credited to capital as part of the cost of securities issued. Thus, the accrued interest is accounted for in the same way as the principal amount of the debt converted and any unamortized premium, discount, or issuance costs; the net carrying amount of the debt, including any unamortized premium, discount, or issuance costs and the related accrual for interest to the date of conversion, net of any related income tax effects, is a credit to the entity's capital. ##### [470-20-40-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:00dc21196b9c75a25925a28cf6496dadd09016ab315e039901e83617fe1bff73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Induced Conversions ##### [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:218f66d447af1f9d17e12b0317d5889fc1ccdf2fe3710443fe4fe852c4692b72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16) applies to conversions of convertible debt to equity securities pursuant to terms that reflect changes made by the debtor to the conversion privileges provided in the terms of the debt at issuance (including changes that involve the payment of consideration) for the purpose of inducing conversion. That guidance applies only to conversions that both: 1. a Occur pursuant to changed conversion privileges that are exercisable only for a limited period of time (inducements offered without a restrictive time limit on their exercisability are not, by their structure, changes made to induce prompt conversion) 2. b Include the issuance of all of the equity securities issuable pursuant to conversion privileges included in the terms of the debt at issuance for each debt instrument that is converted, regardless of the party that initiates the offer or whether the offer relates to all debt holders. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16) applies to conversions of convertible debt instruments pursuant to terms that reflect changes made by the issuer to the conversion privileges provided in the terms of the existing debt instrument (including changes that involve the payment of consideration) for the purpose of inducing conversion. That guidance applies only to conversions for which all of the following criteria are satisfied: 1. a The conversion occurs pursuant to changed conversion privileges that are exercisable only for a limited period of time (inducements offered without a restrictive time limit on their exercisability are not, by their structure, changes made to induce prompt conversion). 2. b The conversion includes the issuance of all of the consideration (in form and amount) issuable pursuant to conversion privileges provided in the terms of the existing debt instrument for each debt instrument that is converted, regardless of the party that initiates the offer or whether the offer relates to all debt holders. See paragraph [470-20-40-13A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A) for additional guidance applicable to debt instruments whose conversion privileges permit the entity to issue cash (or other assets) or a combination of shares and cash (or other assets) upon conversion. The examples in paragraphs [470-20-55-9A through 55-9J](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A) illustrate the application of this guidance. 3. c The existing debt instrument, regardless of whether it is currently convertible, contained a substantive conversion feature as of both the time of issuance and the date the inducement offer is accepted by the convertible debt holder. See paragraphs [470-20-40-6 through 40-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-6) for additional guidance on determining whether a conversion feature is substantive. ##### [470-20-40-13A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:dc43bb359cbe620a92f3c1c55fdf462bc924ab75416b8eec33de2f66084bd948 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)In applying the guidance in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), an entity shall compare the amount of cash (or other assets) and number of shares issuable under the conversion privileges provided in the terms of the existing instrument with the amount of cash (or other assets) and number of shares issuable under the inducement offer. An entity shall consider the following: 1. a For purposes of comparing the amount of cash (or other assets) and number of shares issuable, if the settlement terms under either the existing conversion privileges or the inducement offer are based on a future share price or average of future share prices (such as a volume-weighted average price), then an entity shall use the fair value of the shares as of the date the inducement offer is accepted. For example, the incorporation, elimination, or modification of a volume-weighted average price formula that is based on future share prices does not affect the determination of the amount of cash or number of shares issuable for the induced conversion assessment because the fair value of the shares as of the date the inducement offer is accepted would be used instead of the future volume-weighted average price. A future share price refers to a share price measured after the inducement offer is accepted. 2. b Changes that result in the amount of cash (or other assets) and number of shares being indexed to something other than the future price of the issuer’s shares (for example, the fair value of a commodity) shall be considered a change in the form of settlement. 3. c If within the one-year period preceding the date the inducement offer is accepted by the convertible debt holder the existing debt has been exchanged or modified (without being deemed to be substantially different in accordance with the guidance in Subtopic 470-50), then the conversion privileges provided in the debt terms that existed one year before the date the offer is accepted by the convertible debt holder shall be used in place of the conversion privileges provided in the terms of the existing debt instrument. ##### [470-20-40-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-14) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:93ba9c41f31fe4fe211281f3b3e6f6b4c45166be59c8d8708195f087a5980679 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A conversion includes an exchange of a convertible debt instrument for equity securities or a combination of equity securities and other consideration, whether or not the exchange involves legal exercise of the contractual conversion privileges included in terms of the debt. The preceding paragraph also includes conversions pursuant to amended or altered conversion privileges on such instruments, even though they are literally provided in the terms of the debt at issuance. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)A conversion includes an exchange of a convertible debt instrument for equity securities or other consideration, whether or not the exchange involves legal exercise of the contractual conversion privileges included in terms of the debt. The guidance in paragraphs [470-20-40-13 through 40-13A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) also applies to conversions pursuant to amended or altered conversion privileges on such instruments, even though the right to amend the terms is provided in the terms of the existing debt instrument. ##### [470-20-40-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-15) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:96b8dab0d1f24563bda9d69a9329a6f5214d1e07daee7cdc33275e56c33034b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The changed terms may involve any of the following: 1. a A reduction of the original conversion price thereby resulting in the issuance of additional shares of stock 2. b An issuance of warrants or other securities not provided for in the original conversion terms 3. c A payment of cash or other consideration to those debt holders that convert during the specified time period. The guidance in the following paragraph does not apply to conversions pursuant to other changes in conversion privileges or to changes in terms of convertible debt instruments that are different from those described in this paragraph. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The changed terms may involve any of the following: 1. a A reduction of the conversion price thereby resulting in the issuance of additional shares of stock 2. b An issuance of warrants or other securities not provided for in the conversion privileges in the terms of the existing instrument 3. c A payment of cash or other consideration to those debt holders that convert during the specified time period. The guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)does not apply to conversions pursuant to other changes in conversion privileges or to changes in terms of convertible debt instruments that are different from those described in this paragraph. ##### [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:dc245149444f67391073ad814f54d4cd558bafb8d6fd3a8272c6847b6098ec09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a convertible debt instrument is converted to equity securities of the debtor pursuant to an inducement offer (see paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13)), the debtor shall recognize an expense equal to the fair value of all securities and other consideration transferred in the transaction in excess of the fair value of securities issuable pursuant to the original conversion terms. The fair value of the securities or other consideration shall be measured as of the date the inducement offer is accepted by the convertible debt holder. That date normally will be the date the debt holder converts the convertible debt into equity securities or enters into a binding agreement to do so. Until the debt holder accepts the offer, no exchange has been made between the debtor and the debt holder. Example 1 (see paragraph [470-20-55-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1B)) illustrates the application of this guidance. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)If a convertible debt instrument is converted pursuant to an inducement offer (see paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13)), the issuer shall recognize an expense equal to the fair value of all securities and other consideration transferred in the transaction in excess of the fair value of securities and other consideration issuable pursuant to the conversion privileges provided in the terms of the existing instrument. The fair value of the securities or other consideration shall be measured as of the date the inducement offer is accepted by the convertible debt holder. That date normally will be the date the debt holder converts the convertible debt or enters into a binding agreement to do so. Until the debt holder accepts the offer, no exchange has been made between the issuer and the debt holder. Example 1 (see paragraph [470-20-55-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1B)) illustrates the application of this guidance. ##### [470-20-40-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-17) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:d4e3fe632ca5b33c2abd5c96d11997f77d9092fc611c4274c965bdae1f92db30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the preceding paragraph does not require recognition of gain or loss with respect to the shares issuable pursuant to the original conversion privileges of the convertible debt when additional securities or assets are transferred to a debt holder to induce prompt conversion of the debt to equity securities. In a conversion pursuant to original conversion terms, debt is extinguished in exchange for equity pursuant to a preexisting contract that is already recognized in the financial statements, and no gain or loss is recognized upon conversion. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)does not require recognition of gain or loss with respect to the shares (or other consideration) issuable pursuant to the conversion privileges provided in the terms of the existing convertible debt instrument when additional securities, instruments, or assets are transferred to a debt holder to induce prompt conversion of the existing debt instrument. In a conversion pursuant to the conversion privileges provided in the terms of the existing instrument, debt is settled in exchange for shares, cash (or other assets), or any combination of shares and cash (or other assets) pursuant to a preexisting contract that is already recognized in the financial statements, and no gain or loss is recognized upon conversion. #### Modifications and Extinguishments ##### [470-20-40-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:1de76d5c191c8191c82e519505e22ffbbbd05684fe6871ad518d783ae9e975e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For additional guidance on modifications (or exchanges) and extinguishments of convertible debt instruments, see Subtopic 470-50. ### Cash Conversion ##### [470-20-40-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:32c4e7e91c8a93b4fcbdf08ab8bd0b486103f478469341db866bc2c69719995b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:1674e2d898c8797a80b5df8d306e8fee67222e5f29d0b8965291823bb0e11868 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-21](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:1add5244951d01c84ab114fb89f37f82c2d7834d490b5f46e0afa0cbc412fd3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-22](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:19ff31a734ce3be87a72bc32a4f945593cfee952071275cc955a844672a2e513 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-23](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:111c11f1bede072c9c4c6bf6173f53af8dd21b56d2f14d5536631e4d4d795955 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-24](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-24) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:a8fda79885a127bf6b407521bbb3221eb8dfe783f6d624812b45b26f3c7b09a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-25](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-25) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:a2db397777e5084c156e8a2974aedeba41dcdd17e9ec046242c3e9aec4663791 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-40-26](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-26) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z Record version: sha256:7be967c4bc2f5cf0e9695912bd1542075171cf86818a7dc718361e53dc37bb5a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:36.263Z to 2026-09-10T00:31:36.263Z Record version: sha256:aaadab7651516919b0a8fb86e30a90477a415fdd89486fc52a060b676e83c10c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/20/#45-other-presentation-matters) SEC content: no ##### [470-20-45-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:36.263Z to 2026-09-10T00:31:36.263Z Record version: sha256:175e7dfec044c78bd1f7eea3ec2310f847ba52e9638e80affcde6722cc2f2e3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). ##### [470-20-45-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:36.263Z to 2026-09-10T00:31:36.263Z Record version: sha256:4d5c59af813d64789be8d24f6378036b9c5ced70d07d198ad31ec171fd857ec4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transaction costs incurred with third parties other than the investor(s) and that directly relate to the issuance of convertible debt instruments within the scope of this Subtopic shall be reported in accordance with the guidance in Section 835-30-45. ##### [470-20-45-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1B) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:36.263Z to 2026-09-10T00:31:36.263Z Record version: sha256:df2be2859382d0016446440e31be0243f20bbea92ea7aed44889b10ba6add078 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance on convertible debt instruments in this Subtopic does not affect an issuer's determination of whether the instruments should be classified as a current liability or a long-term liability. For purposes of applying other applicable U.S. generally accepted accounting principles (GAAP) to make that determination, all terms of the convertible debt instrument shall be considered. ##### [470-20-45-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:36.263Z to 2026-09-10T00:31:36.263Z Record version: sha256:629e8939d44ef2f0a2c3fd84cd65cd5a9726494b383926496beacfabbe257b8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). #### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance ##### [470-20-45-2A](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-2A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:36.263Z to 2026-09-10T00:31:36.263Z Record version: sha256:8a5e5338a31666cc9eeae305ffdd4c2e6a8fd3eb1f7c121da937942399a105d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the basic and diluted earnings-per-share calculation. If dividends on the loaned shares are not reimbursed to the entity, any amounts, including contractual (accumulated) dividends and participation rights in undistributed earnings, attributable to the loaned shares shall be deducted in computing income available to common shareholders, in a manner consistent with the two-class method in paragraph [260-10-45-60B](https://asc.understandingaccounting.org/asc/260/10/#260-10-45-60B). ### Cash Conversion ##### [470-20-45-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:36.263Z to 2026-09-10T00:31:36.263Z Record version: sha256:71915808cc676d6c1bb7f78f575c404ae05f4b3d70bc18030aaee04c9bd43185 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:c874d583a85428699f7c7f7861f447a2e534ce89ceb047c320ef7cfd13c4cf8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/20/#50-disclosure) SEC content: no ##### [470-20-50-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:21c306f7eed7848a18a7ef442411328c621c7b88aac2278b01c66abb946c1303 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Convertible Debt Instruments ##### [470-20-50-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:d537cba854b4bc311f2e3a914632d0e1cc18304ebb9b342b3b56a1381a2f2a93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the disclosure about convertible debt instruments is to provide users of financial statements with: 1. a Information about the terms and features of convertible debt instruments 2. b An understanding of how those instruments have been reported in an entity's statement of financial position and statement of financial performance 3. c Information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity's future cash flows related to those instruments. ##### [470-20-50-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1B) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:a1c5d1967b2dd3ab432c787f164a8d1f22b4403d7d9f7c813f4246b7a255318b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall explain the pertinent rights and privileges of each convertible debt instrument outstanding, including, but not limited to, the following information: 1. a Principal amount 2. b Coupon rate 3. c Conversion or exercise prices or rates and number of shares into which the instrument is potentially convertible 4. d Pertinent dates, such as conversion date(s) and maturity date 5. e Parties that control the conversion rights 6. f Manner of settlement upon conversion and any alternative settlement methods, such as cash, shares, or a combination of cash and shares 7. g Terms that may change conversion or exercise prices, number of shares to be issued, or other conversion rights and the timing of those rights (excluding standard antidilution provisions) 8. h Liquidation preference and unusual voting rights, if applicable 9. i Other material terms and features of the instrument that are not listed above. ##### [470-20-50-1C](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1C) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:0633bf234791262f11b89324bfbb9b6b4107a08a17b1de0147c00547b37835c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall provide the following incremental information for [contingently convertible instruments](https://asc.understandingaccounting.org/glossary/c/#contingently-convertible-instruments "Contingently convertible instruments are instruments that have embedded conversion features that are contingently convertible or exercisable based on either of the following: A market price trigger Multiple contingencies if one of the contingencies is a market price trigger and the instrument can be converted or share settled based on meeting the specified market condition. A market price trigger is a market condition that is based at least in part on the issuer's own share price. Examples of contingently convertible instruments include contingently convertible debt, contingently convertible preferred stock, and the instrument described by paragraph 260-10-45-43, all with embedded market price triggers.") or the instruments that are described in paragraphs [470-20-05-8 through 05-8A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-8): 1. a Events or changes in circumstances that would adjust or change the contingency or would cause the contingency to be met 2. b Information on whether the shares that would be issued if the contingently convertible securities were converted are included in the calculation of diluted earnings per share (EPS) and the reasons why or why not 3. c Other information that is helpful in understanding both the nature of the contingencies and the potential impact of conversion. ##### [470-20-50-1D](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1D) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:282176f581c3bc0cba27d3b7cb977db29e1f7c2bbbbe39cd32f1b67cf3154bc9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the following information for each convertible debt instrument as of each date for which a statement of financial position is presented. 1. a The unamortized premium, discount, or issuance costs and, if applicable, the premium amount recorded as paid-in capital in accordance with paragraph [470-20-25-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-13) 2. b The net carrying amount 3. c For [public business entities](https://asc.understandingaccounting.org/glossary/p/#public-business-entity "A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC."), the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the entire instrument and the level of the fair value hierarchy in accordance with paragraphs [825-10-50-10 through 50-15](https://asc.understandingaccounting.org/asc/825/10/#825-10-50-10) . See Example 11 (paragraph [470-20-55-69A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69A)) for an illustration of this disclosure requirement. ##### [470-20-50-1E](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1E) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:4264782c783c9025990cf27cae25e8011199ddbf7c8d06bf4bd6542c3cc9a4fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the following information as of the date of the latest statement of financial position presented: 1. a Changes to conversion or exercise prices that occur during the reporting period other than changes due to standard antidilution provisions 2. b Events or changes in circumstances that occur during the reporting period that cause conversion contingencies to be met or conversion terms to be significantly changed 3. c Number of shares issued upon conversion, exercise, or satisfaction of required conditions during the reporting period 4. d Maturities and sinking fund requirements for convertible debt instruments for each of the five years following the date of most recent statement of financial position presented in accordance with paragraph [470-10-50-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-1). ##### [470-20-50-1F](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1F) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:320741f0922e8194a23005932ae8e1863e09834c7e6ba25fbe71946e140ff2b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the following information about interest recognized for each period for which a statement of financial performance is presented: 1. a The effective interest rate for the period 2. b The amount of interest recognized for the period disaggregated by both of the following (see Example 12 \[paragraph [470-20-55-69D](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69D)\] for an illustration of this disclosure requirement): 1. 1 The contractual interest expense 2. 2 The amortization of the premium, discount, or issuance costs. ##### [470-20-50-1G](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1G) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:8ed4c2d5f2fcb82e63b7e62df765a9b7597c31f9161aa0f59517a33214428f96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the conversion option of a convertible debt instrument is accounted for as a derivative in accordance with Subtopic 815-15, an entity shall provide disclosures in accordance with Topic 815 for the conversion option in addition to the disclosures required by this Section, if applicable. ##### [470-20-50-1H](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1H) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:87abcd350fc0cb0e83d883a02c70b98c7fcaab4009e5c8b01d9b39b8852118f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a convertible debt instrument is measured at fair value in accordance with the Fair Value Option Subsections of Subtopic 825-10, an entity shall provide disclosures in accordance with Subtopic 820-10 and Subtopic 825-10 in addition to the disclosures required by this Section, if applicable. ##### [470-20-50-1I](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1I) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:cc6f8abd0fddc011a748f06acc0b205ceba46ebcf22999490a8e29d2856e40f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the following information about derivative transactions entered into in connection with the issuance of convertible debt instruments within the scope of this Subtopic regardless of whether such derivative transactions are accounted for as assets, liabilities, or equity instruments: 1. a The terms of those derivative transactions (including the terms of settlement) 2. b How those derivative transactions relate to the instruments within the scope of this Subtopic 3. c The number of shares underlying the derivative transactions 4. d The reasons for entering into those derivative transactions. An example of a derivative transaction entered into in connection with the issuance of a convertible debt instrument within the scope of this Subtopic is the purchase of call options that are expected to substantially offset changes in the fair value or the potential dilutive effect of the conversion option. Derivative instruments also are subject to the disclosure guidance in Topic 815. #### EPS ##### [470-20-50-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:94d621e41d6a47e8d272245ad0b5374efa2159a2788ccad09d619574fb0d7873 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For disclosures about securities in relationship to earnings per share (EPS) disclosures, see paragraph [260-10-50-1(c)](https://asc.understandingaccounting.org/asc/260/10/#260-10-50-1). #### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance ##### [470-20-50-2A](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:2a3db18e9e9732ee4448e4d4ab0d2a471a5eab251eb0e35b3f0810f1679dd83b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that enters into a share-lending arrangement on its own shares in contemplation of a convertible debt offering or other financing shall disclose all of the following. The disclosures must be made on an annual and interim basis in any period in which a share-lending arrangement is outstanding. 1. a A description of any outstanding share-lending arrangements on the entity's own stock 2. b All significant terms of the share-lending arrangement including all of the following: 1. 1 The number of shares 2. 2 The term 3. 3 The circumstances under which cash settlement would be required 4. 4 Any requirements for the counterparty to provide collateral. 3. c The entity's reason for entering into the share-lending arrangement 4. d The fair value of the outstanding loaned shares as of the balance sheet date 5. e The treatment of the share-lending arrangement for the purposes of calculating earnings per share 6. f The unamortized amount of the issuance costs associated with the share-lending arrangement at the balance sheet date 7. g The classification of the issuance costs associated with the share-lending arrangement at the balance sheet date 8. h The amount of interest cost recognized relating to the amortization of the issuance cost associated with the share-lending arrangement for the reporting period 9. i Any amounts of dividends paid related to the loaned shares that will not be reimbursed. ##### [470-20-50-2B](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2B) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:3614ed4d468f3271c9f345d5a469103f4b4971f2263b9c84ce99cc0e55f89a0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that enters into a share-lending arrangement on its own shares in contemplation of a convertible debt offering or other financing shall also make the disclosures required by Topic 505. ##### [470-20-50-2C](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2C) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:6d67a08cf210385e2917b3bd04971576675e4fa382a564a0fb3664ac6adc114f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the period in which an entity concludes that it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the counterparty to its share-lending arrangement will default, the entity shall disclose the amount of expense reported in the statement of earnings related to the default. The entity shall disclose in any subsequent period any material changes in the amount of expense as a result of changes in the fair value of the entity's shares or the probable recoveries. If default is probable but has not yet occurred, the entity shall disclose the number of shares related to the share-lending arrangement that will be reflected in basic and diluted earnings per share when the counterparty defaults. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)In the period in which an entity concludes that it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the counterparty to its share-lending arrangement will default, the entity shall disclose the amount of expense reported in the statement of earnings related to the default. The entity shall disclose in any subsequent period any material changes in the amount of expense as a result of changes in the fair value of the entity's shares or the probable recoveries. If default is probable but has not yet occurred, the entity shall disclose the number of shares related to the share-lending arrangement that will be reflected in basic and diluted earnings per share when the counterparty defaults. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)In the interim or annual reporting period in which an entity concludes that it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the counterparty to its share-lending arrangement will default, the entity shall disclose the amount of expense reported in the statement of earnings related to the default. The entity shall disclose in any subsequent interim and annual reporting periods any material changes in the amount of expense as a result of changes in the fair value of the entity's shares or the probable recoveries. If default is probable but has not yet occurred, the entity shall disclose the number of shares related to the share-lending arrangement that will be reflected in basic and diluted earnings per share when the counterparty defaults. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ### Cash Conversion ##### [470-20-50-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:b1deac785d45bab7ff14f722234ac93da163ba1610eb3770191e38a6544e2f97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-50-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:99f7c1554f2e1037dde083d268ca0100e716a39457a9f4e1cf3f975941ff5ea5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-50-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:ee3167c691be27e5b685ecf8717940304e4b7a797594d2c71d9a7f7aff62e721 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-50-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:40.076Z to 2026-09-10T00:31:40.076Z Record version: sha256:6083cb20ff4ad8a0bb1a59591da5d2636c7c0f59182359d38c1baaccc12db7ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:2e9c1f34d21ade65b8fb4cd6a7ade67a6e4748b4f9ea8f22ee9392222f30f9f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/20/#55-implementation-guidance-and-illustrations) SEC content: no ##### [470-20-55-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:5b1042ac8c4de4fa8167691b7edbb7e30e4aedd8dc5cbf6d61931dcee0dd13b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Implementation Guidance ##### [470-20-55-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:07a806915635250ea91e2fd186937da0a763dcd54c29058e1283f873d7627e29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An example of a convertible preferred stock that paragraph [470-20-15-2D](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2D) requires an entity consider as a convertible debt instrument for purposes of the scope application of this Subtopic is a convertible preferred stock that has a stated redemption date and also would require the issuer to settle the face amount of the instrument in cash upon exercise of the conversion option.Such a convertible preferred stock is a mandatorily redeemable financial instrument and is classified as a liability under Subtopic 480-10 because it embodies an unconditional obligation to redeem the instrument by transferring assets at a specified or determinable date (or dates). #### Illustrations ##### [470-20-55-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1B) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:3da40695311a10886494f966de83903746a62fa803b4952177916553ec24ccc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate application of the guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16) to induced conversions of convertible securities: 1. a Reduced conversion price for conversion before determination date, increase in bond [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") (Case A) 2. b Reduced conversion price for conversion before determination date, decrease in bond fair value (Case B). Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The Cases in paragraphs [470-20-55-3 through 55-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-3) illustrate application of the guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)for measuring an expense when a convertible debt instrument is converted pursuant to an inducement offer: 1. a Reduced conversion price for conversion, increase in bond [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") (Case A) 2. b Reduced conversion price for conversion, decrease in bond fair value (Case B). ##### [470-20-55-1C](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1C) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:1893968f4892d2b3ecdedfe2bf71d31dcf7a5a1cbaa2f86581a9ea883f242d38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The Cases in paragraphs [470-20-55-9A through 55-9J](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A) illustrate application of the guidance in paragraphs [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) and [470-20-40-13A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A) for determining whether an inducement offer includes the issuance of all of the consideration (in form and amount) issuable pursuant to conversion privileges provided in the terms of the existing debt instrument: 1. a Offer to settle convertible debt instrument in cash and warrants (Case C) 2. b Offer to settle convertible debt instrument in cash and shares (Case D) 3. c Offer to settle convertible debt instrument in shares and warrants (Case E). ##### [470-20-55-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:b26f3106f2066a32e99bc57323e86e5e23747a48d61ac895076bbfc3fce2d93d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For simplicity, the face amount of each security is assumed to be equal to its carrying amount in the financial statements (that is, no original issue premium or discount exists). ##### [470-20-55-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-3) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:20e10b32546c64966c1030f5d5532f8f86082d14e891c36844dc3d31958a14f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 1, 19X4, Entity A issues a $1,000 face amount 10 percent convertible bond maturing December 31, 20X3. The carrying amount of the bond in the financial statements of Entity A is $1,000, and it is convertible into common shares of Entity A at a conversion price of $25 per share. On January 1, 19X6, the convertible bond has a fair value of $1,700. To induce convertible bondholders to convert their bonds promptly, Entity A reduces the conversion price to $20 for bondholders that convert before February 29, 19X6 (within 60 days). Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)
Editor's Note: The heading that precedes paragraph 470-20-55-3 will be amended upon transition as shown below. The content of the paragraph will not change.
• • > Case A: Reduced Conversion Price, Increase in Bond Fair Value
On January 1, 19X4, Entity A issues a $1,000 face amount 10 percent convertible bond maturing December 31, 20X3. The carrying amount of the bond in the financial statements of Entity A is $1,000, and it is convertible into common shares of Entity A at a conversion price of $25 per share. On January 1, 19X6, the convertible bond has a fair value of $1,700. To induce convertible bondholders to convert their bonds promptly, Entity A reduces the conversion price to $20 for bondholders that convert before February 29, 19X6 (within 60 days). ##### [470-20-55-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-4) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:aa4e87d3578bf8211eca57a944c610337d2135dfe12a2b76a26513bc599896f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assuming the market price of Entity A's common stock on the date of conversion is $40 per share, the fair value of the incremental consideration paid by Entity A upon conversion is calculated as follows for each $1,000 bond that is converted before February 29, 19X6. - ![](https://asc.understandingaccounting.org/asc-img/GUID-F31E429A-9446-48B5-8D55-12C4450F03B3-low.gif) Value of securities issued (a) " $2,000 " Value of securities issuable pursuant to original conversion privileges (b) " 1,600 " Fair value of incremental consideration $400 (a) Value of securities issued to debt holders is computed as follows: Face amount " $1,000 " ÷ New conversion price ÷ $20 per share Number of common shares issued upon conversion 50 shares × Price per common share × $40 per share Value of securities issued " $2,000 " (b) Value of securities issuable pursuant to original conversion privileges is computed as follows: Face amount " $1,000 " ÷ Original conversion price ÷ $25 per share Number of common shares issuable pursuant to original conversion privileges 40 shares × Price per common share × $40 per share Value of securities issuable pursuant to original conversion privileges " $1,600 " Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assuming the market price of Entity A's common stock on the date the inducement offer was accepted is $40 per share, the fair value of the incremental consideration that will be paid by Entity A is calculated as follows for each $1,000 bond that is converted before February 29, 19X6. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D6E3CC14-0373-4779-A51A-DA63DD5B67FF-low.gif) Value of securities issued (a) " $2,000 " Value of securities issuable pursuant to existing conversion privileges (b) " 1,600 " Fair value of incremental consideration $400 (a) Value of securities issued to debt holders is computed as follows: Face amount " $1,000 " ÷ New conversion price ÷ $20 per share Number of common shares issued upon conversion 50 shares × Price per common share × $40 per share Value of securities issued " $2,000 " (b) Value of securities issuable pursuant to existing conversion privileges is computed as follows: Face amount " $1,000 " ÷ Existing conversion price ÷ $25 per share Number of common shares issuable pursuant to existing conversion privileges 40 shares × Price per common share × $40 per share Value of securities issuable pursuant to existing conversion privileges " $1,600 " ##### [470-20-55-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-5) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:44fb3f32343f5011e88a83a7c6d740ed3325521400f0ed6fd5604c6e98a0080a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Therefore, Entity A records debt conversion expense equal to the fair value of the incremental consideration paid as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D1F33C6C-85DE-48DF-A9D2-38F28478130F-low.gif) Debit Credit Convertible debt " $1,000 " Debt conversion expense 400 Common stock " $1,400 " Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Entity A concludes that it meets all of the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13). Therefore, upon conversion, Entity A records debt conversion expense equal to the fair value of the incremental consideration paid as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D1F33C6C-85DE-48DF-A9D2-38F28478130F-low.gif) Debit Credit Convertible debt " $1,000 " Debt conversion expense 400 Common stock " $1,400 " ##### [470-20-55-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-6) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:50318e915c229f6cd2da670959c5fd9a14f4aa622f987db4d1a6d2bec9f355de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On January 1, 19X1, Entity B issues a $1,000 face amount 4 percent convertible bond maturing December 31, 20X0. The carrying amount of the bond in the financial statements of Entity B is $1,000, and it is convertible into common shares of Entity B at a conversion price of $25. On June 1, 19X4, the convertible bond has a fair value of $500. To induce convertible bondholders to convert their bonds promptly, Entity B reduces the conversion price to $20 for bondholders that convert before July 1, 19X4 (within 30 days). Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)
Editor's Note: The heading that precedes paragraph 470-20-55-6 will be amended upon transition as shown below. The content of the paragraph will not change.
• • > Case B: Reduced Conversion Price, Decrease in Bond Fair Value
On January 1, 19X1, Entity B issues a $1,000 face amount 4 percent convertible bond maturing December 31, 20X0. The carrying amount of the bond in the financial statements of Entity B is $1,000, and it is convertible into common shares of Entity B at a conversion price of $25. On June 1, 19X4, the convertible bond has a fair value of $500. To induce convertible bondholders to convert their bonds promptly, Entity B reduces the conversion price to $20 for bondholders that convert before July 1, 19X4 (within 30 days). ##### [470-20-55-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-7) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:99b1ab023d5fb5b7b715deb5b38f68a12a055360c08ad0df2dfb6d33f374279a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assuming the market price of Entity B's common stock on the date of conversion is $12 per share, the fair value of the incremental consideration paid by Entity B upon conversion is calculated as follows for each $1,000 bond that is converted before July 1, 19X4. - ![](https://asc.understandingaccounting.org/asc-img/GUID-C7B2869B-40D4-4FD3-99A7-AEAFEE474EF0-low.gif) Value of securities issued (a) $600 Value of securities issuable pursuant to original conversion privileges (b) 480 Fair value of incremental consideration $120 (a) Value of securities issued to debt holders is computed as follows: Face amount " $1,000 " ÷ New conversion price ÷ $20 per share Number of common shares issued upon conversion 50 shares × Price per common share × $12 per share Value of securities issued $600 (b) Value of securities issuable pursuant to original conversion privileges is computed as follows: Face amount " $1,000 " ÷ Original conversion price ÷ $25 per share Number of common shares issuable pursuant to original conversion privileges 40 shares × Price per common share × $12 per share Value of securities issuable pursuant to original conversion privileges $480 Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assuming the market price of Entity B's common stock on the date the inducement offer was accepted is $12 per share, the fair value of the incremental consideration that will be paid by Entity B is calculated as follows for each $1,000 bond that is converted before July 1, 19X4. - ![](https://asc.understandingaccounting.org/asc-img/GUID-C4016606-7A1F-49C1-8260-6AB5DEA4BA05-low.gif) Value of securities issued (a) $600 Value of securities issuable pursuant to existing conversion privileges (b) 480 Fair value of incremental consideration $120 (a) Value of securities issued to debt holders is computed as follows: Face amount " $1,000 " ÷ New conversion price ÷ $20 per share Number of common shares issued upon conversion 50 shares × Price per common share × $12 per share Value of securities issued $600 (b) Value of securities issuable pursuant to existing conversion privileges is computed as follows: Face amount " $1,000 " ÷ Existing conversion price ÷ $25 per share Number of common shares issuable pursuant to existing conversion privileges 40 shares × Price per common share × $12 per share Value of securities issuable pursuant to existing conversion privileges $480 ##### [470-20-55-7A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-7A) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:be07d0baaf6fe146e68987923e4f6424cb3b8ebc18882be779c2eb70a4f15d79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Entity B is required to assess whether the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) are met, including whether the conversion feature is substantive (in accordance with the guidance in paragraphs [470-20-40-6 through 40-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-6) ) as of both the time of issuance and the date the inducement offer is accepted by the convertible debt holder. If Entity B concludes that, on the basis of its facts and circumstances, all of the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) are met, then it would account for the transaction as illustrated in paragraph [470-20-55-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-8). If Entity B determines that the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) are not met, it should not account for the settlement transaction as an induced conversion. ##### [470-20-55-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-8) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:9ba25bf57b3883119fe83f1adb3d6eabd94dbeae4c07968cede1205ccf18e85f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Therefore, Entity B records debt conversion expense equal to the fair value of the incremental consideration paid as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-64AA99F2-6D0D-4B0E-9191-736F8BB2D9F1-low.gif) Debit Credit Convertible debt " $1,000 " Debt conversion expense 120 Common stock " $1,120 " Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)If Entity B determines that the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) are met, upon conversion, Entity B would record debt conversion expense equal to the fair value of the incremental consideration paid as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-64AA99F2-6D0D-4B0E-9191-736F8BB2D9F1-low.gif) Debit Credit Convertible debt " $1,000 " Debt conversion expense 120 Common stock " $1,120 " ##### [470-20-55-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:987439b17afc7987d0ddd00b576f831c09271bb1f1d66389ed2be8e6c7fb3a36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The same accounting would apply if, instead of reducing the conversion price, Entity B issued shares pursuant to a tender offer of 50 shares of its common stock for each $1,000 bond surrendered to the entity before July 1, 19X4. See paragraph [470-20-40-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-14). ##### [470-20-55-9A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:2f536625f4ee8736bc8f1fb70f37a8e830afdef79ab1d82a52086c44b70841f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)On January 1, 2X24, Entity A issues a $1,000 face amount 10 percent convertible bond maturing December 31, 2X33. The bond has a conversion price of $25 per share. The terms of the existing instrument require that, upon conversion, the issuer settle the principal in cash and the conversion premium in any combination of cash and shares. Under the existing conversion privileges, the total amount of cash (or the total value of the cash and shares) required to be issued upon conversion equals the product of 40 shares per $1,000 bond and a volume-weighted average price of Entity A’s common stock. The volume-weighted average price is calculated over a period of 40 days beginning the day after the holder notifies the issuer that it will convert the debt instrument. On May 15, 2X27, to induce convertible bondholders to convert their bonds promptly, Entity A offers the following consideration in exchange for each $1,000 bond that is converted within 60 days (for purposes of this Example, assume the offer meets the other criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) and that the offer is accepted by bondholders on June 1, 2X27): 1. a A cash payment equal to 40 shares multiplied by the volume-weighted average price of Entity A’s common stock calculated over a period of 15 days (beginning the day after the holder accepts the inducement offer) 2. b Five warrants (offered as a sweetener). Each warrant enables the holder to acquire a share of Entity A’s common stock at a fixed exercise price of $40. The warrants are exercisable upon issuance and expire five years after issuance. ##### [470-20-55-9B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9B) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:76d2f391ac1aa8b2ae25644afa3c2f1e46424b9f56e4e41c3e8946f860bc8b12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assume that the fair value of Entity A’s common stock on the date the inducement offer was accepted (June 1, 2X27) is $40 per share. To evaluate whether the inducement offer meets the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), Entity A would compare the form and amount of consideration offered with the form and amount of consideration that would be issued upon conversion pursuant to the terms of the existing instrument. The conversion privileges in the existing instrument require Entity A to settle the principal in cash and permit Entity A to settle the conversion premium in any combination of cash and shares. ##### [470-20-55-9C](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9C) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:1a21ed3b578111af6521afc45f6ec1a49e27fbaad93d0918ada3ba3a1fd5ea19 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)In this Case, the inducement offer includes the form (entirely cash) and amount ($1,600) of consideration required to settle both the principal ($1,000) and the conversion premium ($600) pursuant to the conversion privileges provided in the terms of the existing debt instrument. The amount of $1,600 is the product of 40 shares and the fair value of Entity A’s shares at the offer acceptance date ($40). ##### [470-20-55-9D](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9D) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:9757da6de5c6373d8c86457e6ee4ba544de92cd7d964995fd9555e5395adc661 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The offer of warrants to induce conversion does not affect the assessment of whether the inducement offer includes the form and amount of consideration issuable under the existing conversion privileges because the existing conversion privileges did not provide for the issuance of warrants (however, the offer of warrants as a sweetener affects the measurement of the debt conversion expense recognized in accordance with paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)). Similarly, the fact that the inducement offer changes the number of days over which the volume-weighted average price of Entity A’s shares is measured does not affect whether the inducement offer includes the amount of consideration issuable under the existing conversion privileges because Entity A would use the fair value of its common stock as of the offer acceptance date to calculate the amount of cash payable under both the conversion privileges in the existing instrument and the inducement offer in accordance with paragraph [470-20-40-13A(a)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A). Therefore, the inducement offer satisfies the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13). - ![](https://asc.understandingaccounting.org/asc-img/GUID-5697D545-6CE4-4431-8579-C024AE25B181-low.gif) Consideration Issuable Pursuant to Existing Conversion Privileges Principal Cash " $1,000 " Conversion premium "Any combination of cash and shares with a total value of $600. If $600 of the conversion premium is settled in cash, then the conversion premium would be settled as follows:" Cash and $600 Shares (a) 0 shares Consideration Issuable Pursuant to Inducement Offer Cash and " $1,600 " Warrants 5 warrants (a) Number of shares issuable pursuant to existing conversion privileges is computed as follows: Value of 40 shares (40 shares × $40 per share as of the offer acceptance date) " $1,600 " − Face amount − " $1,000 " Value of conversion premium $600 Value of conversion premium $600 Amount of conversion premium settled in cash − $600 Value of conversion premium to be settled in shares $0 ##### [470-20-55-9E](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9E) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:f3e8c8a99ef1c595f544d8fda3a0e3ab7417a1eff69e130215cf4f50bbda1f45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assume the same facts as in Case C, except that Entity A offers the following consideration (instead of the consideration listed in paragraph [470-20-55-9A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A)): 1. a A cash payment of $1,400 2. b Ten shares of Entity A’s common stock. ##### [470-20-55-9F](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9F) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:89f10deec86c2f477e5c33b9b552b01cfe8799c3e7beb67cf11f75296770cd13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)To evaluate whether the inducement offer meets the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), Entity A would compare the form and amount of consideration offered with the form and amount of consideration that would be issued upon conversion pursuant to the terms of the existing instrument. The conversion privileges in the terms of the existing instrument require Entity A to settle the principal in cash and permit Entity A to settle the conversion premium in any combination of cash and shares. ##### [470-20-55-9G](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9G) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:0b44a606896f97d673760ab2c9d3ae726308b91284c41af1b39bf345c7671fd7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)In this Case, the inducement offer includes the form (cash) and amount ($1,000) of consideration required to settle the principal pursuant to the conversion privileges provided in the terms of the existing debt instrument. Under the existing conversion privileges, the remaining settlement value of $600 can be settled in any combination of cash and shares. If $400 ($1,400 total cash payment − $1,000 principal) of the conversion premium is settled in cash, then the inducement offer must provide for at least 5 shares ($200 remaining conversion premium ÷ $40 share price) of Entity A’s common stock to provide the same form (cash and shares) and at least the same amount of cash and shares that would have been provided under the conversion privileges of the existing instrument. Because the inducement offer illustrated in Case D includes 10 shares, it would satisfy the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13). The fact that the inducement offer eliminates the volume-weighted average price formula contained in the existing conversion privileges and instead offers a specified amount of cash and shares does not affect whether the inducement offer includes the amount of consideration issuable under the existing conversion privileges because Entity A would use the fair value of its common stock as of the offer acceptance date to calculate the amount of cash payable and shares issuable under the conversion privileges in the existing instrument in accordance with paragraph [470-20-40-13A(a)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A). - ![](https://asc.understandingaccounting.org/asc-img/GUID-4035D57C-F631-4721-A2BB-8AE6D9BCAF51-low.gif) Consideration Issuable Pursuant to Existing Conversion Privileges Principal Cash " $1,000 " Conversion premium "Any combination of cash and shares with a total value of $600. If $400 of the conversion premium is settled in cash, then the conversion premium would be settled as follows:" Cash and $400 Shares (a) 5 shares Consideration Issuable Pursuant to Inducement Offer Cash and " $1,400 " Shares 10 shares (a) Number of shares issuable pursuant to existing conversion privileges is computed as follows: Value of 40 shares (40 shares × $40 per share as of the offer acceptance date) " $1,600 " − Face amount − " $1,000 " Value of conversion premium $600 Value of conversion premium $600 Amount of conversion premium settled in cash − $400 Value of conversion premium to be settled in shares $200 Value of conversion premium to be settled in shares $200 ÷ Price per share (as of the offer acceptance date) ÷ $40 Number of shares issued to satisfy conversion premium 5 shares ##### [470-20-55-9H](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9H) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:236c468340f30886985ae37468a9034d454015de45df62bbd7552bc8ef004196 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assume the same facts as in Case C, except that Entity A offers the following consideration (instead of the consideration listed in paragraph [470-20-55-9A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A)): 1. a Forty shares of Entity A’s common stock 2. b Five warrants (offered as a sweetener). Each warrant enables the holder to acquire a share of Entity A’s common stock at a fixed exercise price of $40. The warrants are exercisable upon issuance and expire five years after issuance. ##### [470-20-55-9I](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9I) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:8d585f9763b3a174f30e2fb11f6247cb9c9068fd9d629bda0a90c55760c60414 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)To evaluate whether the inducement offer meets the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), Entity A would compare the form and amount of consideration offered with the form and amount of consideration that would be issued upon conversion pursuant to the terms of the existing instrument. The conversion privileges in the terms of the existing instrument require Entity A to settle the principal in cash and permit Entity A to settle the conversion premium in any combination of cash and shares. ##### [470-20-55-9J](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9J) Pending content: yes Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:500b7275e67092f164b8cf1e44589ed3ddbd0384fd13ddd0ab675c2c6c07b947 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)In contrast to Case C and Case D, the inducement offer does not include the issuance of all the consideration (in form and amount) issuable pursuant to the conversion privileges included in the terms of the existing instrument. The terms of the existing instrument require settlement of the principal amount in cash, but Entity A did not offer cash consideration in the inducement offer. Therefore, Entity A would conclude that the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) is not satisfied. ##### [470-20-55-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:d9e554fba4d7169d4d0d74da886451297c6287fd6293833bf90b8c9138919c1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:598b3a3bb76ad62d14fdd55a48aec3a44f84660defdb2dcf3b534040637bb6d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:567c7774c1fcb20edb8fe9afcbd418a578372addbd9e5efe1875e9370a4515cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:9e5c248f23a07ec20f3cbbd35dec0628fc79bd092e3edd97263df28f295b662a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:a4d7dc27dc7eab00ff23288c2ff93d0e3b90ef1b8601122c1ea62f7528081070 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:3cb926aea73c0dfd525cc181446c36dfab9a8be2f310cfcaac66669d479620d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:b078cb06789a6564c2da088c1f75c20ed265c85e1d6efe35bc2a37508614bb72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:f90b0ce07492d1252d8f00f0abd348dbd269c3588f5fb18c67d88ac496b40a48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:411a3e99a2c5f9be8abca917a008983673c87a098485769034cffb6bd43993aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [470-20-25-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-14). ##### [470-20-55-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:cf5dea1fa12dfc7baaa1707afe86f5272527ade7c9fc802ed20c9990dc321904 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the conversion price was described as $1 million divided by the market price of the common stock on the date of the conversion, that is, resetting at the date of conversion, the holder is guaranteed to receive $1 million in value upon conversion and, therefore, the debt instrument would be considered stock-settled debt. ##### [470-20-55-19A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-19A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:57f890672a4828b640c52b2beeb313246d4311ca4ab05564c7ca75553e480f4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:2bdc7172595a3c320702383dcffe09c00199d15e6e963a86f3005fb4feffbc71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-21](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:22ee772c60107176b5cbd96b73ee416660b7d3974bcbcbcdaaaf4d4116cf1a04 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-22](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:c3917eda467285cfd6da3df4ba3d39c1add299ad4aa30a2aed37a9880f4cf3f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-23](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:4f02c37c7db8e5efe2c1111499d6a1180937d075462ae72e04baf8b3762c59f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-24](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:50956de3c175e575c4ff706d4cb0fd19147b464bd1437439896ffc62b2448d0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-25](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:3c3d3f57f20ba28fc354656e27b596abbd452655d5b160dab0aa5275f1aeefec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-26](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:78d0d4d6a8eb62e272aaddc810b107490a9352ca589c75a7d2bc42dad76d8fa2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-27](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:32e59fdc1d11d5ed48fbb06b7746df7a588871b03a02a3373ee70399c41f0ff8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-28](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:9c7e1ee36f87e16fb67bbfced8ec34174a0b8f11e37191c677f5673d5d536bbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-29](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:a09c8bcde910e47743c77dd53c030612c1494903377854e4b0e9508ca4b83594 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-30](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:145b845fbd417abd76e6b18eca37aa78ff89a7eb3ca2edf75107ace3ceaaaf40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-31](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:be19855a54268e36d2dba545f06035398cd4d8108dfaedd90beb1cc90da0f731 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-32](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:c5b86d3e7cea7eb9355b3cf8162b060a10357980e8a12c263dac92755e7e97d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-33](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:dab8bcd690a62177e813732720665bd12f1d2ddd5111fc2562bf558b1e279ceb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-34](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:be350478278dad6f908fbdecef579428e2ade9469d3db6f284834acf7f204a3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-35](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:3cafa507a803b50586badcff8683b12fbd2e71e5414b6ab8492e80c720dc8ebe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-36](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:24cac77ac2a12a4ca4f5c821e38fab93f0ce0fef26159455a608b375e5db4045 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-37](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:8d2ffd8504aa389d8fc39337f7655a4aa4f7ecd5e2a8484d07898da9b32ab139 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-38](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:96d47d8bc679f3d0ad261340310dc57f202ad67b2f7751365ca40d3a5881055c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-39](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:fca9e86080bfa63b472e906f88fb42be9bd80518f6e1a39eb4b144703b9fbaa7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-20-55-40](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:f136f2e31fb8e9f0ef93ae35d8a96509ae4da4d79cb105654cd4e6301a3433c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-20-55-41](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:c593ee499ff557708b8d62f4f1001c44edf4bdffa6194e40d179443df3378be8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-20-55-42](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:2a157c0ce367eb797db33e44a09522fa90b834e6e6448b7da477e63ec518962d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-20-55-43](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:15c6c272085f65d993c456a6598eeb14f080d0bdece2bec6d068eb399f249070 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-20-55-44](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:86aa119551983feed54e089dc034e6a3a221aa90ce960693dc4ad9239c0f1d17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-45](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:0de46dc376979429d0a73f2f153120d4ca416cf3bcf91a71e271af461c396066 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-46](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:fe625a9bb3f89823c826606053abe254f69eac3e406ae2189fe7ba1c9158d4e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-47](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:79fc02b6576c015695fade9f674b4841590d4793600473290a3aa708d64567ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-48](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:8683a772b80a4b4a2e3545f67270807ab7518a9bfaaa0ca0ff7aba201a97b3a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-49](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:852b4d39f4fe308062c81a0c60a136755724531970a9f6b2b5e757b25eb73833 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-50](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:a66e556ea9083dac286520b9516a1cc5c48e96ac5794a2ec10c12f87cdbed8aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-51](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:9af5bc5805dbc596c488a8fbbd93e673e70559bddd437bd149333334b5016e1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-52](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:1f7b7bffeb20d22876dbb631559c80700b58ed7cf095a70c97206ef1c76e8234 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-53](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:dbbad45daac12be528f5336870478b9f056363e4583d046f04d960394e7091dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-20-55-54](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:10a388e1ddc470b464a0c0570b76c742c129bdfa3931ed5832b647cc9e6172e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-54A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-54A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:d5dd810bc05113db0ae5e1ffe7172e069bc0bbb9e8c4935772b9deafdcf10f57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-55](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:8adca874d2be9725b9c1de720742e1a298fc6427319b9803efc65c892bc5da47 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-56](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:3406bea0895df47b9dea59eb1d16c885c019fecf27545d00e71870a2fa58fb18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-57](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:6aff59486cd254970219bc60273071e6da248b318fd53fbe2913e4ddfd5c80c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-58](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:55c3578e638ce5ddaa1313bc907001feaf0cdaf863ba442d1d45b32cab34bec0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-59](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:3aa8d22601f09f9fad8355cc7a7a27ee836b6ee3f5e2c816ededb8a110b2b46d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [470-20-55-60](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:fca5b2e5a0937bd3323be950442b48568fad675e68c5c3da29c1a325b9801b92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-60A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-60A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:67f8ea97f421090a6c063785f60a5f22ee8a43f5ebf2facb4184129b855f1a26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-61](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:5b76dc2f95df620f23b33583e9aae81fdfbf92719fe90548de2241c475c12dd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-62](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:27da1b577843ae63ef2164ec454aa8934fe2530e65f76dc83589dd98d9b92301 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-63](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:021210004129e003089de90de8e10dd16ae5493ed71352472a86af72909b1d1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-64](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:c0ce9464e20af93aec0fe0c7f09044ab6a83e111e5f6b0aaca2418fa06bbe5b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-65](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:30423ba5d662dab7c247b7d1734b3d8c6970abfe05d04edbc26145f52f3a39b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-66](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:295e29511771367e1b580e04adeb03426b7bd6196bac8ad819e18ade2750cd0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Example 9: Illustration of a Conversion of an Instrument that Becomes Convertible Upon the Issuer's Exercise of a Call Option ##### [470-20-55-67](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:3190fda4ea65c6db19fc997373d152306425a99ec5122f099972206917a4aabd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates an instrument subject to the guidance in paragraphs [470-20-40-5 through 40-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-5) . ##### [470-20-55-68](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:431166dd90972b3198e6fc23d66c1560d73f75e45ce54a1c18d1c8802d9dcab8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity issues a contingently convertible instrument on January 1, 2006, with a market price trigger, a $1,000 par amount, and a maturity date of December 31, 2020. The debt instrument is convertible at the option of the holder if the share price of the issuer exceeds a specified amount. The issuer can call the debt at any time between 2009 and the maturity date of the debt. If the issuer calls the debt, the holder has the option to receive cash for the call amount or a fixed number of shares as specified in the terms of the instrument upon issuance, regardless of whether the market price trigger has been met. In 2010, the issuer calls the debt before the market price trigger being met and the holder elects to receive a fixed number of shares (as specified in the terms of the instrument). ##### [470-20-55-69](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:9d8a744b50a06c82fbdd778b566c1ea3d72dfb88c160da2806f6488c46be1377 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Example 11: Disclosure of the Information in the Statement of Financial Position ##### [470-20-55-69A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69A) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:360891612fd6f4dba4eaeae6033b0dc54c342d7e09636d562916a8e6d3f781ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example provides an illustration of the guidance in paragraph [470-20-50-1D](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1D) based on the assumption that Entity A is a public business entity and has two convertible debt instruments outstanding as of December 31, 20X7, and 20X6. ##### [470-20-55-69B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69B) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:38102ebe3afc29bcf6ca5673b1701e2211a3e1303a30e1f0e4004ab91aadbb2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following illustrates the disclosures in a tabular format. - ![](https://asc.understandingaccounting.org/asc-img/GUID-E72B7729-8AD9-49CE-B7FF-34B242E75ED4-low.gif) "The following is a summary of Entity A's convertible debt instruments as of December 31, 20X7 (in thousands)." Unamortized Debt Principal Discount and Net Carrying Fair Value Amount Issuance Costs Amount Amount Leveling Leveling "1.2% convertible debt due on December 31, 20X8" " $1,000 " $(18) $982 " $1,100 " Level 2 "Zero-coupon convertible debt due on December 31, 20X9" 500 (9) 491 462 Level 3 "The following is a summary of Entity A's convertible debt instruments as of December 31, 20X6 (in thousands)." Unamortized Debt Principal Discount and Net Carrying Fair Value Amount Issuance Costs Amount Amount Leveling Leveling "1.2% convertible debt due on December 31, 20X8" " $1,000 " $(35) $965 " $1,015 " Level 2 "Zero-coupon convertible debt due on December 31, 20X9" 500 (14) 486 450 Level 3 ##### [470-20-55-69C](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69C) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:8be0c25e30f19722ce739717f0ca118ad9a5b4df977e2b077941c1f178832fd2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosures may be provided alternatively in narrative descriptions. - **1.2 Percent Convertible Debt Instrument Due on December 31, 20X8** - As of December 31, 20X7, and 20X6, the net carrying amount of the convertible debt instrument was $982,000 and $965,000, respectively, with unamortized debt discount and issuance costs of $18,000 and $35,000. The estimated fair value (Level 2) of the convertible debt instrument was $1,100,000 and $1,015,000, respectively, as of December 31, 20X7, and 20X6. - **Zero-Coupon Convertible Debt Instrument Due on December 31, 20X9** - As of December 31, 20X7, and 20X6, the net carrying amount of the convertible debt instrument was $491,000 and $486,000, respectively, with unamortized debt discount and issuance costs of $9,000 and $14,000. The estimated fair value (Level 3) of the convertible debt instrument was $462,000 and $450,000, respectively, as of December 31, 20X7, and 20X6. #### Example 12: Disclosure of the Information in the Statement of Financial Performance ##### [470-20-55-69D](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69D) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:ff3efea5bcbf3af20a2f41fd64b04680c59784f9afcba097a58a191ca2d41397 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example provides an illustration of the guidance in paragraph [470-20-50-1F(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1F) based on the assumption that Entity A has two convertible debt instruments issued before January 1, 20X5, and still outstanding as of December 31, 20X7. ##### [470-20-55-69E](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69E) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:602d2a8e458a72569183748a5aa9324c609a56e84c8f4483703babaf87ab28b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following illustrates the disclosures in a tabular format. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B6DCDEFB-584A-4CCD-8A37-DD1156CEB944-low.gif) The following provides a summary of the interest expense of Entity A's convertible debt instruments (in thousands). "Year Ended December 31, " 20X7 20X6 20X5 Coupon interest $12 $12 $12 Amortization of debt discount and issuance costs 22 22 21 Total $34 $34 $33 ##### [470-20-55-69F](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69F) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:966725c72f20ab35da00da5a5196888eb45fd16e3bc4d1bdaaac26c2e5279a0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosures may be provided alternatively in narrative descriptions. - For the years ended December 31, 20X7, 20X6, and 20X5, the total interest expense was $34,000, $34,000, and $33,000 with coupon interest expense of $12,000 for each year and the amortization of debt discount and issuance costs of $22,000, $22,000, and $21,000, respectively. ### Cash Conversion ##### [470-20-55-70](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:75a3051405a1e930500532cb27b4234314f2808d1d4fb68946bf7102530e5dbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-71](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:d1ab3ab34d230168d068b7bd86349cc26211c8888f49e8004b16ef2124a02a74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-72](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:c46ba84ce63d1d26b22301b636586e024841e7e4b9b1811789b2ca20a5e116e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-73](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:dacf42413b389cc5d68fa59fa19ede8e3f951fa86cbaa4b6fa4ee633602d29b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-74](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:5d94fb103d1302b6bbb1d87156c59569c9ca72e62a16727b5b9f7945a2a92bcc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-75](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:9a203fc2d3fe2ed5a3ba1a8edd35b27f177463214c22373d0e2aa23d371ce9d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-76](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:9cd7d07f183fb56a344b3e464a3a83789cd72538b422f545e8d6cf5b113ddcd2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-77](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-77) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:98d8d30e53aef8d2c6b09ac3dfd702d4eb09e461f621d46925cf58bd38d6a7db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-78](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-78) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:d7d779af7ff26e23b27c2c4a6c961b3b49761a930f2f822b38f7bba790e70df2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-79](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-79) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:bb3e5f54d3865f7294dc2322c6b61742fc6ee0d31426fc7f7770e129b4077aa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-80](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-80) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:ba417b2107f13188bb917bbbc663eae131af46ffc30d00c18b70f29200b95aa1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-81](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-81) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:a5632f63c3b092cad1f0f6c6c1969b32c72a4573d78f2c0c0a1539e004400f28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [470-20-55-82](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-82) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z Record version: sha256:c24ac6a58a21ec06047ca6355e1960e88c48d284867252fd5960a17a1de76fa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). Source downloaded (UTC): 2026-09-10T00:31:45.764Z to 2026-09-10T00:31:45.764Z Record version: sha256:196a1dc8f8cafd90a54570a20b53a1922039895405102760f910781457b12e55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/470/20/#65-transition-and-open-effective-date-information) SEC content: no ##### [470-20-65-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:45.764Z to 2026-09-10T00:31:45.764Z Record version: sha256:8198fc8aed49d64ccae4ed8696ae9ef1a3e9daa8c84aa8526d5c17a42df39d15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/01/2010 after the end of the transition period stated in FASB Staff Position APB 14-1, _Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)_. ##### [470-20-65-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:45.764Z to 2026-09-10T00:31:45.764Z Record version: sha256:bc24b3584c7125e43c2c1a90c5b1ff135ef5300fc37582e42a86601f49803214 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 03/23/2010 after the end of the transition period stated in FASB Staff Position APB 14-1, _Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)_. ##### [470-20-65-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:45.764Z to 2026-09-10T00:31:45.764Z Record version: sha256:13ae64fd5b51037741236e9565265e27fb68aefa1cb0fc835a31b341585b8b60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2011 after the end of the transition period stated in Accounting Standards Update No. 2009-15, _Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing_. #### Transition Related to Accounting Standards Update No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments ##### [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:45.764Z to 2026-09-10T00:31:45.764Z Record version: sha256:e9e37b0fe7ead52572ae7557eb7374c004704e13f6c165239202915e9b9bfd13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Accounting Standards Update No. 2024-04](https://asc.understandingaccounting.org/updates/asu-2024-04/) 2027-06-14 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 2025-12-16 The following represents the transition and effective date information related to Accounting Standards Update No. 2024-04, _Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments_: **Effective date and early adoption** 1. a All entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. 2. b Early adoption of the pending content that links to this paragraph is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance), but no earlier than the adoption of the pending content that links to paragraph [815-40-65-1](https://asc.understandingaccounting.org/asc/815/40/#815-40-65-1). If an entity adopts the pending content that links to this paragraph in an interim reporting period, it shall adopt the pending content as of the beginning of the annual reporting period that includes that interim reporting period. **Transition method** 1. c An entity shall apply the pending content that links to this paragraph prospectively to settlements of convertible debt instruments that occur during annual reporting periods (and interim reporting periods within those annual reporting periods) beginning after the effective date of the pending content. 2. d An entity may elect to apply the pending content that links to this paragraph retrospectively as of the beginning of the first comparative reporting period in accordance with the guidance on accounting changes in paragraphs [250-10-45-5 through 45-10](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-5) . This transition method shall be applied only to convertible debt instruments settled after the adoption of the pending content that links to paragraph [815-40-65-1](https://asc.understandingaccounting.org/asc/815/40/#815-40-65-1). **Transition disclosures** 1. e An entity that applies the pending content that links to this paragraph prospectively in accordance with (c) shall disclose the nature of and reason for the change in accounting principle in the financial statements of both the interim reporting period (if applicable) and the annual reporting period of the change. 2. f An entity applying the pending content that links to this paragraph retrospectively in accordance with (d) shall provide the following transition disclosures in the financial statements of both the interim reporting period (if applicable) and the annual reporting period of the change: 1. 1 The nature of the change in accounting principle, including an explanation of the newly adopted accounting principle 2. 2 The method of applying the change 3. 3 The cumulative effect of the change on retained earnings or other components of equity in the statement of financial position as of the beginning of the first period for which the pending content that links to this paragraph is initially applied 4. 4 The effect of the change on income from continuing operations, net income (or other appropriate captions of changes in the applicable net assets or performance indicator), any other affected financial statement line item, and any affected per-share amounts for any prior periods retrospectively adjusted. Source downloaded (UTC): 2026-09-10T00:31:51.126Z to 2026-09-10T00:31:51.126Z Record version: sha256:3a29de6605e802dd98210f91b6d017e36a76fd4a65fd85e7d08c620c92948ffc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/20/#sec-25-recognition) SEC content: yes #### Debt Exchangeable for the Stock of Another Entity ##### [470-20-S25-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:51.126Z to 2026-09-10T00:31:51.126Z Record version: sha256:fee9173ff71290023b056e3a5499b3a6a8e9d84f0b99260947be41a2c3fb0c79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-20-S99-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-S99-1), SEC Observer Comment: Debt Exchangeable for the Stock of Another Entity, for SEC Staff views on accounting for debt that is exchangeable for the stock of another entity Source downloaded (UTC): 2026-09-10T00:31:53.248Z to 2026-09-10T00:31:53.248Z Record version: sha256:1b9c17d89e9107cc2fd9f0f49613e8e89347450204297f9e16fa3e9b043b19ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-20-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/470/20/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [470-20-S99-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:53.248Z to 2026-09-10T00:31:53.248Z Record version: sha256:0a6a58840a9f78cd4a30ea0c51701de46703a49ab47c269dccff2596a2150696 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of the SEC Observer Comment: Debt Exchangeable for the Stock of Another Entity. - An issue has been discussed involving an enterprise that holds investments in common stock of other enterprises and issues debt securities that permit the holder to acquire a fixed number of shares of such common stock. These types of transactions are commonly affected through the sale of either debt with detachable warrants that can be exchanged for the stock investment or debt without detachable warrants (the debt itself must be exchanged for the stock investment - also referred to as "exchangeable" debt). Those debt issues differ from traditional warrants or convertible instruments because the traditional instruments involve exchanges for the equity securities of the issuer. There have been questions as to whether the exchangeable debt should be treated similar to traditional convertibles as specified in Subtopic 470-20 or whether the transaction requires separate accounting for the exchangeability feature. The SEC staff believes that Subtopic 470-20 does not apply to the accounting for debt that is exchangeable for the stock of another entity and therefore separation of the debt element and exchangeability feature is required Source downloaded (UTC): 2026-09-10T00:31:54.980Z to 2026-09-10T00:32:26.321Z Record version: sha256:ac788dd9918b7ed3648a15848c4f4178ccc7654f97b8dcff643b6b0abe628f4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30: Debt — Participating Mortgage Loans ### Machine-generated study aids ```json { "summary": "ASC 470-30 governs how a *borrower* accounts for a participating mortgage loan — a mortgage in which the lender is entitled to share in appreciation in the fair value of the mortgaged real estate project, in its results of operations, or both. If the lender participates in fair value appreciation, the borrower recognizes a participation liability at the fair value of the participation feature at loan inception with an offsetting debt discount, remeasures the liability to current fair value each reporting period (adjusting the discount), and amortizes the discount to interest expense using the interest method. Participations in results of operations are charged to interest expense in the period incurred with a credit to the participation liability.", "key_points": [ "A participation liability with a corresponding debit to a debt discount account is recognized when the lender is entitled to participate in appreciation in the market value of the mortgaged real estate project (470-30-25-1).", "The participation feature is measured at fair value (per Subtopic 820-10) at inception of the loan (470-30-30-1).", "Interest expense has three components: stated interest, amounts for the lender's participation in results of operations, and amortization of the debt discount related to participation in fair value appreciation (470-30-35-2); the discount is amortized by the interest method using the effective interest rate (470-30-35-1).", "At the end of each reporting period the participation liability is adjusted to the current fair value of the participation feature, with the offsetting debit or credit to the debt discount account (470-30-35-4A), and the revised discount is amortized prospectively at the effective interest rate (470-30-35-5).", "Amounts due for participation in results of operations are charged to interest expense in the corresponding reporting period with a credit to the participation liability (470-30-35-4); stated interest is charged to income as incurred, based on the index/rate as it changes, and is subject to Subtopic 835-20 capitalization rules, with capitalized amounts not adjusted for reversals of appreciation (470-30-35-3).", "Early extinguishment produces a gain or loss equal to the difference between the recorded amount of the debt (including unamortized discount and the participation liability) and the amount exchanged, reported as required by 470-50-40-2 (470-30-40-1; 470-30-45-2).", "Borrowers must disclose the aggregate amount of participating mortgage obligations at the balance sheet date, separately showing aggregate participation liabilities and related debt discounts, plus the terms of the lender's participations (470-30-50-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Disclosure", "Fair value" ], "audience_level": "intermediate", "student_note": "Exam traps: this Subtopic applies only to borrowers (not lenders) and excludes participating leases, lender-option equity-convertible debt, and participations arising from troubled debt restructurings. Remember the participation liability is remeasured to fair value every period through the debt discount (not through earnings directly) — earnings are affected only via prospective amortization of the revised discount.", "related_topics": [ "470-50", "835-20", "820-10", "470-60", "310-10" ], "key_concepts": [ "participating mortgage loan", "participation liability", "debt discount", "interest method", "effective interest rate", "fair value appreciation participation", "participation in results of operations", "debt extinguishment gain or loss" ] } ``` Source downloaded (UTC): 2026-09-10T00:31:54.980Z to 2026-09-10T00:31:54.980Z Record version: sha256:6950b34e7ac470917a93eb3b7847f41cb3bdc0b9b9fd7d7b9e1795e272c5b585 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/30/#00-status) SEC content: no ##### [470-30-00-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:54.980Z to 2026-09-10T00:31:54.980Z Record version: sha256:d32300b0128fcc6a13d4c9b20784453fc0c2d67e91b0b9499a7114857a43ed90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
DebtSupersededAccounting Standards Update No. 2016-1912/14/2016
470-30-05-1AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-05-4AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-05-6AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-05-7AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-05-9AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-15-3AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-25-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-25-1AmendedAccounting Standards Update No. 2015-1006/12/2015
470-30-30-1AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-35-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-35-2AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-35-4AmendedAccounting Standards Update No. 2015-1006/12/2015
470-30-35-4AmendedAccounting Standards Update No. 2012-0410/01/2012
470-30-35-4AAddedAccounting Standards Update No. 2015-1006/12/2015
470-30-40-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-45-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-45-3SupersededAccounting Standards Update No. 2015-0101/09/2015
470-30-50-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-30-50-1AmendedAccounting Standards Update No. 2012-0410/01/2012
Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:b8f96a20df8a7b79f4b4144225a5b7a6925e9f34d82564deccf9237b3f2e5404 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/30/#05-overview-and-background) SEC content: no ##### [470-30-05-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:62d24965808b260b4c09738253e5e50c01d9fa919f6d1bd953c0466aaf49d756 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic establishes the borrower's accounting for a participating mortgage loan if the lender is entitled to participate in any of the following: 1. a Appreciation in the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the mortgaged real estate project 2. b The results of operations of the mortgaged real estate project. ##### [470-30-05-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:8ed4210f659f8ad2b872a136e624207eb6557640cf77573ba992333647d720c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The desire for instruments in which the return to the lenders was tied more closely to the performance of the property led to the introduction of participating mortgage loans. ##### [470-30-05-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:59133c3612685e732c5c976050afd84163e85cd8471ecc17ef5935fbd0619e2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Participating mortgage loans and nonparticipating mortgage loans share all of the following characteristics: 1. a Debtor-creditor relationships between those who provide initial cash outlays and hold the mortgages, and those who are obligated to make subsequent payments to the mortgage holders 2. b Real estate collateral 3. c Periodic fixed-rate or floating-rate interest payments 4. d Fixed maturity dates for stated principal amounts. ##### [470-30-05-4](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:0e361b63c2913a66395bfca77a0d4fc8182956bd3d026e1b05ee5d5a48db6549 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, unlike a nonparticipating mortgage loan arrangement, in a participating mortgage loan, the lender participates in appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project, or in both. ##### [470-30-05-5](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:20f4d9cfe93040e0679e62675fb8cc421705f17a556d726e873e4a1d39216528 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The terms and economics of participating mortgage loan agreements vary by agreement. The terms and economics of one agreement may create a circumstance in which any participation payment is remote. In another agreement, the terms and economics may transfer many of the risks and rewards of property ownership. ##### [470-30-05-6](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:bd75fcb3986a9ee3be904364e0a279b9a08abc670b90268bbe2e2512e3d039df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lender may be entitled to participate in appreciation in the fair value of a project at any one of the following times: 1. a Upon the sale of the project 2. b At a deemed sale date 3. c At the maturity or refinancing of the loan. ##### [470-30-05-7](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:e3ffb6e4cf176ef46f621dc02a64fbe9eb067be00a57a11d9f03d347769fb87a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In agreements in which lenders participate in results of operations, the definition of the results of operations may vary among agreements. Examples of these definitions include, but are not limited to, the following: 1. a Revenue 2. b Income 3. c Cash flows before or after debt service. ##### [470-30-05-8](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:a8fdf1eb2d107857032bab45900a349627810b00040b5f445f7fd1316847fb2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The participation terms of a participating mortgage loan agreement usually are negotiated concurrently with the other terms of the underlying mortgage loan. A borrower agrees to participation rights generally because of market conditions, or in exchange for concessions granted by the lender on some other term(s) of the loan, such as a lower interest rate or a higher loan-to-value ratio. ##### [470-30-05-9](https://asc.understandingaccounting.org/asc/470/30/#470-30-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:31:58.075Z to 2026-09-10T00:31:58.075Z Record version: sha256:012224be308d74f32acdb45ae545af2d179485932928cf95990fdbb3b1a38515 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The lender's participation reduces the borrower's potential realization of operating results or gain on the sale of the real estate. However, the participation also may reduce any of the following: 1. a The contract interest the borrower is required to pay 2. b The risk that the borrower will be unable to pay interest at the stated or floating rate in the loan agreement and, consequently, the risk that the borrower will default on the loan and need to sell the property 3. c The amount of capital the borrower has at risk, because the loan-to-value ratio normally is higher. Further, the obligation to pay the lender a share of the property appreciation does not increase the current exposure of the borrower to loss in its investment, because the participation payments are made only if the fair value of the property appreciates. Source downloaded (UTC): 2026-09-10T00:32:01.971Z to 2026-09-10T00:32:01.971Z Record version: sha256:b83df8c006fc6f82de38bf1ff71256814e411d5767c15844b76a42d7d8f7c029 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/30/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-30-15-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:01.971Z to 2026-09-10T00:32:01.971Z Record version: sha256:9acd2f576cc5c93150b3e7f42b2753883b65707dc8d5518e44d34f94abca5dc3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to the following entities: 1. a All borrowers in participating mortgage loan arrangements. ##### [470-30-15-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:01.971Z to 2026-09-10T00:32:01.971Z Record version: sha256:83fc35285e4f6212d518236b63c97e40c3fbec8b8f7b0a862134c8635ac955a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following entities: 1. a Creditors in participating mortgage loan arrangements. #### Transactions ##### [470-30-15-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:01.971Z to 2026-09-10T00:32:01.971Z Record version: sha256:d2939a84c91ef16c7152924c4740cbac95ef1927cbf66adb2ee5b307fef8887c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Participating leases 2. b Debt convertible at the option of the lender into equity ownership of the property 3. c Participating loans resulting from troubled debt restructurings. Source downloaded (UTC): 2026-09-10T00:32:09.032Z to 2026-09-10T00:32:09.032Z Record version: sha256:28853a10184bb708aacac826d448fa89a62d76ea21df2a932f42c50360aecfd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/30/#25-recognition) SEC content: no ##### [470-30-25-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:09.032Z to 2026-09-10T00:32:09.032Z Record version: sha256:6ec939cce2345761f570082e0e7ff581990940656c8106cd205605bd260946d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a lender is entitled to participate in the appreciation of the market value of a mortgaged real estate project, the borrower shall recognize a participation liability with a corresponding debit to a debt discount account. Source downloaded (UTC): 2026-09-10T00:32:11.186Z to 2026-09-10T00:32:11.186Z Record version: sha256:fbabfe973e7209a541409cc7cb95dc2d6369a672bb6c03f081ecb322c9e1e414 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/470/30/#30-initial-measurement) SEC content: no ##### [470-30-30-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:11.186Z to 2026-09-10T00:32:11.186Z Record version: sha256:160d4f4ff7ea9a51fd3606b47111bd1ef32b05951ab103f4983648ddadf78efc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the lender is entitled to participate in appreciation in the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the mortgaged real estate project, the borrower shall determine the fair value (see Subtopic 820-10) of the participation feature at the inception of the loan (see paragraph [470-30-25-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-25-1) for guidance on how to recognize the participation feature). Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:514377c2f7127340d3a4d5a43c59fb4a264d134bdc7d6fc2c7302f37db747d8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/470/30/#35-subsequent-measurement) SEC content: no ##### [470-30-35-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:0117dbfda6423977fcf57dcc2306d1a64b4cc9bb71757e75b563cc9078fff522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt discount shall be amortized by the interest method, using the effective interest rate. ##### [470-30-35-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:ff2aa5e29a4b76bb14632113d8131a0fc0fa7304e23d4c809c060695bdaa51d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest expense on participating mortgage loans consists of the following three components: 1. a Amounts designated in the mortgage agreement as interest 2. b Amounts related to the lender's participation in results of operations 3. c Amortization of debt discount related to the lender's participation in the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") appreciation of the mortgaged real estate project. ##### [470-30-35-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:41af7f73a787d611a5d5a94ab58a30ba80151b1d4c4296976be58deb45739b5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts designated in the mortgage agreement as interest shall be charged to income in the period in which the interest is incurred. If the loan's stated interest rate varies based on changes in an independent factor, such as an index or rate (for example, the prime rate, the London Interbank Offered Rate \[LIBOR\], or the U.S. Treasury bill weekly average rate), the calculation of the interest shall be based on the factor (the index or the rate) as it changes over the life of the loan. Interest recognized pursuant to this guidance is subject to the requirements of Subtopic 835-20. Once capitalized, amounts shall not be adjusted for the effects of reversals of appreciation. ##### [470-30-35-4](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:c264ec8382159bb498c4c173177659ea17e34c317d067bf5b34fe7bd16865d74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts due to a lender pursuant to the lender's participation in the real estate project's results of operations (as defined in the participating mortgage loan agreement) shall be charged to interest expense in the borrower's corresponding financial reporting period, with a corresponding credit to the participation liability. 1. a [Subparagraph superseded by Accounting Standards Update No. 2015-10](https://asc.understandingaccounting.org/updates/asu-2015-10/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2015-10](https://asc.understandingaccounting.org/updates/asu-2015-10/). ##### [470-30-35-4A](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-4A) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:e18842d6af04d0a0cd8fd92b40e2167052182e48bb82cd81d3299c9272c9440c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a lender is entitled to participate in the appreciation of the market value of a mortgaged real estate project, both of the following are required at the end of each reporting period: 1. a The balance of the participation liability shall be adjusted to equal the current fair value of the participation feature. 2. b The corresponding debit or credit shall be recorded in the related debt-discount account. ##### [470-30-35-5](https://asc.understandingaccounting.org/asc/470/30/#470-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:12.876Z to 2026-09-10T00:32:12.876Z Record version: sha256:02a84b3578c1776b399c0ce1bd9e3e8188dc02e479539e01159ba4d2bfe7a388 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The revised debt discount shall be amortized prospectively, using the effective interest rate. Source downloaded (UTC): 2026-09-10T00:32:14.766Z to 2026-09-10T00:32:14.766Z Record version: sha256:e27040948363532772f3e801638fb486dc5c5e77f6827486f64a616354ee630a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/470/30/#40-derecognition) SEC content: no ##### [470-30-40-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:14.766Z to 2026-09-10T00:32:14.766Z Record version: sha256:a726b049a4d9a6f90113d193f38b607784e40a4a225380ddc2aac9038b1c8095 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the participating mortgage loan is extinguished before its due date, the difference between the recorded amount of the debt (including the unamortized debt discount and the participation liability) and the amount exchanged to extinguish the debt is a debt extinguishment gain or loss. Source downloaded (UTC): 2026-09-10T00:32:18.105Z to 2026-09-10T00:32:18.105Z Record version: sha256:e1438d1763070af7b6c15768203f0cee688dbcf545a43e5333be8f88bf8f211d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/30/#45-other-presentation-matters) SEC content: no ##### [470-30-45-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:18.105Z to 2026-09-10T00:32:18.105Z Record version: sha256:5f9779b7537fb631f07171d31f0fc7cf5b699cc3a43aa290e6cf5c50fafa4867 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amortization of the debt discount relating to the participation liability shall be included in interest expense. ##### [470-30-45-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:18.105Z to 2026-09-10T00:32:18.105Z Record version: sha256:254d0359469e5af72af99ce1c96fcbca0b756b4fa6ab79207522246f12a0639d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the participating mortgage loan is extinguished before its due date, the debt extinguishment gain or loss shall be reported as required by paragraph [470-50-40-2](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-2). ##### [470-30-45-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:18.105Z to 2026-09-10T00:32:18.105Z Record version: sha256:9f02251dfe276cfcfad13e440c901f21998f3d22cb697a5e44282aade4e3a55d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). Source downloaded (UTC): 2026-09-10T00:32:19.774Z to 2026-09-10T00:32:19.774Z Record version: sha256:f916b685bd5e9d638ed67e36fef18f688aa9585a7d7e80cb16545a73528bfc6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/30/#50-disclosure) SEC content: no ##### [470-30-50-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:19.774Z to 2026-09-10T00:32:19.774Z Record version: sha256:0dc16a3e09c3aa20045775a60e4f9e432dba82033db4e8be7eb92f8a408f2736 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The borrower's financial statements shall disclose both of the following: 1. a The aggregate amount of participating mortgage obligations at the balance sheet date, with separate disclosure of the aggregate participation liabilities and related debt discounts 2. b Terms of the participations by the lender in either the appreciation in the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the mortgaged real estate project or the results of operations of the mortgaged real estate project, or both. Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:d8e7b5eeff85ad524271a70560f4d1c95e9e2e17af231f34e9bd9bd6dfb57447 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [470-30-55-1](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:6333593e876d6a621d863098878f72989f59e3cf5a8d5cc51ec7574687f81193 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in this Subtopic. ##### [470-30-55-2](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:cc046e36092c7bb6c65ad7fde4bda6aa29564bd296f342ee9c3078268e81cc17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that on January 1, 19X1, Borrower Co. purchased a property for $10 million. On that date, Borrower paid $1 million cash and entered into a participating mortgage loan agreement with Lender Co. in the amount of $9 million. ##### [470-30-55-3](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:d9a6f9505ec13a95e41557f7bb532621bffe66052c7e1fc6722f6d821c3c626d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The loan agreement has the following terms: 1. a 15 year term 2. b Interest-only periodic payments, principal to be repaid at end of term 3. c 5% stated interest rate 4. d 20% participation in appreciation in the value of the property above $10 million, payable at maturity (or earlier if the asset is sold or the loan is refinanced). ##### [470-30-55-4](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:a0f2595a048569f392e6d3b3a2fdf2e689f4d25b26554414d9622fcac5cd51bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assumptions related to the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the participation feature are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-8FCBAA19-0630-4D2D-BEDB-B1366D73BFA1-low.gif) Date Fair Value Estimated Payment Years in Future 1/1/X1 " $25,055 " " $300,000 " 15 12/31/X1 " 40,063 " " 320,000 " 14 12/31/X2 " 54,122 " " 333,000 " 13 ##### [470-30-55-5](https://asc.understandingaccounting.org/asc/470/30/#470-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:22.883Z to 2026-09-10T00:32:22.883Z Record version: sha256:189e317b3d5d058bae84fdef915bef28a51c2233e9f51ed7bc3f60f3926d2514 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the preceding assumptions, Borrower Co. should make the following journal entries for this participating mortgage loan. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-219B13AD-8F51-46A5-9EB7-EB14409AAA9A-low.gif) "a. On January 1, 19X1, the following journal entries should be recorded:" Cash " $9,000,000 " Loan discount " 25,055 " Mortgage loan payable " $9,000,000 " Participation liability " 25,055 " To record participating debt and estimate of participation liability (based on fair value of participation feature). Property " $10,000,000 " Cash " 10,000,000 " To record purchase of property. "b. By the end of 19X1, entries to record interest expense and amortization of discount throughout the year would have taken the following form:" Interest expense " $451,159 " Interest payable " 450,000 " Loan discount " 1,159 " To record interest expense and amortization of debt discount using the interest method and an effective rate of 5.03 percent (rounded). Loan discount " $15,008 " Participation liability " 15,008 " To adjust balance of participation liability to fair value at end of period. The adjustment is calculated as follows: Fair value at 12/31/X1 " $40,063 " Fair value at 1/1/X1 " 25,055 " Adjustment " $15,008 " "Note: For purposes of this illustration, the fair value of the participation feature at 12/31/X1 is based on a revised estimate of the equity participation that would be payable in fourteen years of $320,000." "c. At the end of 19X2, entries to record interest expense and amortization of discount throughout the year would have taken the following form:" Interest expense " $451,979 " Interest payable " 450,000 " Loan discount " 1,979 " "To record interest expense and amortization of debt discount, using the interest method and an effective rate of 5.04 percent (rounded)." Loan discount " $14,059 " Participation liability " 14,059 " "To adjust recorded participation liability of $40,063 to fair value at 12/31/X2 of $54,122." Source downloaded (UTC): 2026-09-10T00:32:28.409Z to 2026-09-10T00:32:41.026Z Record version: sha256:2f4a9b809af5488c5099ecde64032ccd3417ad5393daa77cacea17e44e417488 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40: Debt — Product Financing Arrangements ### Machine-generated study aids ```json { "summary": "ASC 470-40 governs product financing arrangements — transactions in which a \"sponsor\" arranges for another entity to buy and hold inventory on its behalf (or controls the disposition of such product) with a related commitment to buy it back at specified prices covering the other entity's financing and holding costs. Because the sponsor is in substance the owner of the product, the arrangement is accounted for as a borrowing rather than a sale: the sponsor records the inventory as an asset and a corresponding liability when the other entity buys the product (470-40-25-1 through 25-2). After ASU 2014-09, sale-and-repurchase legs are handled under Topic 606, leaving this Subtopic focused on purchases made by another entity on the sponsor's behalf.", "key_points": [ "A product financing arrangement within scope is accounted for as a borrowing, not a sale; the sponsor reports the product as an asset and the related obligation as a liability (470-40-25-1).", "Scope requires both: (a) the sponsor must purchase the product (or substantially identical product or processed goods containing it) at specified prices not subject to change except for finance and holding cost fluctuations, and (b) payments to the other entity are set to cover substantially all fluctuations in its purchasing and holding costs, including interest (470-40-15-2).", "The 'specified price' condition is also met by resale price guarantees, a sponsor purchase option whose economic effect (e.g., a significant penalty) compels exercise, or a put option held by the other entity (470-40-15-2(a)(1) through (3)).", "The sponsor records the asset and related liability when the product is purchased by the other entity, not when the sponsor takes physical delivery (470-40-25-2).", "Costs in excess of the other entity's purchase cost (excluding processing costs) are financing and holding costs accounted for under the sponsor's own policies as incurred by the other entity; interest costs are separately identified and accounted for under Topic 835 (470-40-25-3 through 25-4).", "Excluded from scope: ordinary purchase commitments where the seller retains control, typical contractor-subcontractor relationships, long-term unconditional purchase obligations such as take-or-pay contracts under Subtopic 440-10, unmined/unharvested natural resources and financial instruments, and contracts within Topic 606 including sale-with-repurchase arrangements (470-40-15-3).", "Unlike an unconditional purchase obligation, in a product financing arrangement the product already exists and the other entity's purchase cost is known (470-40-05-6)." ], "categories": [ "Recognition", "Debt and equity", "Inventory and PP&E", "Revenue" ], "audience_level": "intermediate", "student_note": "This is the classic \"substance over form\" inventory-parking rule: a sale that comes with a buyback obligation at a price covering the buyer's carrying costs is really a secured loan, so no revenue is recognized and the inventory never leaves the sponsor's balance sheet. The common mistake is applying 470-40 to a sponsor's outright sale-and-repurchase — ASU 2014-09 moved those to Topic 606 (606-10-55-66 through 55-78), leaving 470-40 for purchases made by another entity on the sponsor's behalf.", "related_topics": [ "606-10", "440-10", "835", "330", "860" ], "key_concepts": [ "product financing arrangement", "sponsor", "in-substance borrowing", "repurchase agreement", "specified prices", "financing and holding costs", "resale price guarantee", "unconditional purchase obligation" ] } ``` Source downloaded (UTC): 2026-09-10T00:32:28.409Z to 2026-09-10T00:32:28.409Z Record version: sha256:2b3c1635270fa9e21f4593d3069efcf403a276e70805abe2368f8fdd04994cb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/40/#00-status) SEC content: no ##### [470-40-00-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:28.409Z to 2026-09-10T00:32:28.409Z Record version: sha256:418ba73e25ae8ee9cca29a40e8423cae04d65a56b1c16bf6cd2ab3b1c1cc0a30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
Unconditional Purchase ObligationAddedMaintenance Update 2014-20 (PDF)09/29/2014
470-40-05-3AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-05-5AmendedMaintenance Update 2014-20 (PDF)09/29/2014
470-40-15-2AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-15-3AmendedMaintenance Update 2015-11 (PDF)06/19/2015
470-40-15-3AmendedMaintenance Update 2014-20 (PDF)09/29/2014
470-40-15-3AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-25-1 through 25-3
AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-55-1AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-55-2AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-55-3 through 55-5
SupersededAccounting Standards Update No. 2014-0905/28/2014
470-40-55-6AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:86b4bf214db67307f9c8273e861c24890109c4809b5d57b4d7dc6cfd69902b74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/40/#05-overview-and-background) SEC content: no ##### [470-40-05-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:9b969c65bd94ee31f6f95e45587463a95b86ae7ded1381689521b3b3ef682d8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic establishes guidance for determining whether an arrangement involving the sale of inventory is in substance a financing arrangement. ##### [470-40-05-2](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:6c1a8c1fa25764a23aa43dfa1effd520c71500e7288b4a18a90e3b4172c8d9cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Product financing arrangements](https://asc.understandingaccounting.org/glossary/p/#product-financing-arrangement "A product financing arrangement is a transaction in which an entity sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions.") include agreements in which a sponsor (the entity seeking to finance product pending its future use or resale) does any of the following: 1. a Sells the product to another entity (the entity through which the financing flows), and in a related transaction agrees to repurchase the product (or a substantially identical product) 2. b Arranges for another entity to purchase the product on the sponsor's behalf and, in a related transaction, agrees to purchase the product from the other entity 3. c Controls the disposition of the product that has been purchased by another entity in accordance with the arrangements described in either (a) or (b). ##### [470-40-05-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:ee989b361f452ac1af79cacabaa23412f4f2e8ef26d9a5f9cc432143371e9fab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In all of the foregoing cases, the sponsor agrees to purchase the product, or processed goods of which the product is a component, from the other entity at specified prices over specified periods or, to the extent that it does not do so, guarantees resale prices to third parties (see paragraph [470-40-15-2(a)(1)](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-2)). The Implementation Guidance in Section 470-40-55 illustrates the arrangement described in (b) of the preceding paragraph. For an arrangement described in (a), see 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](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.") for guidance on repurchase agreements in paragraphs [606-10-55-66 through 55-78](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-66) and an illustration on repurchase agreements in Example 62, Case A, paragraphs [606-10-55-401 through 55-404](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-401) . ##### [470-40-05-4](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:d21408e8c5f94b8952174e7d37ee18d1fba35183fc5de8f000bd90e38cccbf6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other characteristics that commonly exist in product financing arrangements but that are not necessarily present in all such arrangements include the following: 1. a The entity that purchases the product from the sponsor or purchases it directly from a third party on behalf of the sponsor was established expressly for that purpose or is an existing trust, nonbusiness entity, or credit grantor. 2. b The product covered by the financing arrangement is to be used or sold by the sponsor, although a portion may be sold by the other entity directly to third parties. 3. c The product covered by the financing arrangement is stored on the sponsor's premises. 4. d The debt of the entity that purchases the product being financed is guaranteed by the sponsor. ##### [470-40-05-5](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:99135683640b1edcbd26f28fc35880291bca296f31c07195d0ec16a1df3904b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are similarities between a sponsor's rights and obligations under a product financing arrangement and a purchaser's rights and obligations under an [unconditional purchase obligation](https://asc.understandingaccounting.org/glossary/u/#unconditional-purchase-obligation "An obligation to transfer funds in the future for fixed or minimum amounts or quantities of goods or services at fixed or minimum prices (for example, as in take-or-pay contracts or throughput contracts).") (see Topic 440): 1. a Both the sponsor and the purchaser obtain probable future economic benefits from the assured source of product. 2. b Both are obligated to make future cash payments to the other party to the agreement. ##### [470-40-05-6](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:242037841a5524f4da9fd53163c96fea21bcd8a1a0893683b69f5b7720b78600 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Beyond those similarities, however, there is a substantial difference in the related accounting issues. Under a product financing arrangement, the product already exists and the other entity's purchase cost is known. Source downloaded (UTC): 2026-09-10T00:32:34.310Z to 2026-09-10T00:32:34.310Z Record version: sha256:f47faa398238791b6d8ae2de1fdb411520c83b3133a915e0064bdd2db74e1356 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/40/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-40-15-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:34.310Z to 2026-09-10T00:32:34.310Z Record version: sha256:42dc5d2d130299dcff511a796d16839eaa2156e7ba2edd7a8275245bbd4bcab3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities. #### Transactions ##### [470-40-15-2](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:34.310Z to 2026-09-10T00:32:34.310Z Record version: sha256:ffa4d5f034f683c9937c87456a99e987a2324e0c628df71294bef802e713a6e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to [product financing arrangements](https://asc.understandingaccounting.org/glossary/p/#product-financing-arrangement "A product financing arrangement is a transaction in which an entity sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions.") for products that have been purchased by another entity on behalf of the sponsor and have both of the following characteristics: 1. a The financing arrangement requires the sponsor to purchase the product, a substantially identical product, or processed goods of which the product is a component at specified prices. The specified prices are not subject to change except for fluctuations due to finance and holding costs. This characteristic of predetermined prices also is present if any of the following circumstances exist: 1. 1 The specified prices in the financing arrangement are in the form of resale price guarantees under which the sponsor agrees to make up any difference between the specified price and the resale price for products sold to third parties. 2. 2 The sponsor is not required to purchase the product but has an option to purchase the product, the economic effect of which compels the sponsor to purchase the product; for example, an option arrangement that provides for a significant penalty if the sponsor does not exercise the option to purchase. 3. 3 The sponsor is not required by the agreement to purchase the product but the other entity has an option whereby it can require the sponsor to purchase the product. 2. b The payments that the other entity will receive on the transaction are established by the financing arrangement, and the amounts to be paid by the sponsor will be adjusted, as necessary, to cover substantially all fluctuations in costs incurred by the other entity in purchasing and holding the product (including interest). This characteristic ordinarily is not present in purchase commitments or contractor-subcontractor relationships. ##### [470-40-15-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:34.310Z to 2026-09-10T00:32:34.310Z Record version: sha256:cb8c7879fbd012dad42892f039dbc73a59614dde2ae24ddfa9ecb723d682bc18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Ordinary purchase commitments in which control of the good or service is retained by the seller (for example, a manufacturer or other supplier) until the good or service is transferred to a purchaser. 2. b Typical contractor-subcontractor relationships in which the contractor is not in substance the owner of product held by the subcontractor and the obligation of the contractor is contingent on substantial performance on the part of the subcontractor. 3. c Long-term [unconditional purchase obligations](https://asc.understandingaccounting.org/glossary/u/#unconditional-purchase-obligation "An obligation to transfer funds in the future for fixed or minimum amounts or quantities of goods or services at fixed or minimum prices (for example, as in take-or-pay contracts or throughput contracts).") (for example, [take-or-pay contracts](https://asc.understandingaccounting.org/glossary/t/#take-or-pay-contract "An agreement between a purchaser and a seller that provides for the purchaser to pay specified amounts periodically in return for products or services. The purchaser must make specified minimum payments even if it does not take delivery of the contracted products or services.")) specified by Subtopic 440-10 on commitments. At the time a take-or-pay contract is entered into, which is an unconditional purchase obligation, either the product does not yet exist (for example, electricity) or the product exists in a form unsuitable to the purchaser (for example, unmined coal); the purchaser has a right to receive future product but is not the substantive owner of existing product. 4. d Unmined or unharvested natural resources and financial instruments. 5. e [Contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") within the scope of 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 with [customers](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."). For example, contracts that are subject to a right of return as described in paragraph [606-10-32-10](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-10) and paragraphs [606-10-55-22 through 55-29](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-22) and contracts in which a sponsor (the entity seeking to finance product pending its future use or resale) sells the product to another entity (the entity through which the financing flows) and in a related transaction agrees to repurchase the product (or a substantially identical product). Such contracts are within the scope of Topic 606; see paragraphs [606-10-55-66 through 55-78](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-66) on repurchase agreements and paragraphs [606-10-55-36 through 55-40](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-36) on principal versus agent considerations. 6. f Typical purchases by a subcontractor on behalf of a contractor. In a typical contractor-subcontractor relationship, the purchase of product by a subcontractor on behalf of a contractor ordinarily leaves a significant portion of the subcontractor's obligation unfulfilled. The subcontractor has the risks of ownership of the product until it has met all the terms of a contract. Accordingly, the typical contractor-subcontractor relationship shall not be considered a product financing arrangement. Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:be9324821833c5e5e98210f766b4a8e5414ecbff88649d33a83ab07e218b9c4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/40/#25-recognition) SEC content: no ##### [470-40-25-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:4384fe838066cc7ac36a726a94378499d4239dd4e382ebf14a448dfcd3227cd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic requires that a [product financing arrangement](https://asc.understandingaccounting.org/glossary/p/#product-financing-arrangement "A product financing arrangement is a transaction in which an entity sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions.") within the scope of this Subtopic be accounted for as a borrowing rather than as a sale. The sponsor is in substance the owner of the product and the sponsor shall, therefore, report the product as an asset and the related obligation as a liability. ##### [470-40-25-2](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:d0cfa1efe73ee685bda390bcfe1bf425a96a001d4f2e460ddf33227f20ef062b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the sponsor is a party to an arrangement whereby another entity purchases a product on the sponsor's behalf and, in a related transaction, the sponsor agrees to purchase the product or processed goods of which the product is a component from the entity, the sponsor shall record the asset and the related liability when the product is purchased by the other entity. ##### [470-40-25-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:f2725c64f71ab6aa9d28332e5b75f2af6ff64c2ea645c1fc92ff225efa702895 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs of the product, excluding processing costs, in excess of the other entity's purchase costs represent financing and holding costs. The sponsor shall account for such costs in accordance with the sponsor's accounting policies applicable to financing and holding costs as those costs are incurred by the other entity. For example, if insurance costs ordinarily are accounted for as period costs by the sponsor, similar costs associated with the product covered by financing arrangements shall be expensed by the sponsor as those costs are incurred by the other entity. ##### [470-40-25-4](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:a6d547b3fc2f92944b16a23b7cbef6bfc762e8d01b272e647f64c24ebc15d1ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest costs associated with the product covered by financing arrangements shall be identified separately and accounted for by the sponsor in accordance with Topic 835 as those costs are incurred by the other entity. Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:65c509b9e8323f6667284be95a8d0dcc30fae687acba645d400b60c0f18b8735 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/40/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [470-40-55-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:712a037067a28ed4a0ee979d939bda199c0358a32d4c2c0bc99fd9189468c6f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates how the guidance in paragraphs [470-40-25-1 through 25-4](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-1) applies to [product financing arrangements](https://asc.understandingaccounting.org/glossary/p/#product-financing-arrangement "A product financing arrangement is a transaction in which an entity sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions.") in which a sponsor arranges for another entity to purchase the product on the sponsor's behalf and, in a related transaction, agrees to purchase the product from the other entity. 1. a [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [470-40-55-2](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:55d52d9192097b3bc7544f951e2e1b68a1ec20f8adace09d18534639d1d4fc1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The facts assumed in this Example are illustrative only and are not intended to modify or limit in any way the provisions of this Subtopic. The facts assumed in the Example could vary in one or more respects without altering the application of the provisions of this Subtopic. ##### [470-40-55-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:4751182c079548a17209a3c325f3b3a19b6b8831ef3bab82540e897870e11c73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [470-40-55-4](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:78b81f2cdfa995d84d5a2cded2855fb17f04e0872ba7a7c9df3fba9c82540739 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [470-40-55-5](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:a9b5feed6fbcfa293b58bf7f6bb461954c82fb34d4a5fa5b143cd72d0078dde9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [470-40-55-6](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:aacb6c649fb7d54920f04a6d792f5367f7bf740020e0592f9c15a5e8d4450730 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A sponsor arranges for another entity to buy product on the sponsor's behalf with a related agreement to purchase the product from the other entity. ##### [470-40-55-7](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:927eec4c9996371a86e700ae62607c4d7334781bc940a5f2d18c65ceae855c1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sponsor arranges for the other entity to purchase on its behalf an existing supply of fuel. In a related agreement, the sponsor agrees to purchase the fuel from the other entity over a specified period and at specified prices. The prices established are adequate to cover all financing and holding costs of the other entity. The other entity finances the purchase of fuel using the fuel and the agreement as collateral. ##### [470-40-55-8](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:5a5db85c1da1adb7d0325097f606489a46eb3ee836b627328e6dfcb346ca2312 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this product financing arrangement, both of the characteristics in paragraphs [470-40-15-2 through 15-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-2) are present; accordingly, the sponsor reports the asset (fuel) and the related liability on its balance sheet when the fuel is acquired by the other entity. Financing and holding costs are accrued by the sponsor as incurred by the other entity and accounted for in accordance with the sponsor's accounting policies for financing and holding costs. Interest costs are separately identified and accounted for in accordance with Topic 835. Source downloaded (UTC): 2026-09-10T00:32:44.546Z to 2026-09-10T00:33:07.253Z Record version: sha256:96b4aef8734387505570850c44614da1f3381eca78946cbe5ef04c02b42c3db0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50: Debt — Modifications and Extinguishments ### Machine-generated study aids ```json { "summary": "ASC 470-50 governs the debtor's accounting for extinguishments of debt and for modifications or exchanges of debt instruments with the same creditor (excluding troubled debt restructurings under 470-60 and conversions pursuant to conversion privileges under 470-20). Its core rule is the \"10 percent cash flow test\": if the present value of cash flows under the new instrument differs by at least 10% from the PV of the remaining cash flows of the original instrument (discounted at the original instrument's effective rate), the terms are substantially different and the transaction is accounted for as an extinguishment, with the new debt recorded at fair value and gain or loss recognized currently in income. If not substantially different, no gain or loss is recognized and a new effective interest rate is computed from the original carrying amount and revised cash flows.", "key_points": [ "Any difference between the reacquisition price of debt and its net carrying amount is recognized in income in the period of extinguishment as a separate item and is never amortized to future periods (470-50-40-2); if the fair value option was elected, net carrying amount equals fair value at the reacquisition date and instrument-specific credit risk amounts in OCI are included in net income (470-50-40-2A).", "An exchange of debt instruments with substantially different terms, or a substantial modification of terms, is accounted for as an extinguishment under 405-20-40-1 (470-50-40-6); otherwise modifications produce gain or loss only if the 405-20-40-1 conditions are met (470-50-40-8).", "Instruments are 'substantially different' if the PV of the new instrument's cash flows differs by at least 10 percent from the PV of the original's remaining cash flows; even if under 10 percent, extinguishment accounting applies if the change in fair value of an embedded conversion option is at least 10 percent of the original debt's carrying amount, or if a substantive conversion option is added or eliminated (470-50-40-10).", "Mechanics of the 10 percent test: include fees paid to or received from the creditor in the new instrument's cash flows, use the variable rate in effect for floating-rate debt, test both exercise and nonexercise of call/put features and use the assumptions producing the smaller change, discount at the original instrument's effective interest rate, and use terms from a year ago if there was a prior nonsubstantial modification within the year (470-50-40-12).", "If substantially different, the new debt is initially recorded at fair value, which determines the gain or loss and the new effective rate (470-50-40-13); if not, a new effective rate is computed from the original carrying amount adjusted for an increase (but not a decrease) in the fair value of an embedded conversion option, with the offset to additional paid-in capital (470-50-40-14 through 40-15).", "Creditor fees are included in extinguishment gain or loss if extinguishment accounting applies, but are deferred with existing premium/discount and amortized over the modified debt's term if not; third-party costs (e.g., legal fees) are capitalized and amortized like debt issue costs under extinguishment accounting but expensed as incurred otherwise (470-50-40-17 through 40-18).", "Line-of-credit and revolving-debt changes are tested by comparing borrowing capacity (remaining term × maximum available credit): if new capacity is greater than or equal to old, unamortized costs, creditor fees, and third-party costs are deferred over the new arrangement; if less, unamortized deferred costs are written off in proportion to the decrease in borrowing capacity (470-50-40-21); an intermediary acting as agent is looked through, while one acting as principal is treated as a creditor (470-50-40-19 through 40-20)." ], "categories": [ "Derecognition", "Subsequent measurement", "Debt and equity", "Financial instruments" ], "audience_level": "intermediate", "student_note": "Refinancings are ubiquitous, so the modification-versus-extinguishment analysis and the resulting fee/cost treatment is a recurring practice and exam issue. Common mistakes: discounting at the new instrument's rate instead of the original effective rate, omitting creditor fees from the new cash flows, and assuming that failing the 10 percent test ends the analysis for convertible debt, where the separate conversion-option tests in 470-50-40-10(a)-(b) still apply.", "related_topics": [ "405-20", "470-20", "470-60", "815-40", "825-10", "835-30" ], "key_concepts": [ "debt extinguishment", "10 percent cash flow test", "substantially different terms", "debt modification", "embedded conversion option", "agent versus principal intermediary", "borrowing capacity", "deferred debt issuance costs" ] } ``` Source downloaded (UTC): 2026-09-10T00:32:44.546Z to 2026-09-10T00:32:44.546Z Record version: sha256:7b451ae153966468b65ee02c28cfaeab7a555955f1b94a33bb9232f2793604f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/50/#00-status) SEC content: no ##### [470-50-00-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:44.546Z to 2026-09-10T00:32:44.546Z Record version: sha256:363d070083a3a44ed6fec5e7cc6aa88d695b1ab4494d7cc271e95c7bef747356 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Beneficial Conversion FeatureSupersededAccounting Standards Update No. 2020-0608/05/2020
Reacquisition Price of DebtAddedAccounting Standards Update No. 2014-0603/14/2014
470-50-15-3AmendedAccounting Standards Update No. 2024-0411/26/2024
470-50-40-2AmendedAccounting Standards Update No. 2014-0603/14/2014
470-50-40-2AAddedAccounting Standards Update No. 2018-0907/16/2018
470-50-40-12AmendedAccounting Standards Update No. 2021-0405/03/2021
470-50-40-12AAddedAccounting Standards Update No. 2021-0405/03/2021
470-50-40-16SupersededAccounting Standards Update No. 2020-0608/05/2020
470-50-40-17AmendedAccounting Standards Update No. 2020-0303/09/2020
470-50-40-17AAddedAccounting Standards Update No. 2021-0405/03/2021
470-50-40-18AmendedAccounting Standards Update No. 2020-0303/09/2020
470-50-40-18AAddedAccounting Standards Update No. 2021-0405/03/2021
470-50-40-21AmendedAccounting Standards Update No. 2021-0405/03/2021
470-50-40-21AmendedAccounting Standards Update No. 2020-0303/09/2020
470-50-45-1SupersededAccounting Standards Update No. 2015-0101/09/2015
470-50-45-2SupersededAccounting Standards Update No. 2015-0101/09/2015
470-50-50-1AmendedAccounting Standards Update No. 2009-1612/23/2009
Source downloaded (UTC): 2026-09-10T00:32:47.216Z to 2026-09-10T00:32:47.216Z Record version: sha256:5228a9672f9f614a9b215b7a657db1b7e9af0d67f95fe8ba3a4be96143c4e8c9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/50/#05-overview-and-background) SEC content: no ##### [470-50-05-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:47.216Z to 2026-09-10T00:32:47.216Z Record version: sha256:46f68a849ff58e6fdf9dc16b9923e70fab167c174b2a6468b174c96c2a36dbb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic discusses the accounting for all extinguishments of debt instruments, except debt that is extinguished through a [troubled debt restructuring](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.")(see Subtopic 470-60) or a conversion of debt to equity securities of the debtor pursuant to conversion privileges provided in terms of the debt at issuance (see Subtopic 470-20). ##### [470-50-05-2](https://asc.understandingaccounting.org/asc/470/50/#470-50-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:47.216Z to 2026-09-10T00:32:47.216Z Record version: sha256:57a74cdba6f81d67d6a0a452fdb568a68c4d6124b43ab9f93cab1552bd021aac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic also provides guidance on whether an exchange of debt instruments with the same creditor constitutes an extinguishment and whether a modification of a debt instrument should be accounted for in the same manner as an extinguishment. ##### [470-50-05-3](https://asc.understandingaccounting.org/asc/470/50/#470-50-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:47.216Z to 2026-09-10T00:32:47.216Z Record version: sha256:17270ac622faeab211ca423698b62eca7103e4100a1335a2985d7e13e80e4dd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In circumstances where an exchange of debt instruments or a modification of a debt instrument does not result in extinguishment accounting, this Subtopic provides guidance on the appropriate accounting treatment. ##### [470-50-05-4](https://asc.understandingaccounting.org/asc/470/50/#470-50-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:47.216Z to 2026-09-10T00:32:47.216Z Record version: sha256:cc93d9e6fe9c4b435f919cff427589b1ee547976e715853479f053c6d195bffd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When debtors undergo a modification or exchange of a debt instrument, the resulting cash flows can be affected by changes in principal amounts, interest rates, or maturity. They can also be affected by fees exchanged between the debtor and creditor to effect changes in any of the following: 1. a Recourse or nonrecourse features 2. b Priority of the obligation 3. c Collateralized (including changes in collateral) or noncollateralized features 4. d Debt covenants or waivers 5. e The guarantor (or elimination of the guarantor) 6. f Option features. Source downloaded (UTC): 2026-09-10T00:32:50.760Z to 2026-09-10T00:32:50.760Z Record version: sha256:9871c9cccc2322e0732002b01f94601921a207df44e9c2e1fd5ce6b4efe963dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/50/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-50-15-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:50.760Z to 2026-09-10T00:32:50.760Z Record version: sha256:5e777cd5732e498bd499fcffd987e5e1fb3b21b93117667e2a78c203255e8372 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities. #### Transactions ##### [470-50-15-2](https://asc.understandingaccounting.org/asc/470/50/#470-50-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:50.760Z to 2026-09-10T00:32:50.760Z Record version: sha256:6fbc441d3db3a4391129a3ce50cfc94384bdf3f0b339bdbebb1c32697247df40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies, in part, to the following transactions and activities: 1. a Extinguishments of debt effected by issuance of common or preferred stock, including redeemable and fixed-maturity preferred stock, that do not represent the exercise of a conversion right contained in the terms of the debt at issuance. ##### [470-50-15-3](https://asc.understandingaccounting.org/asc/470/50/#470-50-15-3) Pending content: yes Source downloaded (UTC): 2026-09-10T00:32:50.760Z to 2026-09-10T00:32:50.760Z Record version: sha256:b224da0e2cc052c1124b7bbf0f2a6aec0ac986c08b8e5f9306b7e6ef746dc55a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Conversions of debt into equity securities of the debtor pursuant to conversion privileges provided in the terms of the debt at issuance. Additionally, the guidance in this Subtopic does not apply to conversions of convertible debt instruments pursuant to terms that reflect changes made by the debtor to the conversion privileges provided in the debt at issuance (including changes that involve the payment of consideration) for the purpose of inducing conversion. Guidance on conversions of debt instruments (including induced conversions) is contained in paragraphs [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) and [470-20-40-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-15). 2. b Extinguishments of debt through a [troubled debt restructuring](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider."). (See Section 470-60-15 for guidance on determining whether a modification or exchange of debt instruments is a troubled debt restructuring. If it is determined that the modification or exchange does not result in a troubled debt restructuring, the guidance in this Subtopic shall be applied.) 3. c Transactions entered into between a debtor or a debtor's agent and a third party that is not the creditor. Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance: [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Conversions of debt instruments pursuant to conversion privileges provided in the terms of those instruments. Additionally, the guidance in this Subtopic does not apply to conversions of convertible debt instruments pursuant to terms that reflect changes made by the debtor to the conversion privileges provided in the existing terms of those debt instruments (including changes that involve the payment of consideration) for the purpose of inducing conversion. Guidance on conversions of debt instruments (including induced conversions) is contained in paragraphs [470-20-40-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-4), [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), and [470-20-40-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-15). 2. b Extinguishments of debt through a [troubled debt restructuring](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider."). (See Section 470-60-15 for guidance on determining whether a modification or exchange of debt instruments is a troubled debt restructuring. If it is determined that the modification or exchange does not result in a troubled debt restructuring, the guidance in this Subtopic shall be applied.) 3. c Transactions entered into between a debtor or a debtor's agent and a third party that is not the creditor. #### Other Considerations ##### [470-50-15-4](https://asc.understandingaccounting.org/asc/470/50/#470-50-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:50.760Z to 2026-09-10T00:32:50.760Z Record version: sha256:0d4cd610309842c32175b017378c40395ff450275d224b31139d7a6a5c3f2665 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The general guidance for the extinguishment of liabilities is contained in Subtopic 405-20and defines transactions that the debtor shall recognize as an extinguishment of a liability. Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:3c94e2a6de0759464d7de08332061aa92216d9cd4ff4a98e433e5850c226c060 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/470/50/#40-derecognition) SEC content: no #### Extinguishments of Debt ##### [470-50-40-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:94a735d3712172cc71d037a919c8cbf6e8c31add0597a127f5192eb80db835a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [470-50-15-4](https://asc.understandingaccounting.org/asc/470/50/#470-50-15-4), the general guidance for the extinguishment of liabilities is contained in Subtopic 405-20 and defines transactions that the debtor shall recognize as an extinguishment of a liability. ##### [470-50-40-2](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:839d14c4f2d5fbdf896ba1599186a15f6512d9ee6bc8b4f2fb29f2f45edfa936 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A difference between the [reacquisition price of debt](https://asc.understandingaccounting.org/glossary/r/#reacquisition-price-of-debt "The amount paid on extinguishment, including a call premium and miscellaneous costs of reacquisition. If extinguishment is achieved by a direct exchange of new securities, the reacquisition price is the total present value of the new securities.") and the [net carrying amount of the extinguished debt](https://asc.understandingaccounting.org/glossary/n/#net-carrying-amount-of-debt "Net carrying amount of debt is the amount due at maturity, adjusted for unamortized premium, discount, and cost of issuance.") shall be recognized currently in income of the period of extinguishment as losses or gains and identified as a separate item. Gains and losses shall not be amortized to future periods. If upon extinguishment of debt the parties also exchange unstated (or stated) rights or privileges, the portion of the consideration exchanged allocable to such unstated (or stated) rights or privileges shall be given appropriate accounting recognition. Moreover, extinguishment transactions between related entities may be in essence capital transactions. ##### [470-50-40-2A](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-2A) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:e64b0b51e3434e486d7c802c40db1eab442bab54dd472463826abbfc9db53f46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In an early extinguishment of debt for which the fair value option has been elected in accordance with Subtopic 815-15 on embedded derivatives or Subtopic 825-10 on financial instruments, the net carrying amount of the extinguished debt shall be equal to its fair value at the reacquisition date. In accordance with paragraph [825-10-45-6](https://asc.understandingaccounting.org/asc/825/10/#825-10-45-6), upon extinguishment an entity shall include in net income the cumulative amount of the gain or loss previously recorded in other comprehensive income for the extinguished debt that resulted from changes in instrument-specific credit risk. ##### [470-50-40-3](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:01e547ca51ee7be4b3e1fe62c9980e122f85e3a976f6d030bfcb1fa714a8189b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In an early extinguishment of debt through exchange for common or preferred stock, the reacquisition price of the extinguished debt shall be determined by the value of the common or preferred stock issued or the value of the debt—whichever is more clearly evident. #### Extinguishment of Convertible Debt ##### [470-50-40-4](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:b66fca5662641b6e2c3c6467d3b0fc1ed99005f043618bc52282a25e2323c51a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The extinguishment of convertible debt does not change the character of the security as between debt and equity at that time. Therefore, a difference between the cash acquisition price of the debt and its net carrying amount shall be recognized currently in income in the period of extinguishment as losses or gains. ##### [470-50-40-5](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:5b6ac083e7c3f435a56b293b1d90d212be7877555d1b32795b3a6ae69649b681 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to debt tendered to exercise detachable warrants that were originally issued with that debt if the debt is permitted to be tendered towards the exercise price of the warrants under the terms of the securities at issuance. The tendering of the debt in such a case would be accounted for in the same manner as a conversion. #### Modifications and Exchanges ##### [470-50-40-6](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:9b95c8cfbfc2b551547e820804be5ff8d208308d126042e2eb8f2591ef57d735 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An exchange of debt instruments with substantially different terms is a debt extinguishment and shall be accounted for in accordance with paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1). A debtor could achieve the same economic effect as an exchange of a debt instrument by making a substantial modification of terms of an existing debt instrument. Accordingly, a substantial modification of terms shall be accounted for like an extinguishment. ##### [470-50-40-7](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:0751cc91e2bb2633fd2963c3e07f176da60db9d107158d259d3f731988a0ff03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transactions among debt holders do not result in a modification of the original debt's terms or an exchange of debt instruments between the debtor and the debt holders and do not impact the accounting by the debtor. ##### [470-50-40-8](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:059bc9ebaf1e62395ec8ba8abecff6170d276e20292339e699671c4c5871e7c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transactions involving the modification or exchange of debt instruments shall only result in gain or loss recognition by the debtor if the conditions for extinguishment of debt described in paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1) are satisfied or if the guidance in this Subtopic requires that accounting. ##### [470-50-40-9](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:ac2654addab48d0705edf24969f2754817313830961bf6bf84b1f623fb1c94d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transactions involving contemporaneous exchanges of cash between the same debtor and creditor in connection with the issuance of a new debt obligation and satisfaction of an existing debt obligation by the debtor would only be accounted for as debt extinguishments if the debt instruments have substantially different terms, as defined in this Subtopic. ##### [470-50-40-10](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:953cc012f44044a6ea6cbaf7e03a28ae07302d354e6e63aaeff2a504888a6db3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. From the debtor's perspective, an exchange of debt instruments between or a modification of a debt instrument by a debtor and a creditor in a nontroubled debt situation is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. If the terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is less than 10 percent, the debt instruments are not considered to be substantially different, except in the following two circumstances: 1. a A modification or an exchange affects the terms of an embedded conversion option, from which the change in the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) is at least 10 percent of the carrying amount of the original debt instrument immediately before the modification or exchange. 2. b A modification or an exchange of debt instruments adds a substantive conversion option or eliminates a conversion option that was substantive at the date of the modification or exchange. (For purposes of evaluating whether an embedded conversion option was substantive on the date it was added to or eliminated from a debt instrument, see paragraphs [470-20-40-7 through 40-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-7) .) ##### [470-50-40-11](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:0aa1dd2cdfc6939b5f5e40fd5c9d5403fb270a9f9e3927ef776daa69ddd03c10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. With respect to the conditions in (a) and (b) in the preceding paragraph, this guidance does not address modifications or exchanges of debt instruments in circumstances in which the embedded conversion option is separately accounted for as a derivative under Topic 815 before the modification, after the modification, or both before and after the modification. ##### [470-50-40-12](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:c4172d7921fbd8eb9fafa9a9ef90d8edfd43c600ce4edcb48e9c632c9b46a59a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance shall be used to calculate the present value of the cash flows for purposes of applying the 10 percent cash flow test described in paragraph [470-50-40-10](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-10): 1. a The cash flows of the new debt instrument include all cash flows specified by the terms of the new debt instrument plus any amounts paid by the debtor to the creditor less any amounts received by the debtor from the creditor as part of the exchange or modification. For a modification or an exchange of a freestanding equity-classified written call option held by a creditor that is a part of or directly related to a modification or an exchange of an existing debt instrument held by that same creditor (see paragraphs [815-40-35-14 through 35-15](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-14) and [815-40-35-17(c)](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-17)), an entity shall apply the guidance in paragraph [470-50-40-12A](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-12A). 2. b If the original debt instrument or the new debt instrument has a floating interest rate, then the variable rate in effect at the date of the exchange or modification shall be used to calculate the cash flows of the variable-rate instrument. 3. c If either the new debt instrument or the original debt instrument is callable or puttable, then separate cash flow analyses shall be performed assuming exercise and nonexercise of the call or put. The cash flow assumptions that generate the smaller change would be the basis for determining whether the 10 percent threshold is met. 4. d If the debt instruments contain contingent payment terms or unusual interest rate terms, judgment shall be used to determine the appropriate cash flows. 5. e The discount rate to be used to calculate the present value of the cash flows is the effective interest rate, for accounting purposes, of the original debt instrument. 6. f If within a year of the current transaction the debt has been exchanged or modified without being deemed to be substantially different, then the debt terms that existed a year ago shall be used to determine whether the current exchange or modification is substantially different. 7. g The change in the fair value of an embedded conversion option resulting from an exchange of debt instruments or a modification in the terms of an existing debt instrument shall not be included in the 10 percent cash flow test. Rather, a separate test shall be performed by comparing the change in the fair value of the embedded conversion option to the carrying amount of the original debt instrument immediately before the modification, as specified in paragraph [470-50-40-10(a)](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-10). ##### [470-50-40-12A](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-12A) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:4576038cd6980ffc4c7c70e1cdaed15a9d6a33fe49ff47fb6d6cec209bcc421a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a modification or an exchange of a freestanding equity-classified written call option held by a creditor is a part of or directly related to a modification or an exchange of an existing debt instrument held by that same creditor (see paragraphs [815-40-35-14 through 35-15](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-14) and [815-40-35-17(c)](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-17)), an increase or a decrease in the fair value of the freestanding equity-classified written call option held by the creditor, calculated in accordance with paragraph [815-40-35-16](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-16), shall be included in the application of the 10 percent cash flow test described in paragraph [470-50-40-10](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-10). #### Subsequent Accounting for Modifications and Exchanges If Extinguishment Accounting Is Applied ##### [470-50-40-13](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:43fffb0cacfa13099928a89ab7243ea3948f0c405d47b9dcaddb5d9765d6b3c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is determined that the original and new debt instruments are substantially different, the new debt instrument shall be initially recorded at fair value, and that amount shall be used to determine the debt extinguishment gain or loss to be recognized and the effective rate of the new instrument. #### Subsequent Accounting for Modifications and Exchanges If Extinguishment Accounting Is Not Applied ##### [470-50-40-14](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:e81fa4f1e36c4f8aec1a01ba0d590ce09a00e13c54d0137717fd8f89485c363d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is determined that the original and new debt instruments are not substantially different, then a new effective interest rate shall be determined based on the carrying amount of the original debt instrument, adjusted for an increase (but not a decrease) in the fair value of an embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) resulting from the modification, and the revised cash flows. ##### [470-50-40-15](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:eb09ba22479ed9700a076634985a76812d46ad076c6339ce19dc400051ab91ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) shall reduce the carrying amount of the debt instrument (increasing a debt discount or reducing a debt premium) with a corresponding increase in additional paid-in capital. However, a decrease in the fair value of an embedded conversion option resulting from a modification or an exchange shall not be recognized. ##### [470-50-40-16](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:aa2efdb9e1dff55b8b006296e6162de6922e686cd598220987a328860154547b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Fees between Debtor and Creditor ##### [470-50-40-17](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:db4da74207b567f2f4029fc71302ddf4ed87f6eb3d7264d1751d93147b1e234d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fees paid by the debtor to the creditor or received by the debtor from the creditor (fees may be received by the debtor from the creditor to cancel a call option held by the debtor or to extend a no-call period) as part of the exchange or modification shall be accounted for as follows: 1. a If the exchange or modification is to be accounted for in the same manner as a debt extinguishment and the new debt instrument is initially recorded at fair value, then the fees paid or received shall be associated with the extinguishment of the old debt instrument and included in determining the debt extinguishment gain or loss to be recognized. 2. b If the exchange or modification is not to be accounted for in the same manner as a debt extinguishment, then the fees shall be associated with the replacement or modified debt instrument and, along with any existing unamortized premium or discount, amortized as an adjustment of interest expense over the remaining term of the replacement or modified debt instrument using the interest method. For fees between the debtor and creditor for exchanges of or modifications to line-of-credit or revolving-debt arrangements, see paragraph [470-50-40-21](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-21). ##### [470-50-40-17A](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-17A) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:c581d0d28e6809d5be29b4b6fd2907f2fdec59fc02a0ed0d516395d1dee755f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An increase or a decrease in the fair value of a freestanding equity-classified written call option held by a creditor (calculated in accordance with paragraph [815-40-35-16](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-16)) that is modified or exchanged as a part of or is directly related to a modification or an exchange of a debt instrument held by that same creditor (see paragraphs [815-40-35-14 through 35-15](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-14) and [815-40-35-17(c)](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-17)) shall be accounted for in the same manner as fees between the debtor and the creditor as described in paragraph [470-50-40-17](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-17). #### Third-Party Costs of Exchange or Modification ##### [470-50-40-18](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:7c3f38545dd5fc814723601261fb82adc3a78d6ac699a293d518b47ba5c27516 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs incurred with third parties directly related to the exchange or modification (such as legal fees) shall be accounted for as follows: 1. a If the exchange or modification is to be accounted for in the same manner as a debt extinguishment and the new debt instrument is initially recorded at fair value, then the costs shall be associated with the new debt instrument and amortized over the term of the new debt instrument using the interest method in a manner similar to debt issue costs. 2. b If the exchange or modification is not to be accounted for in the same manner as a debt extinguishment, then the costs shall be expensed as incurred. For third-party costs for exchanges of or modifications to line-of-credit or revolving-debt arrangements, see paragraph [470-50-40-21](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-21). ##### [470-50-40-18A](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-18A) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:efc1420c97f4ff8829caa98c12d7fe09b27197111a1973c52c259d0a0ecefdd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An increase (but not a decrease) in the fair value of a freestanding equity-classified written call option held by a third party (calculated in accordance with paragraph [815-40-35-16](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-16)) that is modified or exchanged as a part of or is directly related to a modification or an exchange of a debt instrument (see paragraphs [815-40-35-14 through 35-15](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-14) and [815-40-35-17(c)](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-17)) shall be accounted for in the same manner as third-party costs incurred that are directly related to the modification or exchange of a debt instrument as described in paragraph [470-50-40-18](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-18). #### Transactions Involving Third-Party Intermediaries ##### [470-50-40-19](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:80943393d1c8b5f8e8d8442751c79686417dbef8ae92d01bc40a23d1457f98bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In transactions involving a third-party intermediary acting as agent on behalf of a debtor, the actions of the intermediary shall be viewed as those of the debtor in order to determine whether there has been an exchange of debt instruments or a modification of terms between a debtor and a creditor. Stated another way, if a third-party intermediary acts as agent, the analysis shall look through the intermediary. ##### [470-50-40-20](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:9d61459c54e663d8c37f336a52dcca4bd4b5c4f7bdbf74643b4ff7f73d97dd6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In transactions involving a third-party intermediary acting as principal, the intermediary should be viewed as a third-party creditor similar to any other creditor in order to determine whether there has been an exchange of debt instruments or a modification of terms between a debtor and a creditor. Stated another way, if a third-party intermediary acts as principal, the analysis should not look through the intermediary. #### Line-of-Credit or Revolving-Debt Arrangements ##### [470-50-40-21](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:0c44eb2c0138da5e3998b589458e8196a618e7837671f39b350d9dc06b40acaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Modifications to or exchanges of [line-of-credit or revolving-debt arrangements](https://asc.understandingaccounting.org/glossary/l/#line-of-credit-arrangement "A line-of-credit or revolving-debt arrangement is an agreement that provides the borrower with the option to make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and to then reborrow under the same contract. Line-of-credit and revolving-debt arrangements may include both amounts drawn by the debtor (a debt instrument) and a commitment by the creditor to make additional amounts available to the debtor under predefined terms (a loan commitment).") resulting in either a new line-of-credit or revolving-debt arrangement or resulting in a traditional term-debt arrangement shall be evaluated in the following manner: 1. a The debtor shall compare the product of the remaining term and the maximum available credit of the old arrangement (this product is referred to as the borrowing capacity) with the borrowing capacity of the new arrangement. 2. b If the borrowing capacity of the new arrangement is greater than or equal to the borrowing capacity of the old arrangement, then any unamortized deferred costs, any fees paid to the creditor, and any third-party costs incurred shall be associated with the new arrangement (that is, deferred and amortized over the term of the new arrangement). 3. c If the borrowing capacity of the new arrangement is less than the borrowing capacity of the old arrangement, then: 1. 1 Any fees paid to the creditor and any third-party costs incurred shall be associated with the new arrangement (that is, deferred and amortized over the term of the new arrangement). 2. 2 Any unamortized deferred costs relating to the old arrangement at the time of the change shall be written off in proportion to the decrease in borrowing capacity of the old arrangement. The remaining unamortized deferred costs relating to the old arrangement shall be deferred and amortized over the term of the new arrangement. - Fees between the debtor and the creditor include an increase or a decrease in the fair value of a freestanding equity-classified written call option held by a creditor (calculated in accordance with paragraph [815-40-35-16](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-16)) that is modified or exchanged as a part of or is directly related to a modification or an exchange of a line-of-credit or revolving-debt arrangement held by that same creditor (see paragraphs [815-40-35-14 through 35-15](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-14) and [815-40-35-17(c)](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-17)). Third-party costs include an increase (but not a decrease) in the fair value of a freestanding equity-classified written call option held by a third party (calculated in accordance with paragraph [815-40-35-16](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-16)) that is modified or exchanged as a part of or is directly related to a modification or an exchange of a line-of-credit or revolving-debt arrangement (see paragraphs [815-40-35-14 through 35-15](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-14) and [815-40-35-17(c)](https://asc.understandingaccounting.org/asc/815/40/#815-40-35-17)). - For fees between the debtor and the creditor or third-party costs not related to exchanges of or modifications to a line-of-credit or revolving-debt arrangements resulting in either a new line-of-credit or revolving-debt arrangement, see paragraphs [470-50-40-17 through 40-18A](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-17). ##### [470-50-40-22](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:2386015b58f2ee4931ac17f155e316d12dd29da2fdef9a79fae9734598af35cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic is limited to modifications to or exchanges of line-of-credit or revolving-debt arrangements by a debtor and a creditor (the same parties that were involved in the original line-of-credit or revolving-debt arrangement) in a nontroubled situation. ##### [470-50-40-23](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:56.153Z to 2026-09-10T00:32:56.153Z Record version: sha256:7b1e3408f219fc0890e180b7bc71280d31576608da93a129e61622952dfb8d72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [470-50-55-10](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-10)) for an illustration of this guidance. Source downloaded (UTC): 2026-09-10T00:32:58.747Z to 2026-09-10T00:32:58.747Z Record version: sha256:dcdd074aeba91e5422e7b82f9a5a952cdd5fa0d200c1bd0e5e7723e62904870a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/50/#45-other-presentation-matters) SEC content: no ##### [470-50-45-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:58.747Z to 2026-09-10T00:32:58.747Z Record version: sha256:a54aabca26fa23f257404e58e7d43bb648cee1debab05b6bc3e5d28fab885c9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). ##### [470-50-45-2](https://asc.understandingaccounting.org/asc/470/50/#470-50-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:58.747Z to 2026-09-10T00:32:58.747Z Record version: sha256:ba9f09f41931a8cb8dbeb902e8d7847981e20260bbb2c3fc9131134837d9f300 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). Source downloaded (UTC): 2026-09-10T00:33:01.603Z to 2026-09-10T00:33:01.603Z Record version: sha256:b76883a33434d83926a1a7e166afada15cc40e22fc92f2b5e58b3603c73b32fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/50/#50-disclosure) SEC content: no ##### [470-50-50-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:01.603Z to 2026-09-10T00:33:01.603Z Record version: sha256:81f47c8111f3b68c6e1311b01621c5e2863ff78d335ba7373ffc17f1ff0a9906 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If debt was considered to be extinguished by [in-substance defeasance](https://asc.understandingaccounting.org/glossary/i/#in-substance-defeasance "Placement by the debtor of amounts equal to the principal, interest, and prepayment penalties related to a debt instrument in an irrevocable trust established for the benefit of the creditor.") under the provisions of FASB Statement No. 76, _Extinguishment of Debt,_ before the effective date of FASB Statement No. 125, _Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,_ a general description of the transaction and the amount of debt that is considered extinguished at the end of each period that debt remains outstanding shall be disclosed. Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:7710ca96f1512c86072d79c4cfdc8378cf0f98bc8243443d12729f5c9ac5ccff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/50/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [470-50-55-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:2ade9f008865c206d045e5a6764d1f483552b286029baaf7653c530c24490438 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the definition of a [loan participation](https://asc.understandingaccounting.org/glossary/l/#loan-participation "A transaction in which a single lender makes a large loan to a borrower and subsequently transfers undivided interests in the loan to groups of banks or other entities."), for purposes of applying the guidance in this Subtopic, the debt instrument would be the contract between the debtor and the lead bank. Participating banks are not direct creditors but, rather, have an interest represented by a certificate of participation. In the event of a modification or exchange between the debtor and lead bank, the debtor shall apply the guidance in this Subtopic. ##### [470-50-55-2](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:2eab9cbe0cc42af1c45157b995f679e927463784506676377fe69e691422885f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the definition of a [loan syndication](https://asc.understandingaccounting.org/glossary/l/#loan-syndication "A transaction in which several lenders share in lending to a single borrower. Each lender loans a specific amount to the borrower and has the right to repayment from the borrower. It is common for groups of lenders to jointly fund those loans when the amount borrowed is greater than any one lender is willing to lend."), for purposes of applying the guidance in this Subtopic, separate debt instruments exist between the debtor and the individual creditors participating in the syndication. If an exchange or modification offer is made to all members of the syndicate and only some of the creditors agree to the exchange or modification, the guidance in this Subtopic would be applied to debt instruments held by those creditors that agree to the exchange or modification. Debt instruments held by those creditors that do not agree would not be affected. ##### [470-50-55-3](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:88778835bcdddee717fb6bdc833886581d4fa3ded1947e3e7963eecccb9f71d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a [public debt issuance](https://asc.understandingaccounting.org/glossary/p/#public-debt-issuance "A public debt issuance occurs when a debtor issues a number of identical debt instruments to an underwriter that sells the debt instruments (in the form of securities) to various investors."), for purposes of applying the guidance in this Subtopic, the debt instrument is the individual security held by an investor, and the creditor is the security holder. If an exchange or modification offer is made to all investors and only some agree to the exchange or modification, then the guidance in this Subtopic shall be applied to debt instruments held by those investors that agree to the exchange or modification. Debt instruments held by those investors that do not agree would not be affected. ##### [470-50-55-4](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:d315fefe700e89eca1a14acfccf7d81f27e1bbf20053ae67f8f6e2eddfd16025 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In transactions involving a third-party investment banker acting as agent on behalf of the debtor, the activity of the investment banker is treated as if it were the activity of the debtor. Thus, if the investment banker acquires debt instruments from holders for cash, the debtor has an extinguishment even if the investment banker subsequently transfers a debt instrument with the same or different terms to the same or different investors. If the investment banker acting as agent on behalf of the debtor acquires instruments from holders by exchanging those instruments for new debt, the guidance in this Subtopic shall be applied. If the investment banker acquires debt instruments from holders for cash and contemporaneously issues new debt instruments for cash, an extinguishment has occurred only if the two debt instruments have substantially different terms, as defined in Section 470-50-40. ##### [470-50-55-5](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:6b671aca27ed8c09f3151b085f993f4b88e5acad1e48778dfae7e662be72f9b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In transactions involving a third-party investment banker acting as principal, the investment banker is considered a debt holder like other debt holders. Thus, if the investment banker acting as principal acquires debt instruments from other parties, the acquisition by the investment banker does not impact the accounting by the debtor, and exchanges or modifications between the debtor and the investment banker shall follow the guidance in this Subtopic. ##### [470-50-55-6](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:cc67abb36f292e8bd2ad97450032f755a9dfee61c5c67dfb67b6b131cd53b119 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a debt instrument is transferred from one debt holder to another in connection with a modification or exchange, including transfers from an intermediary acting as principal to another debt holder, the debtor is not impacted by the exchange as long as the funds do not pass through the debtor or its agent. ##### [470-50-55-7](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:450564667b895275106d2f40b0c0c7fc15edc2ae9037af39cc97ec5ea526ae11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transactions between a debtor and a third-party creditor should be analyzed based on the guidance in paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1) and the guidance in this Subtopic to determine whether gain or loss recognition is appropriate. Application of the guidance in this Subtopic may require determination of whether a third-party intermediary is an agent or a principal and consideration of legal definitions may be helpful in making that determination. Generally, an agent acts for and on behalf of another party. Therefore, a third-party intermediary is an agent of a debtor if it acts on behalf of the debtor. In addition, an evaluation of the facts and circumstances surrounding the involvement of a third-party intermediary should be performed. The following indicators should be considered in that evaluation: 1. a If the intermediary's role is restricted to placing or reacquiring debt for the debtor without placing its own funds at risk, that would indicate that the intermediary is an agent. For example, that may be the case if the intermediary's own funds are committed and those funds are not truly at risk because the intermediary is made whole by the debtor (and therefore is indemnified against loss by the debtor). If the intermediary places and reacquires debt for the debtor by committing its funds and is subject to the risk of loss of those funds, that would indicate that the intermediary is acting as principal. 2. b In an arrangement where an intermediary places notes issued by the debtor, if the placement is done under a best-efforts agreement, that would indicate that the intermediary is acting as agent. Under a best-efforts agreement, an agent agrees to buy only those securities that it is able to sell to others; if the agent is unable to remarket the debt, the issuer is obligated to pay off the debt. The intermediary may be acting as principal if the placement is done on a firmly committed basis, which requires the intermediary to hold any debt that it is unable to sell to others. 3. c If the debtor directs the intermediary and the intermediary cannot independently initiate an exchange or modification of the debt instrument, that would indicate that the intermediary is an agent. The intermediary may be a principal if it acquires debt from or exchanges debt with another debt holder in the market and is subject to loss as a result of the transaction. 4. d If the only compensation derived by an intermediary from its arrangement with the debtor is limited to a preestablished fee, that would indicate that the intermediary is an agent. If the intermediary derives gains based on the value of the security issued by the debtor, that would indicate that the intermediary is a principal. ##### [470-50-55-8](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:9d0a1bf6172f690b7a19aa4e777952c9acd86b576e58d9932ac7311ba17e8fd5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic applies to transactions in which the terms of a debt instrument are modified through execution of a binding contract between the debtor and creditor that requires a debt instrument to be redeemed at a future date for a specified amount. ##### [470-50-55-9](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:e1bf385b52d773625db3e3a04d5cff6f329281a168841966d10a619809063b18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following situations do not result in an extinguishment and would not result in gain or loss recognition under either paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1) or this Subtopic: 1. a An announcement of intent by the debtor to call a debt instrument at the first call date 2. b [In-substance defeasance](https://asc.understandingaccounting.org/glossary/i/#in-substance-defeasance "Placement by the debtor of amounts equal to the principal, interest, and prepayment penalties related to a debt instrument in an irrevocable trust established for the benefit of the creditor.") 3. c An agreement with a creditor that a debt instrument issued by the debtor and held by a different party will be redeemed. #### Illustrations ##### [470-50-55-10](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:8860aaaf38a79e6c2a183c5484307d2549dc2f112243a02a35b10f2e16bbd76f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of the guidance in paragraphs [470-50-40-21 through 40-22](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-21) for changes in [line-of-credit or revolving-debt arrangements](https://asc.understandingaccounting.org/glossary/l/#line-of-credit-arrangement "A line-of-credit or revolving-debt arrangement is an agreement that provides the borrower with the option to make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and to then reborrow under the same contract. Line-of-credit and revolving-debt arrangements may include both amounts drawn by the debtor (a debt instrument) and a commitment by the creditor to make additional amounts available to the debtor under predefined terms (a loan commitment)."). ##### [470-50-55-11](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:ad6439aa2e9c8ebe957d4da9f1adf2ca6634996506a42301bb21e2dc36b16934 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Terms of original arrangement are as follows: 1. a Five-year term (three years remaining) 2. b $10 million commitment amount 3. c The borrowing capacity under the original arrangement at the time of the change is $30 million, the product of the remaining term (3 years) and the commitment amount ($10 million). ##### [470-50-55-12](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:bb016ba34761cfcef40e6f870c9864ea061629e543b04d4dff248e928f5a24c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following situations represent changes that are made (with the same creditor) to the original terms: 1. a The commitment amount is increased to $15 million, the term of the new arrangement remains at 3 years (borrowing capacity is $45 million). 2. b The commitment amount is decreased to $2 million, the term of the new arrangement is 5.5 years (borrowing capacity is $11 million). 3. c The original revolver is replaced with a 3-year, $7.5 million term loan, with principal due at the end of 3 years (borrowing capacity is $22.5 million). 4. d The original revolver is replaced with a 3-year, $10 million term loan, with principal due at the end of 3 years (borrowing capacity is $30 million). ##### [470-50-55-13](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:c4d98c77731fb772c780ea193576eae0451dafb27ab36bb4e937327fdfa3cf2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In all of the situations described, at the time the change is made to the original arrangement, $150,000 of unamortized costs relating to the original arrangement remain on the debtor's balance sheet; the debtor pays a fee of $100,000 to the creditor; and the debtor incurs third-party costs of $200,000. - The following illustrates the various situations described in this Example. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-43E70402-AEF2-4168-BE3B-F2E1D57509AC-low.gif) Case Old Borrowing Capacity New Borrowing Capacity Accounting Treatment of Unamortized Deferred Costs Accounting Treatment of Fees and Third-Party Costs Incurred A 30 million 45 million "$150,000 is amortized over 3 years." "$300,000 is deferred and amortized over 3 years." B 30 million 11 million "63 percent of the unamortized costs ($94,500) are written off; the remaining costs ($55,500) are amortized over 5.5 years." "$300,000 is deferred and amortized over 5.5 years." C 30 million 22.5 million "25 percent of the unamortized costs ($37,500) are written off; the remaining costs ($112,500) are amortized over 3 years." "$300,000 is deferred and amortized over 3 years." D 30 million 30 million "$150,000 is amortized over 3 years." "$300,000 is deferred and amortized over 3 years." Source downloaded (UTC): 2026-09-10T00:33:11.172Z to 2026-09-10T00:33:34.628Z Record version: sha256:15f33b23a62ae3b5034e7ad43be4a39a14835a7021deb2529165de9f31cab0e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60: Debt — Troubled Debt Restructurings by Debtors ### Machine-generated study aids ```json { "summary": "ASC 470-60 governs how a debtor accounts for a troubled debt restructuring (TDR) — a restructuring in which the creditor, for economic or legal reasons related to the debtor's financial difficulties, grants a concession it would not otherwise consider (470-60-15-5). Settlements by transfer of assets or grant of an equity interest are measured at fair value, with a gain on restructuring equal to the excess of the payable's carrying amount over that fair value (470-60-35-2, 35-4). Pure modifications of terms are accounted for prospectively with no change in carrying amount and a new effective interest rate, unless total future cash payments (including contingent amounts) are less than the carrying amount, in which case the debtor writes down the payable and recognizes a gain (470-60-35-5 through 35-7).", "key_points": [ "A restructuring is a TDR only if the creditor grants a concession for reasons related to the debtor's financial difficulties (470-60-15-5); a debtor able to borrow elsewhere at rates near nontroubled market rates generally is not in a TDR (470-60-15-8, 470-60-55-9), and a concession exists if the effective borrowing rate on the restructured debt is lower than on the old debt (470-60-55-10).", "Substance over form controls: modifications of timing, amounts designated as interest, or amounts designated as face amount are all treated alike, and each payable is accounted for individually even if negotiated jointly (470-60-10-1, 470-60-15-4).", "Full settlement by transferring assets produces a gain on restructuring equal to carrying amount of the payable less fair value of the assets, plus a separate gain or loss on transfer of assets equal to fair value less the assets' carrying amount (470-60-35-2 through 35-3); equity interests granted are recorded at fair value (470-60-35-4).", "In a modification-of-terms TDR, the debtor does not change the carrying amount and applies a new effective interest rate that equates the present value of future cash payments (excluding contingent amounts) to that carrying amount (470-60-35-5).", "If total future cash payments under the new terms are less than the carrying amount, the debtor reduces the payable to that total, recognizes a gain, and thereafter records all payments as reductions of carrying amount with no interest expense (470-60-35-6).", "Contingent payments are assumed payable and included in total future cash payments to the extent needed to prevent recognizing a gain that could be offset by future interest expense; they are later accrued under 450-20-25-2 (470-60-35-7, 35-10).", "The Subtopic does not apply where the debtor restates its liabilities generally in bankruptcy or a quasi-reorganization (470-60-15-10, 55-1) and excludes lease modifications and mere payment delays (470-60-15-11); disclosures include principal changes in terms, aggregate gain on restructuring, net gain or loss on asset transfers, and per-share gain (470-60-50-1)." ], "categories": [ "Debt and equity", "Subsequent measurement", "Derecognition", "Disclosure" ], "audience_level": "intermediate", "student_note": "Exam questions hinge on the counterintuitive modification rule: unless undiscounted total future cash payments (including contingent ones) fall below the carrying amount, the debtor recognizes no gain and simply re-solves for a lower effective interest rate — students wrongly assume any concession triggers immediate gain recognition. Also remember the two-part scope test: debtor financial difficulty plus a creditor concession (a decreased effective borrowing rate under 470-60-55-10); if either is absent, apply 470-50 instead.", "related_topics": [ "470-50", "470-10", "450-20", "835-30", "852", "310-40" ], "key_concepts": [ "troubled debt restructuring", "concession", "debtor financial difficulties", "gain on restructuring of payables", "modification of terms", "effective borrowing rate", "contingent future payments", "settlement by transfer of assets or equity interest" ] } ``` Source downloaded (UTC): 2026-09-10T00:33:11.172Z to 2026-09-10T00:33:11.172Z Record version: sha256:c2e0ae4fe44d86f87e4ca395b99ff44f5dac830a9d26ac7df5895b0f58398a77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/60/#00-status) SEC content: no ##### [470-60-00-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:11.172Z to 2026-09-10T00:33:11.172Z Record version: sha256:c6221b63622f0bb85f1461d178b8fde18a8ec2678258eb5787fc96f368473ab8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Amortized Cost BasisAddedAccounting Standards Update No. 2016-1306/16/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
DebtSupersededAccounting Standards Update No. 2016-1912/14/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease ModificationAddedAccounting Standards Update No. 2016-0202/25/2016
Recorded Investment in the ReceivableSupersededAccounting Standards Update No. 2016-1306/16/2016
470-60-05-1AmendedAccounting Standards Update No. 2022-0203/31/2022
470-60-10-1AmendedAccounting Standards Update No. 2016-1912/14/2016
470-60-15-3SupersededAccounting Standards Update No. 2022-0203/31/2022
470-60-15-3AmendedAccounting Standards Update No. 2016-1306/16/2016
470-60-15-4AAddedAccounting Standards Update No. 2016-1912/14/2016
470-60-15-9AmendedAccounting Standards Update No. 2016-1912/14/2016
470-60-15-11AmendedAccounting Standards Update No. 2016-0202/25/2016
470-60-15-12AmendedAccounting Standards Update No. 2016-1306/16/2016
470-60-35-3AmendedMaintenance Update 2017-19 (PDF)11/15/2017
470-60-35-8AmendedAccounting Standards Update No. 2016-1912/14/2016
470-60-50-1AmendedAccounting Standards Update No. 2024-0311/04/2024
470-60-55-4AmendedAccounting Standards Update No. 2016-1912/14/2016
470-60-55-8AmendedAccounting Standards Update No. 2016-1912/14/2016
470-60-55-15SupersededAccounting Standards Update No. 2022-0203/31/2022
Source downloaded (UTC): 2026-09-10T00:33:13.451Z to 2026-09-10T00:33:13.451Z Record version: sha256:9c783385f45d1854acb73e25e9849ae7bce1ebae382cbf86fc8c001dd5f857e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/60/#05-overview-and-background) SEC content: no ##### [470-60-05-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:13.451Z to 2026-09-10T00:33:13.451Z Record version: sha256:4924efcfbb8d23dd3be7f57ce767e8481fddc2c0012fc57cf123df00a48fc561 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses measurement, derecognition, disclosure, and implementation guidance issues concerning [troubled debt restructurings](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") focused on the debtor's records. Source downloaded (UTC): 2026-09-10T00:33:17.391Z to 2026-09-10T00:33:17.391Z Record version: sha256:4559be879a2e102cc502c00c5150547c425e0a0bc88f6bc73b653b6446db8880 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/470/60/#10-objectives) SEC content: no ##### [470-60-10-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:17.391Z to 2026-09-10T00:33:17.391Z Record version: sha256:60f9297431d3b9194937ff7aaa5f87dd4641b413ca87dbfcaea1a22321167046 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting for restructured debt is based on the substance of the modifications—the effect on cash flows—not on the labels chosen to describe those cash flows. The substance of all modifications of a debt in a [troubled debt restructuring](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") is essentially the same whether they involve modifications of any of the following: 1. a Timing 2. b Amounts designated as interest 3. c Amounts designated as face amounts. ##### [470-60-10-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-10-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:17.391Z to 2026-09-10T00:33:17.391Z Record version: sha256:faf8626e0aaf09562a72e2aadbf7c270e1dbc384d991015184c36baf97dd4521 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of those kinds of modifications affect future cash receipts or payments and therefore affect both of the following: 1. a The creditor's total return on the receivable, its effective interest rate, or both 2. b The debtor's total cost on the payable, its effective interest rate, or both. Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:220d1b6ba310cc6ba714505f595c9d21b489b370ac42dc59d1fc4f86c8215ccb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/60/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-60-15-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:3e73c164461b1515d6fa7187ba00a5daa0dc88a8d4517a41ebd0723fe4bc241f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all debtors. #### Transactions ##### [470-60-15-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:4e1ee403836440309d1453a960274cf3cd9c7e5e0539e2473c451fde4d1ef810 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all [troubled debt restructurings](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") by debtors. ##### [470-60-15-3](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:f54c8d32ae5a1e46d13d262fbd1811a4f08f32d6ac08941b8cc259bb81d83a2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2022-02](https://asc.understandingaccounting.org/updates/asu-2022-02/). ##### [470-60-15-4](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:fac34ba45f1dce346c2d48a1a8d5ba8e5a7983322c8c06eb5a54a225dbb1d588 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The substance rather than the form of the payable shall govern. Payables that may be involved in troubled debt restructurings commonly result from borrowing of cash, or purchasing goods or services on credit. Examples are accounts payable, notes, debentures and bonds (whether those payables are secured or unsecured and whether they are convertible or nonconvertible), and related accrued interest, if any. Typically, each payable is negotiated separately, but sometimes two or more payables are negotiated together. For example, a debtor may negotiate with a group of creditors but sign separate debt instruments with each creditor. For purposes of this Subtopic, restructuring of each payable, including those negotiated and restructured jointly, shall be accounted for individually. ##### [470-60-15-4A](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-4A) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:646ce8cc5d5606824bce1ea72c97166fb04004c7f454585778167ad8181ad009 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Subtopic, a receivable or a payable (collectively referred to as debt) represents a contractual right to receive money or a contractual obligation to pay money on demand or on fixed or determinable dates that is already included as an asset or a liability in the creditor's or debtor's balance sheet at the time of the restructuring. ##### [470-60-15-5](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:54c5055fa53b9c201b9fc87f7e8d64a8413284f48aad0f48c93b46a23a2ab386 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A restructuring of a debt constitutes a troubled debt restructuring for purposes of this Subtopic if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider. ##### [470-60-15-6](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:3b395a3a815388d17d99da1dbd9be4c87abd8ddee08d3d3356f100c9af8825f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. That concession is granted by the creditor in an attempt to protect as much of its investment as possible. That concession either stems from an agreement between the creditor and the debtor or is imposed by law or a court; for example, either of the following circumstances might occur: 1. a A creditor may restructure the terms of a debt to alleviate the burden of the debtor's near-term cash requirements, and many troubled debt restructurings involve modifying terms to reduce or defer cash payments required of the debtor in the near future to help the debtor attempt to improve its financial condition and eventually be able to pay the creditor. 2. b The creditor may accept cash, other assets, or an equity interest in the debtor in satisfaction of the debt though the value received is less than the amount of the debt because the creditor concludes that step will maximize recovery of its investment. Although troubled debt that is fully satisfied by foreclosure, repossession, or other transfer of assets or by grant of equity securities by the debtor is, in a technical sense, not restructured, that kind of event is included in the term _troubled debt restructuring_ in this Subtopic. ##### [470-60-15-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:bbe5449cbb0a9a4abd3c494bbac6547fc9d6064a89f053f54496775a660bf556 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whatever the form of concession granted by the creditor to the debtor in a troubled debt restructuring, the creditor's objective is to make the best of a difficult situation. That is, the creditor expects to obtain more cash or other value from the debtor, or to increase the probability of receipt, by granting the concession than by not granting it. ##### [470-60-15-8](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:9f0258dae3215ce3c77ac78c0d9ff6a815db2f774c3d1a30b478ca423bdc4cf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general, a debtor that can obtain funds from sources other than the existing creditor at market interest rates at or near those for nontroubled debt is not involved in a troubled debt restructuring. A debtor in a troubled debt restructuring can obtain funds from sources other than the existing creditor in the troubled debt restructuring, if at all, only at effective interest rates (based on market prices) so high that it cannot afford to pay them. ##### [470-60-15-9](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:760b0844a362ca3c9be51b945083411dedb18d2fd4835a2a19622ee234b496d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A troubled debt restructuring may include, but is not necessarily limited to, one or a combination of the following: 1. a Transfer from the debtor to the creditor of receivables from third parties, real estate, or other assets to satisfy fully or partially a debt (including a transfer resulting from foreclosure or repossession) 2. b Issuance or other granting of an equity interest to the creditor by the debtor to satisfy fully or partially a debt unless the equity interest is granted pursuant to existing terms for converting the debt into an equity interest 3. c Modification of terms of a debt, such as one or a combination of any of the following: 1. 1 Reduction (absolute or contingent) of the stated interest rate for the remaining original life of the debt 2. 2 Extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk 3. 3 Reduction (absolute or contingent) of the face amount or maturity amount of the debt as stated in the instrument or other agreement 4. 4 Reduction (absolute or contingent) of accrued interest. ##### [470-60-15-10](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:353358fbe0217d093da121f49cb655d1af7c082c55c3ebfad2bd162e2137fab4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic shall be applied to all troubled debt restructurings including those consummated under reorganization, arrangement, or other provisions of the Federal Bankruptcy Act or other federal statutes related thereto. This Subtopic does not apply, however, if under provisions of those federal statutes or in a quasi-reorganization or corporate readjustment (see Topic 852) with which a troubled debt restructuring coincides, the debtor restates its liabilities generally, that is, if such restructurings or modifications accomplished under purview of the bankruptcy court encompass most of the amount of the debtor's liabilities. ##### [470-60-15-11](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:e93eaaf98053eca70f9c83871cc470f1694d674b093bb5095c5b3bd75533bbc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of this Subtopic, none of the following are considered troubled debt restructurings: 1. a [Lease modifications](https://asc.understandingaccounting.org/glossary/l/#lease-modification "A change to the terms and conditions of a contract that results in a change in the scope of or the consideration for a lease (for example, a change to the terms and conditions of the contract that adds or terminates the right to use one or more underlying assets or extends or shortens the contractual lease term).") (for guidance, see Topic 842) 2. b Changes in employment-related agreements, for example, pension plans and deferred compensation contracts 3. c Unless they involve an agreement between debtor and creditor to restructure, neither of the following: 1. 1 Debtors' failures to pay trade accounts according to their terms 2. 2 Creditors' delays in taking legal action to collect overdue amounts of interest and principal. ##### [470-60-15-12](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:25dfe58694759df6b0e1c0007d9f4ee5b7f48f3feb86fef05a3775b55a1e4ef5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debt restructuring is not necessarily a troubled debt restructuring for purposes of this Subtopic even if the debtor is experiencing some financial difficulties. For example, a troubled debt restructuring is not involved if any of the following circumstances exist: 1. a The [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of cash, other assets, or an equity interest accepted by a creditor from a debtor in full satisfaction of its receivable at least equals the creditor's [amortized cost basis](https://asc.understandingaccounting.org/glossary/a/#amortized-cost-basis "The amortized cost basis is the amount at which a financing receivable or investment is originated or acquired, adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, writeoffs, foreign exchange, and fair value hedge accounting adjustments.") in the receivable. 2. b The fair value of cash, other assets, or an equity interest transferred by a debtor to a creditor in full settlement of its payable at least equals the debtor's carrying amount of the payable. 3. c The creditor reduces the effective interest rate on the debt primarily to reflect a decrease in market interest rates in general or a decrease in the risk so as to maintain a relationship with a debtor that can readily obtain funds from other sources at the current market interest rate. 4. d The debtor issues in exchange for its debt new marketable debt having an effective interest rate based on its market price that is at or near the current market interest rates of debt with similar maturity dates and stated interest rates issued by nontroubled debtors. ##### [470-60-15-13](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:19.847Z to 2026-09-10T00:33:19.847Z Record version: sha256:abb3f92e520c16f0e02d0b595f9ae1abd2b8dc8caa50f438407df0864019b0af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For further guidance on determining whether a modification or exchange is a troubled debt restructuring, see paragraphs [470-60-55-4 through 55-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-4) . If a debtor concludes that the modification or exchange is not within the scope of this Subtopic, the debtor would apply the provisions of Subtopic 470-50. Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:5b2a709815d2d45430b3dc2b8cfdbd6194e8ff90277e56b60bc53423d40a309e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/470/60/#35-subsequent-measurement) SEC content: no ##### [470-60-35-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:1c552c082afdd9980f378f3030e89ff67fbddac5792b7cb2225addddaed4571a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debtor shall account for a [troubled debt restructuring](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") according to the type of the restructuring as prescribed in this Section. ##### [470-60-35-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:9c1322c6a508f955617d761d554482a153dfa6ac65503e85d40c356a393b3db2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debtor that transfers its receivables from third parties, real estate, or other assets to a creditor to settle fully a payable shall recognize a gain on restructuring of payables. The gain shall be measured by the excess of the [carrying amount](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "For a receivable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs and also an allowance for uncollectible amounts and other valuation accounts.For a payable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs") of the payable over the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the assets transferred to the creditor. However, while the guidance in this Subtopic indicates that the fair value of assets transferred or the fair value of an equity interest granted shall be used in accounting for a settlement of a payable in a troubled debt restructuring, that guidance is not intended to preclude using the fair value of the payable settled if more clearly evident than the fair value of the assets transferred or of the equity interest granted in a full settlement of a payable. However, in a partial settlement of a payable, the fair value of the assets transferred or of the equity interest granted shall be used in all cases to avoid the need to allocate the fair value of the payable between the part settled and the part still outstanding. ##### [470-60-35-3](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:e71707fec49fb4f5c5bebee4f39067edaf0c2a88625fe2ba80d06a17188c96a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A difference between the fair value and the carrying amount of assets transferred to a creditor to settle a payable is a gain or loss on transfer of assets. The carrying amount of a receivable encompasses not only unamortized premium, discount, acquisition costs, and the like but also an allowance for uncollectible amounts and other valuation accounts, if any. The debtor shall include that gain or loss in measuring net income for the period of transfer, reported as provided in Topic 220. A loss on transferring receivables to creditors may therefore have been wholly or partially recognized in measuring net income before the transfer and be wholly or partly a reduction of a valuation account rather than a gain or loss in measuring net income for the period of the transfer. ##### [470-60-35-4](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:5aff3f0f085dbbfd03012232fd7041b763343b81d44395cbe9d1bd5ff802d6a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debtor that issues or otherwise grants an equity interest to a creditor to settle fully a payable shall account for the equity interest at its fair value. The difference between the fair value of the equity interest granted and the carrying amount of the payable settled shall be recognized as a gain on restructuring of payables. ##### [470-60-35-5](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:78f5bd9c3b2c001b61cb9434158877d22fc0a86e2842f732fa596d6a082189db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debtor in a troubled debt restructuring involving only modification of terms of a payable—that is, not involving a transfer of assets or grant of an equity interest— shall account for the effects of the restructuring prospectively from the [time of restructuring](https://asc.understandingaccounting.org/glossary/t/#time-of-restructuring "Troubled debt restructurings may occur before, at, or after the stated maturity of debt, and time may elapse between the agreement, court order, and so forth, and the transfer of assets or equity interest, the effective date of new terms, or the occurrence of another event that constitutes consummation of the restructuring. The date of consummation is the time of the restructuring."), and shall not change the carrying amount of the payable at the time of the restructuring unless the carrying amount exceeds the total future cash payments specified by the new terms. Total future cash payments includes related accrued interest, if any, at the time of the restructuring that continues to be payable under the new terms. That is, the effects of changes in the amounts or timing (or both) of future cash payments designated as either interest or face amount shall be reflected in future periods. Interest expense shall be computed in a way such that a constant effective interest rate is applied to the carrying amount of the payable at the beginning of each period between restructuring and maturity (in substance the interest method prescribed by paragraphs [835-30-35-2](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-2) and [835-30-35-4 through 35-5](https://asc.understandingaccounting.org/asc/835/30/#835-30-35-4) ). The new effective interest rate shall be the discount rate that equates the present value of the future cash payments specified by the new terms (excluding amounts contingently payable) with the carrying amount of the payable. ##### [470-60-35-6](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:866647473de3ab84bb60f99b085bf5b47851140db3837fec3247046881bcdd4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, however, the total future cash payments specified by the new terms of a payable, including both payments designated as interest and those designated as face amount, are less than the carrying amount of the payable, the debtor shall reduce the carrying amount to an amount equal to the total future cash payments specified by the new terms and shall recognize a gain on restructuring of payables equal to the amount of the reduction. If the carrying amount of the payable comprises several accounts (for example, face amount, accrued interest, and unamortized premium, discount, finance charges, and issue costs) that are to be continued after the restructuring, some possibly being combined, the reduction in carrying amount may need to be allocated among the remaining accounts in proportion to the previous balances. Thereafter, all cash payments under the terms of the payable shall be accounted for as reductions of the carrying amount of the payable, and no interest expense shall be recognized on the payable for any period between the restructuring and maturity of the payable. The only exception is to recognize interest expense according to paragraph [470-60-35-10](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-10). However, the debtor may choose to carry the amount designated as face amount by the new terms in a separate account and adjust another account accordingly. ##### [470-60-35-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:25b89a7d6a3ca4d9fa71cedb2015b22787fe5a5397929d7b0335c96361ccf322 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debtor shall not recognize a gain on a restructured payable involving indeterminate future cash payments as long as the maximum total future cash payments may exceed the carrying amount of the payable. Amounts designated either as interest or as face amount by the new terms may be payable contingent on a specified event or circumstance (for example, the debtor may be required to pay specified amounts if its financial condition improves to a specified degree within a specified period). To determine whether the debtor shall recognize a gain according to the provisions of the preceding two paragraphs, those contingent amounts shall be included in the total future cash payments specified by the new terms to the extent necessary to prevent recognizing a gain at the time of restructuring that may be offset by future interest expense. Thus, the debtor shall apply paragraphs [450-30-25-1](https://asc.understandingaccounting.org/asc/450/30/#450-30-25-1) and [450-30-50-1](https://asc.understandingaccounting.org/asc/450/30/#450-30-50-1) in which probability of occurrence of a gain contingency is not a factor, and shall assume that contingent future payments will have to be paid. The same principle applies to amounts of future cash payments that must sometimes be estimated to apply the provisions of the preceding two paragraphs. For example, if the number of future interest payments is flexible because the face amount and accrued interest is payable on demand or becomes payable on demand, estimates of total future cash payments shall be based on the maximum number of periods possible under the restructured terms. ##### [470-60-35-8](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:14c9dcdf4546c892bb1b867c7548d378e2fa699358ec95d27dff0672431b767a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A troubled debt restructuring may involve partial settlement of a payable by the debtor's transferring assets or granting an equity interest (or both) to the creditor and modification of terms of the remaining payable. Even if the stated terms of the remaining payable, for example, the stated interest rate and the maturity date or dates, are not changed in connection with the transfer of assets or grant of an equity interest, the restructuring shall be accounted for as prescribed by this guidance. A debtor shall account for a troubled debt restructuring involving a partial settlement and a modification of terms as prescribed in paragraphs [470-60-35-5 through 35-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-5) except that, first, assets transferred or an equity interest granted in that partial settlement shall be measured as prescribed in paragraphs [470-60-35-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-2) and [470-60-35-4](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-4), respectively, and the carrying amount of the payable shall be reduced by the total fair value of those assets or equity interest. If cash is paid in a partial settlement of a payable in a troubled debt restructuring, the carrying amount of the payable shall be reduced by the amount of cash paid. A difference between the fair value and the carrying amount of assets transferred to the creditor shall be recognized as a gain or loss on transfer of assets. No gain on restructuring of payables shall be recognized unless the remaining carrying amount of the payable exceeds the total future cash payments (including amounts contingently payable) specified by the terms of the debt remaining unsettled after the restructuring. Future interest expense, if any, shall be determined according to the provisions of paragraphs [470-60-35-5 through 35-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-5) . ##### [470-60-35-9](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:2bfd9420580ac3b43e2ba5e3bb0731d5fb87beaa8ceddec9415869a316fd4760 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A troubled debt restructuring that is in substance a repossession or foreclosure by the creditor or other transfer of assets to the creditor shall be accounted for according to the provisions of the preceding paragraph and paragraphs [470-60-35-2 through 35-3](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-2) . ##### [470-60-35-10](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:09f5203d60951902f93e0ea6bf0db751ce42b1d7f815ce9a3b912a09c4aded3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a troubled debt restructuring involves amounts contingently payable, those contingent amounts shall be recognized as a payable and as interest expense in future periods in accordance with paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). Thus, in general, interest expense for contingent payments shall be recognized in each period in which both of the following conditions exist: 1. a It is probable that a liability has been incurred. 2. b The amount of that liability can be reasonably estimated. Before recognizing a payable and interest expense for amounts contingently payable, however, accrual or payment of those amounts shall be deducted from the carrying amount of the restructured payable to the extent that contingent payments included in total future cash payments specified by the new terms prevented recognition of a gain at the time of restructuring (see paragraph [470-60-35-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-7)). ##### [470-60-35-11](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:68d22ffe6e67b22ac47ffee31466d0e852dd7f1f5930f04bf158a0aaf44d40fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If amounts of future cash payments must be estimated to apply the provisions of paragraphs [470-60-35-5 through 35-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-5) because future interest payments are expected to fluctuate—for example, the restructured terms may specify the stated interest rate to be the prime interest rate increased by a specified amount or proportion—estimates of maximum total future payments shall be based on the interest rate in effect at the time of the restructuring. Fluctuations in the effective interest rate after the restructuring from changes in the prime rate or other causes shall be accounted for as changes in estimates in the periods in which the changes occur. However, the accounting for those fluctuations shall not result in recognizing a gain on restructuring that may be offset by future cash payments (see the preceding paragraph and paragraph [470-60-35-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-7)). Rather, the carrying amount of the restructured payable shall remain unchanged, and future cash payments shall reduce the carrying amount until the time that any gain recognized cannot be offset by future cash payments. ##### [470-60-35-12](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:23.646Z to 2026-09-10T00:33:23.646Z Record version: sha256:764e6a62463e25914b74099ccb9c844a14bbcaac0f0a82af222129bb5d99d423 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Legal fees and other direct costs that a debtor incurs in granting an equity interest to a creditor in a troubled debt restructuring shall reduce the amount otherwise recorded for that equity interest according to paragraphs [470-60-35-4](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-4) and [470-60-35-8](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-8). All other direct costs that a debtor incurs to effect a troubled debt restructuring shall be deducted in measuring gain on restructuring of payables or shall be included in expense for the period if no gain on restructuring is recognized. Source downloaded (UTC): 2026-09-10T00:33:26.123Z to 2026-09-10T00:33:26.123Z Record version: sha256:0f1c6343c7fbcee3fc42ecfb35158dabc5d9d20f89ca78169be4727ba971701c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/60/#45-other-presentation-matters) SEC content: no ##### [470-60-45-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:26.123Z to 2026-09-10T00:33:26.123Z Record version: sha256:3eb7434f761fd7457866446a0c7efe8dfd31d5d2582a577ed25888bcfb66fd25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All or a portion of the [carrying amount](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "For a receivable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs and also an allowance for uncollectible amounts and other valuation accounts.For a payable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs") of the payable at the [time of the restructuring](https://asc.understandingaccounting.org/glossary/t/#time-of-restructuring "Troubled debt restructurings may occur before, at, or after the stated maturity of debt, and time may elapse between the agreement, court order, and so forth, and the transfer of assets or equity interest, the effective date of new terms, or the occurrence of another event that constitutes consummation of the restructuring. The date of consummation is the time of the restructuring.") may need to be reclassified in the balance sheet because of changes in the terms, for example, a change in the amount of the payable due within one year after the date of the debtor's balance sheet. ##### [470-60-45-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:26.123Z to 2026-09-10T00:33:26.123Z Record version: sha256:241bc8ec3cf9d5d47813a8500f73a8dd66d5c2305818c71785fa5f860d6eba4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [troubled debt restructuring](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") of a short-term obligation after the date of a debtor's balance sheet but before that balance sheet is issued or is available to be issued (as discussed in Section 855-10-25) may affect the classification of that obligation in accordance with Subtopic 470-10. Source downloaded (UTC): 2026-09-10T00:33:28.511Z to 2026-09-10T00:33:28.511Z Record version: sha256:478a1260c295d925c73b6e9f149c2e533b3c33a68fb8121b4913ab1a31c9b6f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/60/#50-disclosure) SEC content: no ##### [470-60-50-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:33:28.511Z to 2026-09-10T00:33:28.511Z Record version: sha256:aa5c9b2344da9d4abdf43d31082d8f754d9a22a10d41b8e228f2552fc75ff4c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debtor shall disclose, either in the body of the financial statements or in the accompanying notes, all of the following information about [troubled debt restructurings](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") that have occurred during a period for which financial statements are presented: 1. a For each restructuring, a description of the principal changes in terms, the major features of settlement, or both; separate restructurings within a fiscal period for the same category of payables (for example, accounts payable or subordinated debentures) may be grouped for disclosure purposes 2. b Aggregate gain on restructuring of payables 3. c Aggregate net gain or loss on transfers of assets recognized during the period (see paragraphs [470-60-35-3](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-3) and [470-60-35-8](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-8)) 4. d Per-share amount of the aggregate gain on restructuring of payables. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)A debtor shall disclose, either in the body of the financial statements or in the accompanying notes, all of the following information about [troubled debt restructurings](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") that have occurred during a period for which financial statements are presented: 1. a For each restructuring, a description of the principal changes in terms, the major features of settlement, or both; separate restructurings within a fiscal period for the same category of payables (for example, accounts payable or subordinated debentures) may be grouped for disclosure purposes 2. b Aggregate gain on restructuring of payables 3. c Aggregate net gain or loss on transfers of assets recognized during the period (see paragraphs [470-60-35-3](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-3) and [470-60-35-8](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-8)) 4. d Per-share amount of the aggregate gain on restructuring of payables. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ##### [470-60-50-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:28.511Z to 2026-09-10T00:33:28.511Z Record version: sha256:24144eb5b94c74dbb93778bae91f3cd0dbe914da0365beb8b687e8a3067dea83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A debtor shall disclose in financial statements for periods after a troubled debt restructuring the extent to which amounts contingently payable are included in the [carrying amount](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "For a receivable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs and also an allowance for uncollectible amounts and other valuation accounts.For a payable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs") of restructured payables pursuant to the provisions of paragraph [470-60-35-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-35-7). If required by paragraphs [450-20-50-1 through 50-6](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-1) and [450-20-50-9 through 50-10](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-9) , a debtor shall also disclose in those financial statements total amounts that are contingently payable on restructured payables and the conditions under which those amounts would become payable or would be forgiven. Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:75604a787542be6bd77c68526bd923f44624b5a2fc7804cb40736e15eb23c95a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/60/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [470-60-55-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:c6251f4b0f9ed127c56d1599e5235ad54aa0a8c538038bab178ef9145117b099 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities involved with Chapter 11 bankruptcy proceedings frequently reduce all or most of their indebtedness with the approval of their creditors and the court in order to provide an opportunity for the entity to have a fresh start. Such reductions are usually by a stated percentage so that, for example, the debtor owes only 60 cents on the dollar. Because the debtor would be restating its liabilities generally, this Subtopic would not apply to the debtor's accounting for such reduction of liabilities. ##### [470-60-55-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:894152a3e14452b12d13d50948885dc90a82132bae19ffb4bc4b0c2ad90b6f9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the other hand, this Subtopic would apply to an isolated [troubled debt restructuring](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") by a debtor involved in bankruptcy proceedings if such restructuring did not result in a general restatement of the debtor's liabilities. ##### [470-60-55-3](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:854a88ee017c0204eedae17b205b9d20c58a1ecd66096a0c99b97e853a78e447 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To a debtor, a bond constitutes one payable even though there are many bondholders. ##### [470-60-55-4](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:6c49571ee2e5998f262aa22bd123813b0aad6a60850e943d95cf14cbcc6b8085 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No single characteristic or factor, taken alone, is determinative of whether a modification or exchange is a troubled debt restructuring under this Subtopic. That is, the fact that a single characteristic is present in a transaction (such as that described in paragraph [470-60-15-9(c)(3)](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-9) or [470-60-15-12(d)](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-12)) should not be considered sufficient to overcome the preponderance of contrary evidence. Determining whether a transaction is within the scope of this Subtopic requires the exercise of judgment. The guidance that follows is not limited to marketable debt instruments. ##### [470-60-55-5](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:74f9f9e6c7a7622ec27e0d7ea24f8b98074200c1204a1dfaca09d6679c6554be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following model should be applied by a debtor when determining whether a modification or an exchange of debt instruments is within the scope of this Subtopic. - ![](https://asc.understandingaccounting.org/asc-img/GUID-04BDABDF-BBFD-4577-B6ED-02D88AFF7044-low.gif) ##### [470-60-55-6](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:ea2fc659ab76b64dcf1991f0ccf17e7ca0761d7e06260de289768d1fa28d99a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors have no relevance in the determination of whether a modification or an exchange is within the scope of this Subtopic: 1. a The amount invested in the old debt by the current creditors 2. b The [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the old debt immediately before the modification or exchange compared to the fair value of the new debt at issuance 3. c Transactions among debt holders. In addition, the length of time the current creditors have held the investment in the old debt is not relevant in the determination of whether a modification or exchange is within the scope of this Subtopic unless all the current creditors recently acquired the debt from the previous debt holders to effect what is in substance a planned refinancing. ##### [470-60-55-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:c185e184b03c176c9c65c838871831ca9bf1e0b3013551af9189110a8e8045b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the debtor's creditworthiness (for example, based on its credit rating or equivalent, the effects of the original collateral or credit enhancements in the debt, or its sector risk) has deteriorated since the debt was originally issued, the debtor should evaluate whether it is experiencing financial difficulties. Changes in an investment-grade credit rating are not considered a deterioration in the debtor's creditworthiness for purposes of this guidance. Conversely, a decline in credit rating from investment grade to noninvestment grade is considered a deterioration in the debtor's creditworthiness for purposes of this guidance. ##### [470-60-55-8](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:8ac9f9948522ede2873cd4505c7282ce5f82b75b7cfa7da9819fe75c763bf685 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following factors are indicators that the debtor is experiencing financial difficulties: 1. a The debtor is currently in default on any of its debt. 2. b The debtor has declared or is in the process of declaring bankruptcy. 3. c There is significant doubt as to whether the debtor will continue to be a going concern. 4. d Currently, the debtor has securities that have been delisted, are in the process of being delisted, or are under threat of being delisted from an exchange. 5. e Based on estimates and projections that only encompass the current business capabilities, the debtor forecasts that its entity-specific cash flows will be insufficient to service the debt (both interest and principal) in accordance with the contractual terms of the existing agreement through maturity. 6. f Absent the current modification, the debtor cannot obtain funds from sources other than the existing creditors at an effective interest rate equal to the current market interest rate for similar debt for a nontroubled debtor. ##### [470-60-55-9](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:e053653323091b37c916f9e9b64ad535f3aa8c3e44e418fe772b360d31ddb046 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Notwithstanding the above, the following factors, if both are present, provide determinative evidence that the debtor is not experiencing financial difficulties, and, thus, the modification or exchange is not within the scope of this Subtopic (the presence of either factor individually would be an indicator, but not determinative, that the debtor is not experiencing financial difficulty): 1. a The debtor is currently servicing the old debt and can obtain funds to repay the old prepayable debt from sources other than the existing creditors (without regard to the current modification) at an effective interest rate equal to the current market interest rate for a nontroubled debtor. 2. b The creditors agree to restructure the old debt solely to reflect a decrease in current market interest rates for the debtor or positive changes in the creditworthiness of the debtor since the debt was originally issued. ##### [470-60-55-10](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:d30b30bb46d30bf6ffcc75ab90e0ec08c8720fa2ecd0cf0f248c2bc5e67158a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A creditor is deemed to have granted a concession if the debtor's effective borrowing rate on the restructured debt is less than the effective borrowing rate of the old debt immediately before the restructuring. The effective borrowing rate of the restructured debt (after giving effect to all the terms of the restructured debt including any new or revised options or warrants, any new or revised guarantees or letters of credit, and so forth) should be calculated by projecting all the cash flows under the new terms and solving for the discount rate that equates the present value of the cash flows under the new terms to the debtor's current [carrying amount](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "For a receivable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs and also an allowance for uncollectible amounts and other valuation accounts.For a payable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs")of the old debt. ##### [470-60-55-11](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:92272c63336898264535ec2a55c09fda533dfc4a1fd29b555957ceebe8213370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The carrying amount for purposes of this test would not include any hedging effects (including basis adjustments to the old debt) but would include any unamortized premium, discount, issuance costs, accrued interest payable, and so forth. ##### [470-60-55-12](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:8fe14bc0dd7a8c52eeb7b90d112c34a1d72dd6220b640d22f25b2e7d673d546b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When determining the effect of any new or revised sweeteners (options, warrants, guarantees, letters of credit, and so forth), the current fair value of the new sweetener or change in fair value of the revised sweetener would be included in day-one cash flows. If such sweeteners are not exercisable for a period of time, that delay is typically considered within the estimation of the initial fair value as of the debt's modification date. ##### [470-60-55-13](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:c6cf53a9fee85b5ea53a4d292195a57c2596ba662bb7102413f00223bd20660d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although considered rare, if there is persuasive evidence that the decrease in the effective borrowing rate is due solely to a factor that is not captured in the mathematical calculation (for example, additional collateral), the creditor may not have granted a concession and the modification or exchange should be evaluated based on the substance of the modification. ##### [470-60-55-14](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:d502b52b701cf057ccec12940fe9000cfe30be0f2627e58062b1ad92215d5e63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Notwithstanding the guidance in this Section, if an entity has recently restructured the debt and is currently restructuring that debt again, the effective borrowing rate of the restructured debt (after giving effect to all the terms of the restructured debt including any new or revised options or warrants, any new or revised guarantees or letters of credit, and so forth) should be calculated by projecting all the cash flows under the new terms and solving for the discount rate that equates the present value of the cash flows under the new terms to the debtor's previous carrying amount of the debt immediately preceding the earlier restructuring. In addition, the effective borrowing rate of the restructured debt should be compared with the effective borrowing rate of the debt immediately preceding the earlier restructuring for purposes of determining whether the creditor granted a concession (that is, whether the effective borrowing rate decreased). ##### [470-60-55-15](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:b8243e4cda79957b4744031438607e75b0672bb12e8bc9b4963ddc7702ab8e61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2022-02](https://asc.understandingaccounting.org/updates/asu-2022-02/). Source downloaded (UTC): 2026-09-10T00:33:36.319Z to 2026-09-10T00:33:48.351Z Record version: sha256:ee2f970fcdc55b0fb694a66665961b9ecec88acf0688e953dc9420edebfff34a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932: Debt — Extractive Activities—Oil and Gas ### Machine-generated study aids ```json { "summary": "This Subtopic governs how oil and gas entities account for certain \"conveyance\" transactions that are, in substance, borrowings repayable in cash or its equivalent. Under 470-932-25-1, such arrangements must be recorded as a payable by the operator receiving the funds and a receivable by the party advancing the funds, rather than as a sale or conveyance of mineral interests.", "key_points": [ "Transactions labeled conveyances that are in substance borrowings repayable in cash or its equivalent shall be accounted for as borrowings (470-932-25-1).", "Cash advanced to an operator to finance exploration, repayable by offset against purchases of oil or gas discovered or in cash if insufficient production occurs by a specified date, is a receivable to the lender and a payable to the operator (470-932-25-1(a)).", "Funds advanced repayable in cash out of proceeds from a specified share of future production until the advance plus interest at a specified or determinable rate is repaid are accounted for as a borrowing (470-932-25-1(b)).", "Both arrangements are commonly called production payments, but they differ in substance from the production payments described in 932-360-55-2, which are not borrowings (470-932-25-1(b)).", "The Subtopic's scope follows the Overall oil and gas Subtopic scope in Section 932-10-15 (470-932-15-1)." ], "categories": [ "Recognition", "Industry-specific", "Debt and equity" ], "audience_level": "intermediate", "student_note": "The classic trap is treating every \"production payment\" alike: if the advance must be repaid in cash (with interest) out of future production proceeds, it is debt, not a sale of a mineral interest. Compare it against the conveyance-type production payment in 932-360-55-2 to see the substance-over-form distinction.", "related_topics": [ "932-10", "932-360", "932-235", "470-10", "835-30" ], "key_concepts": [ "conveyance", "production payment", "in-substance borrowing", "oil and gas properties", "advance repayable in cash", "receivable and payable recognition", "substance over form" ] } ``` Source downloaded (UTC): 2026-09-10T00:33:36.319Z to 2026-09-10T00:33:36.319Z Record version: sha256:eb975aecf4423c15d6714b754cdfbaad532fd1e16cd1593aac2760932dd9b6d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/932/#00-status) SEC content: no ##### [470-932-00-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:36.319Z to 2026-09-10T00:33:36.319Z Record version: sha256:d1c656e24d0d03e7abfcc6b47f50afa318a070a55de31e4b822ab6544d380d8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ProductionAmendedAccounting Standards Update No. 2010-0301/06/2010
Source downloaded (UTC): 2026-09-10T00:33:39.838Z to 2026-09-10T00:33:39.838Z Record version: sha256:4a9c618c56a86bcb3fb6c163cbcec605e16bd5ef80ef52f8e9857b072c01678c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/932/#05-overview-and-background) SEC content: no ##### [470-932-05-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:39.838Z to 2026-09-10T00:33:39.838Z Record version: sha256:b18c14b592af240c0eaa5c752d2734a074c2b95db82a827af6dc628261391c34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses accounting for debt by entities in the oil and gas industry. Source downloaded (UTC): 2026-09-10T00:33:42.223Z to 2026-09-10T00:33:42.223Z Record version: sha256:23c1a66e2a42bf4de774431bde28689f45f0cb45fd0c826a6332e174b14978b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/932/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [470-932-15-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:42.223Z to 2026-09-10T00:33:42.223Z Record version: sha256:1a813022d26a33c6bc37f02b5d9240651c5b1eb1f28843aeae1f61ca113477df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 932-10-15. Source downloaded (UTC): 2026-09-10T00:33:48.351Z to 2026-09-10T00:33:48.351Z Record version: sha256:4498077b03737279e081575b3026dae13eeae5b06d013ff0daba473399de0ea0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-932-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/932/#25-recognition) SEC content: no ##### [470-932-25-1](https://asc.understandingaccounting.org/asc/470/932/#470-932-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:48.351Z to 2026-09-10T00:33:48.351Z Record version: sha256:9773ac9066bb0ea01514cce235334046899c1d842b03198f5f9b8b280b68248d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain transactions, sometimes referred to as conveyances, are in substance borrowings repayable in cash or its equivalent and shall be accounted for as borrowings. Both of the following are examples of such transactions: 1. a Entities seeking supplies of oil or gas sometimes make cash advances to operators to finance [exploration](https://asc.understandingaccounting.org/glossary/e/#exploration "Exploration involves both of the following: Identifying areas that may warrant examination Examining specific areas that are considered to have prospects of containing oil and gas reserves, including drilling exploratory wells and exploratory-type stratigraphic test wells.") in return for the right to purchase oil or gas discovered. Funds advanced for exploration that are repayable by offset against purchases of oil or gas discovered, or in cash if insufficient oil or gas is produced by a specified date, shall be accounted for as a receivable by the lender and as a payable by the operator. 2. b Funds advanced to an operator that are repayable in cash out of the proceeds from a specified share of future [production](https://asc.understandingaccounting.org/glossary/p/#production "Production involves lifting the crude oil and natural gas to the surface, extracting saleable hydrocarbons, in the solid, liquid, or gaseous state from oil sands, shale, coalbeds, or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas, gathering, treating, field processing (as in the case of processing gas to extract liquid hydrocarbons), and field storage. The oil and gas production function shall be regarded as ending at a terminal point, which is the outlet valve on the lease or field storage tank. If unusual physical or operational circumstances exist, it may be appropriate to regard the terminal point for the production function as: The first point at which oil, gas, or gas liquids, natural or synthetic, are delivered to a main pipeline, a common carrier, a refinery, or a marine terminal In the case of natural resources that are intended to be upgraded into synthetic oil or gas, if those natural resources are delivered to a purchaser before upgrading, the first point at which the natural resources are delivered to a main pipeline, a common carrier, a refinery, a marine terminal, or a facility that upgrades such natural resources into synthetic oil or gas.") of a producing property, until the amount advanced plus interest at a specified or determinable rate is paid in full, shall be accounted for as a borrowing. The advance is a payable for the recipient of the cash and a receivable for the party making the advance. Such transactions, as well as those described in paragraph [932-360-55-2](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-2), are commonly referred to as production payments. The two types differ in substance, however, as explained in that paragraph. Source downloaded (UTC): 2026-09-10T00:33:50.076Z to 2026-09-10T00:34:08.109Z Record version: sha256:5c747b2197ba1cdbcca4fbec2d135f44ce2fe878efcad3eb935922982e3632e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-942: Debt — Financial Services—Depository and Lending ### Machine-generated study aids ```json { "summary": "This Subtopic gives industry-specific presentation and disclosure rules for the borrowings and long-term obligations of depository and lending institutions. Significant categories of borrowings must appear as separate balance sheet line items (or one line with note detail of components), mortgage transfers treated as secured borrowings under Topic 860 must be shown as debt separately from advances, other notes payable and subordinated debt, and notes must describe the principal terms of each debt agreement. Fair value estimates of deposit liabilities must exclude core deposit intangibles.", "key_points": [ "Significant categories of borrowings shall be presented as separate line items in the liability section of the balance sheet, or as a single line item with note disclosure of the components; alternatively, debt may be presented by priority (senior or subordinated) if significant categories of borrowings are separately disclosed (470-942-45-1).", "Transfers of mortgages accounted for as secured borrowings under Topic 860 are classified as debt of the issuing institution, and such mortgage-backed bonds must be classified separately from advances, other notes payable, and subordinated debt (470-942-45-2).", "In estimating the fair value of deposit liabilities, the value of long-term depositor relationships (core deposit intangibles) shall not be considered, because those are separate intangible assets rather than financial instruments (470-942-50-1).", "Accounting and reporting for long-term obligations is the same for financial institutions as for other entities; an unclassified balance sheet need not split current versus long-term portions, and Topic 440 requires disclosure of future payments on long-term borrowings (470-942-50-2).", "Notes must describe the principal terms of debt agreements, including title/nature, interest rate (fixed or floating), payment terms and maturity dates, collateral, conversion or redemption features, senior or subordinated status, and restrictive covenants such as dividend restrictions (470-942-50-3)." ], "categories": [ "Presentation", "Disclosure", "Industry-specific", "Fair value" ], "audience_level": "intermediate", "student_note": "Exam traps here are the two industry twists: mortgage transfers failing sale treatment under Topic 860 become debt shown separately from advances and subordinated debt, and core deposit intangibles are never folded into the fair value of deposit liabilities. Students often assume banks get relief from normal long-term debt reporting — they do not, except that an unclassified balance sheet avoids a current/noncurrent split.", "related_topics": [ "942-10", "860", "440", "470-10", "825", "942-405" ], "key_concepts": [ "significant categories of borrowings", "senior and subordinated debt", "secured borrowing", "mortgage-backed bonds", "core deposit intangibles", "fair value of deposit liabilities", "unclassified balance sheet", "restrictive covenants" ] } ``` Source downloaded (UTC): 2026-09-10T00:33:50.076Z to 2026-09-10T00:33:50.076Z Record version: sha256:386c0683a75ee458e654d2982616a6b1dfd9ba24c5c79b875dd1154d8aa0b96c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-942-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/942/#00-status) SEC content: no ##### [470-942-00-1](https://asc.understandingaccounting.org/asc/470/942/#470-942-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:50.076Z to 2026-09-10T00:33:50.076Z Record version: sha256:8cc30e4e85b3aed809bbece2196ab0e9e90768fdbc738eefa047b2b8cb79ccf8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
942-470-50-1AmendedAccounting Standards Update No. 2016-0101/05/2016
Source downloaded (UTC): 2026-09-10T00:33:52.398Z to 2026-09-10T00:33:52.398Z Record version: sha256:37f4d7239aecd34cd1c9cdf149f1ba0a022009237a305fd797220e9cb810f985 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-942-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/942/#05-overview-and-background) SEC content: no ##### [470-942-05-1](https://asc.understandingaccounting.org/asc/470/942/#470-942-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:52.398Z to 2026-09-10T00:33:52.398Z Record version: sha256:9a4275b888e149edd2cc8c3cbe03201741c47ae8ab402b033029902d706b1467 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides disclosure and presentation guidance concerning certain borrowings and long-term obligations of financial institutions. Source downloaded (UTC): 2026-09-10T00:33:54.167Z to 2026-09-10T00:33:54.167Z Record version: sha256:987a0da17ca095b1e52a8b61d41b407feea447f09bae30836f5d160181060919 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-942-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/942/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [470-942-15-1](https://asc.understandingaccounting.org/asc/470/942/#470-942-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:54.167Z to 2026-09-10T00:33:54.167Z Record version: sha256:e0d149a1aca00b68beb16ad881e4e716005a0de36fba5116fcd7c28789f39f13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 942-10-15. Source downloaded (UTC): 2026-09-10T00:33:56.896Z to 2026-09-10T00:33:56.896Z Record version: sha256:5d4ea23e6eefe51adb4e5ff170d96d09f71f1825aef364061d7b67360c00ab67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-942-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/942/#45-other-presentation-matters) SEC content: no #### Borrowings ##### [470-942-45-1](https://asc.understandingaccounting.org/asc/470/942/#470-942-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:56.896Z to 2026-09-10T00:33:56.896Z Record version: sha256:14aefaf18143e12c8833280927f4e7fc1a89d2565e6b97c95fa5e1f10dcd0bcb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Significant categories of borrowings shall be presented as separate line items in the liability section of the balance sheet, or as a single line item with appropriate note disclosure of components. Institutions may, alternatively, present debt based on the debt's priority (that is, senior or subordinated) if they also provide separate disclosure of significant categories of borrowings. #### Secured Borrowings ##### [470-942-45-2](https://asc.understandingaccounting.org/asc/470/942/#470-942-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:56.896Z to 2026-09-10T00:33:56.896Z Record version: sha256:2b467a01213451ca571f633f6dac2818b3c5eae4143adc297328a66721264684 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transfers of mortgages accounted for under Topic 860 as secured borrowings of the issuing institution shall be classified as debt on the institution's balance sheet. Such mortgage-backed bonds shall be classified separately from advances, other notes payable, and subordinated debt. Source downloaded (UTC): 2026-09-10T00:34:00.254Z to 2026-09-10T00:34:00.254Z Record version: sha256:db156b6b434ea9def4d8b3f947e7c455583fdb014111c25dbd51e2c3cdc2f530 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-942-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/942/#50-disclosure) SEC content: no #### Fair Value of Deposit Liabilities ##### [470-942-50-1](https://asc.understandingaccounting.org/asc/470/942/#470-942-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:00.254Z to 2026-09-10T00:34:00.254Z Record version: sha256:6af90c926bb1acb1217935daf137c5ed775b9164f2c591db0d09c59ec1c2c869 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In estimating the fair value of deposit liabilities, a financial entity shall not take into account the value of its long-term relationships with depositors, commonly known as core deposit intangibles, which are separate intangible assets, not financial instruments. #### Long-Term Obligations ##### [470-942-50-2](https://asc.understandingaccounting.org/asc/470/942/#470-942-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:00.254Z to 2026-09-10T00:34:00.254Z Record version: sha256:646c319c698db35fe62dc343981c0e1755b3d777ba135cbcc7be7a9ca08550b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting and reporting requirements for long-term obligations are the same for financial institutions as for other entities. If the financial institution has an unclassified balance sheet, there is no need to separate balances into current and long-term portions. Topic 440 requires disclosure of future payments on long-term borrowings. #### Debt ##### [470-942-50-3](https://asc.understandingaccounting.org/asc/470/942/#470-942-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:00.254Z to 2026-09-10T00:34:00.254Z Record version: sha256:084e80e7fa26da30aae09b579d58151027bb5cf4efd59d4d009609b910c5baf5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For debt, the notes to the financial statements shall describe the principal terms of the respective agreements including but not limited to all of the following: 1. a The title or nature of the agreement, or both 2. b The interest rate (and whether it is fixed or floating) 3. c The payment terms and maturity date(s) 4. d Collateral 5. e Conversion or redemption features 6. f Whether it is senior or subordinated 7. g Restrictive covenants (such as dividend restrictions), if any. Source downloaded (UTC): 2026-09-10T00:34:04.850Z to 2026-09-10T00:34:04.850Z Record version: sha256:1effdda9ff6f88e29958c39cca2b94e5045d277d5d48c6d72d97f77115977d26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-942-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/942/#sec-45-other-presentation-matters) SEC content: yes #### Short-Term Borrowings ##### [470-942-S45-1](https://asc.understandingaccounting.org/asc/470/942/#470-942-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:04.850Z to 2026-09-10T00:34:04.850Z Record version: sha256:01058d1be76ea6c080a4b92c625337123d078ffd06cc3c4f5cb782c1a80ba8dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-210-S99-1](https://asc.understandingaccounting.org/asc/210/942/#210-942-S99-1), Regulation S-X Rule 9-03.13, for presentation requirements for short-term borrowings. #### Bank Acceptances Outstanding ##### [470-942-S45-2](https://asc.understandingaccounting.org/asc/470/942/#470-942-S45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:04.850Z to 2026-09-10T00:34:04.850Z Record version: sha256:7609217d648d11df48ad71af424afac8c4777626810f5e624e94dc5a1b1b5893 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-210-S99-1](https://asc.understandingaccounting.org/asc/210/942/#210-942-S99-1), Regulation S-X Rule 9-03.14, for presentation requirements for bank acceptances outstanding. #### Other Liabilities ##### [470-942-S45-3](https://asc.understandingaccounting.org/asc/470/942/#470-942-S45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:04.850Z to 2026-09-10T00:34:04.850Z Record version: sha256:06079bb5d514ed73ca5753f6c90194b6a0f9d3be870eb017fac1d10cd3f43a31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-210-S99-1](https://asc.understandingaccounting.org/asc/210/942/#210-942-S99-1), Regulation S-X Rule 9-03.15, for presentation requirements for other liabilities. #### Long-Term Debt ##### [470-942-S45-4](https://asc.understandingaccounting.org/asc/470/942/#470-942-S45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:04.850Z to 2026-09-10T00:34:04.850Z Record version: sha256:33f5392f6cacb628b649953dc37e0f329d92c84fd396fb6d784b3f75571737c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-210-S99-1](https://asc.understandingaccounting.org/asc/210/942/#210-942-S99-1), Regulation S-X Rule 9-03.16, for presentation requirements for long-term debt. Source downloaded (UTC): 2026-09-10T00:34:08.109Z to 2026-09-10T00:34:08.109Z Record version: sha256:29443d8e3ada160099ff1a1e2b1ef09a75c65b1af251db57f4ba0b455691fcc0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-942-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/942/#sec-50-disclosure) SEC content: yes #### Short-Term Borrowing ##### [470-942-S50-1](https://asc.understandingaccounting.org/asc/470/942/#470-942-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:08.109Z to 2026-09-10T00:34:08.109Z Record version: sha256:70d00ad53ef4267ef2397491a8f6a23db3ece005f08003fe4645775f3b92aec8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-210-S99-1](https://asc.understandingaccounting.org/asc/210/942/#210-942-S99-1), Regulation S-X Rule 9-03.13, for presentation requirements for short-term borrowings. #### Bank Acceptances Outstanding ##### [470-942-S50-2](https://asc.understandingaccounting.org/asc/470/942/#470-942-S50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:08.109Z to 2026-09-10T00:34:08.109Z Record version: sha256:980c4408f34848ddbbe0844f165afb9fc2a0f674cccd6fbfc5ecbc3aeaf78e20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-210-S99-1](https://asc.understandingaccounting.org/asc/210/942/#210-942-S99-1), Regulation S-X Rule 9-03.14, for presentation requirements for bank acceptances outstanding. #### Other Liabilities ##### [470-942-S50-3](https://asc.understandingaccounting.org/asc/470/942/#470-942-S50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:08.109Z to 2026-09-10T00:34:08.109Z Record version: sha256:789cc412a5a16e5fe6d9e1a88fd2e7202caf17fd15afe3f48aee9e75fe1a8c3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-210-S99-1](https://asc.understandingaccounting.org/asc/210/942/#210-942-S99-1), Regulation S-X Rule 9-03.15, for presentation requirements for other liabilities. #### Long-Term Debt ##### [470-942-S50-4](https://asc.understandingaccounting.org/asc/470/942/#470-942-S50-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:08.109Z to 2026-09-10T00:34:08.109Z Record version: sha256:a4a38edd4b966834e04322333734dd67b6e4cb4ca0e5ceec95b547ecff6df10d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-210-S99-1](https://asc.understandingaccounting.org/asc/210/942/#210-942-S99-1), Regulation S-X Rule 9-03.16, for disclosure requirements for long-term debt. Source downloaded (UTC): 2026-09-10T00:34:11.077Z to 2026-09-10T00:34:31.491Z Record version: sha256:152e33b07b4272e48f27f04ec073deb246a8941377ef4a3dff0aa8fdbac5de10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-944: Debt — Financial Services—Insurance ### Machine-generated study aids ```json { "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. The common misunderstanding is assuming that because the commissioner can block payments, no interest expense accrues — 470-944-35-1 says accrual continues regardless.", "related_topics": [ "944-10", "470-10", "480-10", "835-30", "944-405" ], "key_concepts": [ "surplus notes", "certificates of contribution", "domiciliary state insurance commissioner approval", "debt versus equity classification", "interest accrual", "subordination", "statutory surplus", "issuer disclosure" ] } ``` Source downloaded (UTC): 2026-09-10T00:34:11.077Z to 2026-09-10T00:34:11.077Z Record version: sha256:073b8dfa292373985754ec4c01e5688aa2d60e847c9f72a2ba09424f0c5fa5c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-944-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/944/#00-status) SEC content: no ##### [470-944-00-1](https://asc.understandingaccounting.org/asc/470/944/#470-944-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:11.077Z to 2026-09-10T00:34:11.077Z Record version: sha256:c4312ffed0c707da0e9499ab06ecd19c8b89e1d1ecfa6e50c6bb21b5d30f1bf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Readily Determinable Fair ValueAmendedAccounting Standards Update No. 2015-1006/12/2015
Readily Determinable Fair ValueAmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T00:34:13.964Z to 2026-09-10T00:34:13.964Z Record version: sha256:107f863f46298a9044c2cfa7cd4d1c384c445722b3b00f902afe3b673bc5d341 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-944-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/944/#05-overview-and-background) SEC content: no ##### [470-944-05-1](https://asc.understandingaccounting.org/asc/470/944/#470-944-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:13.964Z to 2026-09-10T00:34:13.964Z Record version: sha256:fe28270641ede4e96427b1f48de647da05d3403c44c191c2ec6362063ccba897 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on accounting, financial statement presentation, and disclosure by the issuers of [surplus notes](https://asc.understandingaccounting.org/glossary/s/#surplus-notes "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."). 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. The following are some general characteristics of surplus notes: 1. a Approval of the issuance by the domiciliary state insurance commissioner 2. b Stated maturity date in most but not all cases 3. c Scheduled interest payments 4. d Approval of the payment of principal and interest by the domiciliary state insurance commissioner 5. e Nonvoting 6. f Subordinate to all claims except those of shareholders for stock entities 7. g Subordinate to all claims except policyholder residuals for mutual entities (after policyholder liabilities are settled) 8. h No or limited acceleration rights other than for rehabilitation, liquidation, or reorganization of the insurer by a governmental agency 9. i Proceeds from issuance in the form of cash, cash equivalent, or some other asset with a [readily determinable fair value](https://asc.understandingaccounting.org/glossary/r/#readily-determinable-fair-value "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.") satisfactory to the domiciliary state insurance commissioner. Source downloaded (UTC): 2026-09-10T00:34:17.071Z to 2026-09-10T00:34:17.071Z Record version: sha256:d536ea5216e783ec48f5006512da93e6de1d9faaa0a16232c60bbb9ab5d24fe8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-944-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/944/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [470-944-15-1](https://asc.understandingaccounting.org/asc/470/944/#470-944-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:17.071Z to 2026-09-10T00:34:17.071Z Record version: sha256:3dc33b6a4b19c3fae26ad0c366118d8bf50ac4cb330ba09bae9c71b317d7bbc0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Entities ##### [470-944-15-2](https://asc.understandingaccounting.org/asc/470/944/#470-944-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:17.071Z to 2026-09-10T00:34:17.071Z Record version: sha256:73e013f8eea79d265ea4c1142afbf5f83e91c28c21fb7d27aeecb79092ef2d6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to investors in [surplus notes](https://asc.understandingaccounting.org/glossary/s/#surplus-notes "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."). Source downloaded (UTC): 2026-09-10T00:34:21.457Z to 2026-09-10T00:34:21.457Z Record version: sha256:10f7e7904ec8a54b15e0d25616ddf6943cfa12a7231b540e25cd1abb794c7320 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-944-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/944/#25-recognition) SEC content: no #### Surplus Notes ##### [470-944-25-1](https://asc.understandingaccounting.org/asc/470/944/#470-944-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:21.457Z to 2026-09-10T00:34:21.457Z Record version: sha256:c650e1a12f10b3fd092d93fdf4bd3646d40460b769cfe83da17e3d30806c6410 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Surplus notes](https://asc.understandingaccounting.org/glossary/s/#surplus-notes "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.") shall be accounted for as debt instruments; equity treatment for surplus notes is inappropriate. Source downloaded (UTC): 2026-09-10T00:34:23.460Z to 2026-09-10T00:34:23.460Z Record version: sha256:243e3199e540f990c90e4bb4da7b37efc193343787b4d559f7000731573771ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-944-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/470/944/#35-subsequent-measurement) SEC content: no #### Surplus Notes ##### [470-944-35-1](https://asc.understandingaccounting.org/asc/470/944/#470-944-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:23.460Z to 2026-09-10T00:34:23.460Z Record version: sha256:a9bf7542cbb855aaa44abfb33469e2cb3d3237fab792fa69a2d031631acf6b45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T00:34:27.195Z to 2026-09-10T00:34:27.195Z Record version: sha256:39009f9a8f6617bfd4d277e9c1780bb6b27a83368845aa836469e82d1040f68f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-944-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/470/944/#45-other-presentation-matters) SEC content: no #### Surplus Notes ##### [470-944-45-1](https://asc.understandingaccounting.org/asc/470/944/#470-944-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:27.195Z to 2026-09-10T00:34:27.195Z Record version: sha256:d6e515bd04e3ebfc68f5a4fb8f64063cd9d01ede23ebc149ffe4febf1641f463 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Surplus notes](https://asc.understandingaccounting.org/glossary/s/#surplus-notes "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.") shall be presented as liabilities in the financial statements of the issuer; equity treatment for surplus notes is inappropriate. Source downloaded (UTC): 2026-09-10T00:34:29.011Z to 2026-09-10T00:34:29.011Z Record version: sha256:a7e473981f4d6a332d1c8df6ee89e36543f0e6ccf5e07a2d6cbd60231d4e2485 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-944-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/470/944/#50-disclosure) SEC content: no #### Surplus Notes ##### [470-944-50-1](https://asc.understandingaccounting.org/asc/470/944/#470-944-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:29.011Z to 2026-09-10T00:34:29.011Z Record version: sha256:5828cb34a84c30066ca4705f91267031c95ca50933105322c8da8ed01bdd64da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the domiciliary state insurance commissioner's role and ability to approve or disapprove any interest and principal payments. Source downloaded (UTC): 2026-09-10T00:34:33.725Z to 2026-09-10T00:34:48.558Z Record version: sha256:c34d2672c6d3ffe3ba62c261d18578e730d9797359fed991345913ca8e111514 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-954: Debt — Health Care Entities ### Machine-generated study aids ```json { "summary": "This Subtopic gives health care entity-specific debt guidance, principally for tax-exempt bond financings. Bonds issued by a financing authority for a health care entity's benefit are recorded as a liability (or lease liability) only if the entity is responsible for repayment; otherwise the proceeds are reported as contributions from the sponsoring entity. It also addresses arbitrage rebate liabilities owed to the U.S. Treasury and the accounting for crossover refundings.", "key_points": [ "Tax-exempt bonds issued by a financing authority for the benefit of a health care entity are reported as a liability on the entity's balance sheet if the entity is responsible for repayment, and that obligation may take the form of a lease liability (470-954-25-1).", "If the health care entity has no obligation to pay principal and interest (or related lease payments), no liability is recorded and the bond proceeds are reported as contributions from the sponsoring entity (470-954-25-1).", "IRS rules prohibit investment yield on tax-exempt debt proceeds from exceeding the interest rate on the debt; excess earnings create an arbitrage rebate liability payable to the U.S. Treasury to preserve tax-exempt status (470-954-25-2).", "The arbitrage determination is made as of the issue date, but intentional post-issuance acts can retroactively disqualify the issue, and the rebate can be substantial if proceeds are spent more slowly than planned (470-954-25-2).", "In a crossover refunding, the old bonds are not defeased until the crossover date, so no immediate gain or loss is recognized (470-954-40-1).", "If retirement dates of the old debt are established, the call premium, unamortized premium or discount, and initial issue costs are recognized systematically over the remaining life of the old debt as an adjustment of the cost of borrowing (470-954-40-1).", "The escrowed funds are reported as an asset and both old and new debts as liabilities, with no offsetting; income on the funds and interest expense on both debts are recognized in the income statement (470-954-40-1)." ], "categories": [ "Recognition", "Derecognition", "Presentation", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The recurring exam trap is assuming that conduit tax-exempt bond proceeds always create a liability for the health care entity — recognition turns entirely on whether the entity is obligated to repay; if not, the proceeds are contribution revenue. Also remember that a crossover refunding produces no immediate gain or loss and requires gross (non-offset) presentation of the escrow asset and both debts.", "related_topics": [ "954-10", "470-50", "405-20", "958-605", "842", "210-20" ], "key_concepts": [ "tax-exempt bond financing", "arbitrage rebate liability", "crossover refunding", "advance refunding", "conduit debt obligation", "defeasance", "contributions from sponsoring entity", "offsetting of assets and liabilities" ] } ``` Source downloaded (UTC): 2026-09-10T00:34:33.725Z to 2026-09-10T00:34:33.725Z Record version: sha256:7e043c7bdbd2c3ad89f37ef354eb6ea679f7ed2820dff53be2c675e8d41608ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-954-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/954/#00-status) SEC content: no ##### [470-954-00-1](https://asc.understandingaccounting.org/asc/470/954/#470-954-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:33.725Z to 2026-09-10T00:34:33.725Z Record version: sha256:87dbb8599de5930bf2c54f28ab3be27291047ef13eef7aec51e8527b67eef453 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Advance RefundingAddedAccounting Standards Update No. 2016-0202/25/2016
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
ContributionAmendedAccounting Standards Update No. 2018-0806/21/2018
ContributionAmendedAccounting Standards Update No. 2010-0701/28/2010
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Promise to GiveAddedAccounting Standards Update No. 2018-0806/21/2018
954-470-25-1AmendedAccounting Standards Update No. 2016-0202/25/2016
954-470-40-1AmendedAccounting Standards Update No. 2016-0202/25/2016
Source downloaded (UTC): 2026-09-10T00:34:36.180Z to 2026-09-10T00:34:36.180Z Record version: sha256:1d8fe6f360ce24254c86c5c09af3275a1f6b7370c1fdb82240942511b71b3980 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-954-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/954/#05-overview-and-background) SEC content: no ##### [470-954-05-1](https://asc.understandingaccounting.org/asc/470/954/#470-954-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:36.180Z to 2026-09-10T00:34:36.180Z Record version: sha256:9e632d9d340f30ac2cea56d372d56de25078e3253354570620750461f3d4c636 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on accounting for debt for health care entities within the scope of this Topic. Source downloaded (UTC): 2026-09-10T00:34:38.857Z to 2026-09-10T00:34:38.857Z Record version: sha256:8016e056fdd6985e4dc6726b249822a36be7fd2626cf9a01c7f85938b9368663 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-954-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/954/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [470-954-15-1](https://asc.understandingaccounting.org/asc/470/954/#470-954-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:38.857Z to 2026-09-10T00:34:38.857Z Record version: sha256:7a7ac20fe05f85d0c52000ab84651509e66797f5c94728372e50d14239d0d202 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 954-10-15. Source downloaded (UTC): 2026-09-10T00:34:45.263Z to 2026-09-10T00:34:45.263Z Record version: sha256:b846d4f7590d0066447801ca4a2b2cf33c882d12ba8b80791f161f3f5b3d042c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-954-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/954/#25-recognition) SEC content: no #### Financing Authorities ##### [470-954-25-1](https://asc.understandingaccounting.org/asc/470/954/#470-954-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:45.263Z to 2026-09-10T00:34:45.263Z Record version: sha256:10f5f806c32164b2f76f9b95d0dbb345568add33c1bac3fd261f3a129eb3ded9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a financing authority issues tax-exempt bonds or similar debt instruments and uses the proceeds for the benefit of a health care entity, the obligation shall be reported as a liability in the entity's balance sheet if the health care entity is responsible for repayment. In some cases, this obligation may take the form of a liability arising from a lease. If a health care entity has no obligation to make payments of principal and interest on the debt or lease payments on related buildings or equipment, the entity shall not reflect the liability on its balance sheet. In such circumstances, proceeds from the bond issue shall be reported as [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") from the sponsoring entity. #### Arbitrage Rebate Liabilities ##### [470-954-25-2](https://asc.understandingaccounting.org/asc/470/954/#470-954-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:45.263Z to 2026-09-10T00:34:45.263Z Record version: sha256:365afd8d37240b85d80d23beee96de580cc46522c6ba6c2ea94b2fa11ad40aca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Internal Revenue Service (IRS) regulations concerning tax-exempt debt prohibit the yield realized from the investment of the proceeds of such debt from exceeding the interest rate to be paid on such debt. Whenever a provider invests tax-exempt bond proceeds and the ultimate yield is higher than the interest rate on the bonds, the provider may be subject to an arbitrage rebate liability. The arbitrage determination is made as of the date of the issue; however, intentional acts undertaken after the date of the issue can disqualify the issue retroactively. The earnings in excess of interest expense represent a liability that must be paid to the U.S. Treasury in order for the bonds to maintain their tax-exempt status. The arbitrage rebate liability may be a substantial amount if the bond proceeds are not spent as quickly as planned. For example, this may occur if a provider encounters a delay in a major construction project. Source downloaded (UTC): 2026-09-10T00:34:48.558Z to 2026-09-10T00:34:48.558Z Record version: sha256:16289a8b1738cf72c2e62c73236fb11cd9437b57f53194502b10e017c5a78818 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-954-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/470/954/#40-derecognition) SEC content: no ##### [470-954-40-1](https://asc.understandingaccounting.org/asc/470/954/#470-954-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:48.558Z to 2026-09-10T00:34:48.558Z Record version: sha256:0e457752bd5d6d722c9e954f0426f63bba9162f7d6017c8984a195cbd9967de1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a crossover refunding, because the old bonds are not defeased until the crossover date, no immediate gain or loss shall be recognized. If the retirement dates of the old debt have been established, the call premium, unamortized premium or discount, and initial issue costs shall be recognized systematically in the income statement over the remaining life of the old debt as an adjustment of the cost of borrowing related to the old debt. In addition, the income earned on the funds used to consummate the [advance refunding](https://asc.understandingaccounting.org/glossary/a/#advance-refunding "A transaction involving the issuance of new debt to replace existing debt with the proceeds from the new debt placed in trust or otherwise restricted to retire the existing debt at a determinable future date or dates.") and the interest expense on both the old and new debts shall be recognized in the income statement. The funds used to consummate the advance refunding shall be reported as an asset and both the old and new debts shall be reported as liabilities. The assets and liabilities shall not be offset. Source downloaded (UTC): 2026-09-10T00:34:51.743Z to 2026-09-10T00:34:59.299Z Record version: sha256:e217372cc4f7ef9bf732207935f6a1641c41a80748a3e2984d85412881b0baf7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-958: Debt — Not-for-Profit Entities ### Machine-generated study aids ```json { "summary": "This subtopic addresses how a not-for-profit entity accounts for debt, in particular conduit financing obtained through state and local financing authorities. The core rule is that because the NFP is responsible for repaying tax-exempt bonds or other obligations issued on its behalf, the NFP recognizes that financing as a liability on its statement of financial position (470-958-25-1). Scope follows the NFP Overall Subtopic scope in Section 958-10-15.", "key_points": [ "This Subtopic gives debt guidance for not-for-profit entities within the scope of Topic 470 (470-958-05-1).", "Scope and scope exceptions are the same as those in the Not-for-Profit Entities Overall Subtopic, Section 958-10-15 (470-958-15-1).", "An NFP may finance part of its activities with proceeds of tax-exempt bonds or other obligations issued through state and local financing authorities (470-958-25-1).", "Because the NFP is responsible for repayment of those obligations, the financing must be recognized as a liability in the NFP's statement of financial position (470-958-25-1).", "The fact that the bonds are legally issued by a governmental financing authority does not keep the obligation off the NFP's statement of financial position." ], "categories": [ "Recognition", "Not-for-profit", "Debt and equity", "Presentation" ], "audience_level": "introductory", "student_note": "Short but testable: students often assume that because a governmental authority is the nominal issuer of tax-exempt (conduit) bonds, the NFP borrower reports nothing—wrong; repayment responsibility drives liability recognition by the NFP.", "related_topics": [ "958-10", "958-210", "470-10", "470-20", "235-10" ], "key_concepts": [ "not-for-profit entity", "tax-exempt bond financing", "conduit debt obligation", "state and local financing authority", "liability recognition", "statement of financial position" ] } ``` Source downloaded (UTC): 2026-09-10T00:34:51.743Z to 2026-09-10T00:34:51.743Z Record version: sha256:6abc74bb37b220bc9b6f4e7bfc48c38a5f22e1a6efaae75ebf51c62d50f1af97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-958-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/958/#00-status) SEC content: no ##### [470-958-00-1](https://asc.understandingaccounting.org/asc/470/958/#470-958-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:51.743Z to 2026-09-10T00:34:51.743Z Record version: sha256:1a60260f14076601d601b4449cceec9c1be6bd7af9a14b5583859888d25977a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
958-470-05-1AmendedAccounting Standards Update No. 2012-0410/01/2012
Source downloaded (UTC): 2026-09-10T00:34:54.434Z to 2026-09-10T00:34:54.434Z Record version: sha256:2e3988b15ad10c76f0c33534b97fe7a8b80829280d8cc0a91b9a8d7c42eedcd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-958-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/958/#05-overview-and-background) SEC content: no ##### [470-958-05-1](https://asc.understandingaccounting.org/asc/470/958/#470-958-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:54.434Z to 2026-09-10T00:34:54.434Z Record version: sha256:ee725a455735c1d5f572cff93dcf3ff11f30a13ab2341def9169f1ce3c8b368a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on accounting for debt for not-for-profit entities within the scope of this Topic. Source downloaded (UTC): 2026-09-10T00:34:56.927Z to 2026-09-10T00:34:56.927Z Record version: sha256:d704ed839bc92ba8a8257acc7a48a8c7e31ca27de4f0af2e560a3e005d3d7486 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-958-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/958/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [470-958-15-1](https://asc.understandingaccounting.org/asc/470/958/#470-958-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:56.927Z to 2026-09-10T00:34:56.927Z Record version: sha256:880c1a52098e5fd3745f6ba62aef64247d6fe0d4e8be9b5481882d4534f5c31d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic (see Section 958-10-15). Source downloaded (UTC): 2026-09-10T00:34:59.299Z to 2026-09-10T00:34:59.299Z Record version: sha256:6247bbca6159865072a1e6922ab05c56054c49a2433fb98679f726b53d3d6d84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-958-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/958/#25-recognition) SEC content: no ##### [470-958-25-1](https://asc.understandingaccounting.org/asc/470/958/#470-958-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:34:59.299Z to 2026-09-10T00:34:59.299Z Record version: sha256:ff84aec36c9abc907a3620fdc24070cfbedb7be1adb6fe6d898c2c0be40d1b23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A not-for-profit entity (NFP) may finance part of its activities from the proceeds of tax-exempt bonds or other obligations issued through state and local financing authorities. Because the NFP is responsible for the repayment of those obligations, that financing shall be recognized as a liability in its statement of financial position. Source downloaded (UTC): 2026-09-10T00:35:02.025Z to 2026-09-10T00:35:11.229Z Record version: sha256:20de3ddc864cb82d6fbf19c6ca899a9b5b6685986dc0fab26e60ced59ef65c4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-970: Debt — Real Estate—General ### Machine-generated study aids ```json { "summary": "This subtopic tells a real estate developer when it must record a liability for infrastructure debt issued by a municipality (special assessments) or by a tax increment financing (TIF) entity. The core rule is a presumption of liability recognition when the assessment levied on each individual property owner is a fixed or determinable amount for a fixed or determinable period (470-970-25-1); if the assessment is not fixed or determinable, no obligation is recorded, but credit support features (shortfall make-up, pledged assets, letters of credit) must be evaluated as contingencies under Topic 450 and possibly as guarantees under Topic 460.", "key_points": [ "A special assessment or TIF assessment that is a fixed or determinable amount for a fixed or determinable period creates a presumption that the property owner recognizes an obligation (470-970-25-1).", "Factors indicating contingent liability for TIF debt—obligation to satisfy annual debt service shortfalls, pledge of entity assets, or a letter of credit or other credit enhancement—require evaluation of recognition under Topic 450 (470-970-25-1).", "If the entity is constructing facilities for its own use or operation, the presence of any of those factors creates a presumption that the TIF debt must be recognized as the entity's obligation (470-970-25-2).", "Agreements to make up debt service shortfalls or to guarantee TIF debt may be guarantees under 460-10-15-4 and subject to Topic 460 initial recognition, initial measurement, and disclosure (470-970-25-3).", "Case A: a municipal special assessment fixed at $5,000 per parcel per year plus interest for 20 years is recognized as an obligation, and a purchaser assuming it recognizes the obligation on the parcels bought (470-970-55-3 through 55-4); Case B reaches the same result for TIF debt with a determinable annual levy even absent a guarantee (470-970-55-8).", "Cases C and D: where the levy depends on the rate of development or on current tax rates and assessed values, it is not fixed or determinable and no obligation is recognized—assessments are treated like property taxes—unless the entity must fund shortfalls or has guaranteed the debt, in which case Subtopic 450-20 applies (470-970-55-11, 55-14).", "TIF entities are often special-purpose entities that may require consolidation analysis under the Variable Interest Entities Subsections of Subtopic 810-10 (470-970-05-3)." ], "categories": [ "Recognition", "Contingencies and guarantees", "Industry-specific", "Consolidation" ], "audience_level": "intermediate", "student_note": "The decisive question is not who issued the bonds but whether the assessment on each individual parcel is fixed or determinable in amount and period; students often wrongly assume that because the developer did not guarantee the TIF bonds, no liability can arise—Case B shows recognition without any guarantee, and Cases C–D show that shortfall make-up promises still trigger Topic 450/460 analysis.", "related_topics": [ "970-470", "450-20", "460-10", "810-10", "974-720" ], "key_concepts": [ "tax increment financing entity", "special assessment", "fixed or determinable amount", "debt service shortfall", "guarantee", "loss contingency", "infrastructure development", "variable interest entity" ] } ``` Source downloaded (UTC): 2026-09-10T00:35:02.025Z to 2026-09-10T00:35:02.025Z Record version: sha256:bb975f07ea91dbbfaf5e05d19b461d73f14e93969517a459d8c300bb2dde6259 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-970-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/970/#00-status) SEC content: no ##### [470-970-00-1](https://asc.understandingaccounting.org/asc/470/970/#470-970-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:02.025Z to 2026-09-10T00:35:02.025Z Record version: sha256:1cf97b8dd2e9ae3564926fa14d589890c9cc22ef1856697ad7e157c51c6bb815 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
970-470-25-5AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:35:04.752Z to 2026-09-10T00:35:04.752Z Record version: sha256:6e8717e273ccf910cb7b5dee832623ac7a2a94ed205690a1709a731e732c5590 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-970-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/970/#05-overview-and-background) SEC content: no ##### [470-970-05-1](https://asc.understandingaccounting.org/asc/470/970/#470-970-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:04.752Z to 2026-09-10T00:35:04.752Z Record version: sha256:a6cfd0372b26872ca8d7bfc01ff3301ac881ca8c3248bb827afa03139738168d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides recognition and implementation guidance on tax increment financing entities. ##### [470-970-05-2](https://asc.understandingaccounting.org/asc/470/970/#470-970-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:04.752Z to 2026-09-10T00:35:04.752Z Record version: sha256:5776d039a4e40d81fba50ad742c05a9736aeb5a24b0a82c137c047af093b3f25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Municipalities often levy special assessments to finance the construction of certain infrastructure assets or improvements or may levy special assessments for other specified purposes. Alternatively, an entity that intends to develop real estate it owns or leases may form a tax increment financing entity to finance and operate the project infrastructure. Tax increment financing entities are authorized under various state statutes to issue bonds to finance the construction of road, water, and other utility infrastructure for a specific project. Usually, all of the debt is issued by the tax increment financing entity and will be repaid by future user fees or taxes assessed to cover operating costs, such as repairs and maintenance, as well as debt service. ##### [470-970-05-3](https://asc.understandingaccounting.org/asc/470/970/#470-970-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:04.752Z to 2026-09-10T00:35:04.752Z Record version: sha256:d1d88b9c1257acc5f8a1a7a71345734ded55a894686afd86b65945949c06687a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Variable Interest Entities Subsections of Subtopic 810-10 address consolidation by business entities of variable interest entities (VIEs), which may include many special-purpose entities of the type used as tax increment financing entities. Source downloaded (UTC): 2026-09-10T00:35:06.579Z to 2026-09-10T00:35:06.579Z Record version: sha256:d5178bfee6bfb18f90b32ee1df161c960103c383a46e22670061a578632b18e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-970-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/970/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-970-15-1](https://asc.understandingaccounting.org/asc/470/970/#470-970-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:06.579Z to 2026-09-10T00:35:06.579Z Record version: sha256:be7eb887b6fe42d4ff1a6ba2c8068a189a302f0a8ca8804289c2da592a9e2361 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to tax increment financing entities. Source downloaded (UTC): 2026-09-10T00:35:09.321Z to 2026-09-10T00:35:09.321Z Record version: sha256:2ba09ff269b26b488bda3d89e3b9b6c34d03c68bb99c080a61b9d9a545969d11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-970-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/970/#25-recognition) SEC content: no #### Liability for Tax Increment Financing Entity Debt ##### [470-970-25-1](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:09.321Z to 2026-09-10T00:35:09.321Z Record version: sha256:2df957c3ff76f44e32c5211c8ab7f2675c1c79a483f9c5e5eea834338f41e15a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the special assessment or the assessment to be levied by the tax increment financing entity on each individual property owner is a fixed or determinable amount for a fixed or determinable period, there is a presumption that an obligation shall be recognized by the property owner. Further, with respect to tax increment financing entities, factors such as the following indicate that an entity may be contingently liable for tax increment financing entity debt, and recognition of an obligation shall be evaluated under Topic 450: 1. a The entity must satisfy any shortfall in annual debt service obligations. 2. b There is a pledge of entity assets. 3. c The entity provides a letter of credit in support of some or all of the tax increment financing entity debt or provides other credit enhancements. ##### [470-970-25-2](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:09.321Z to 2026-09-10T00:35:09.321Z Record version: sha256:29c21086c8b6db18cf14dc4d0c2971b7ab59d752c3b733b4e694f55713b1e507 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the entity is constructing facilities for its own use or operation, the presence of any of the factors in the preceding paragraph creates a presumption that the tax increment financing entity debt must be recognized as an obligation of the entity. ##### [470-970-25-3](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:09.321Z to 2026-09-10T00:35:09.321Z Record version: sha256:5bb190e3931f1ad1cd007e4150d4801414d261a17d8e9093221f3c72800419f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity's agreement to either make up shortfalls in the annual debt service requirements or guarantee the tax increment financing entity's debt, as described in Example 1, Cases C through D (see paragraphs [970-470-55-9 through 55-14](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-9) ), may be guarantees under the characteristics found in paragraph [460-10-15-4](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4) and subject to the initial recognition, initial measurement, and disclosure requirements of Topic 460. ##### [470-970-25-4](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:09.321Z to 2026-09-10T00:35:09.321Z Record version: sha256:74e65175ba0c6649d597e00132b72add2a45a5b2404887b8fa6849411e19b256 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 970-470-55 for examples of accounting for special assessments and tax increment financing entities. ##### [470-970-25-5](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:09.321Z to 2026-09-10T00:35:09.321Z Record version: sha256:a81773aee91950c7b5fffc56d78af5bc53bd1fb1271123b14f5e21f164be8138 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 974-720-25 for adjustment of assets (or liabilities) transferred between a real estate investment trust and its adviser. Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:ce4e752d36371bc226177939700f95b723445c51864c6dd18cd12eeb0f3d3d25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-970-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/970/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [470-970-55-1](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:311693cd78228c84fcb756a4a2007de2db022cded9ad91d6d570d231ceba826f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [970-470-25-4](https://asc.understandingaccounting.org/asc/470/970/#470-970-25-4). The following Cases illustrate the use of municipal bonds and tax increment financing entities for financing the construction of development project infrastructure assets with differing entity obligation impact: 1. a Municipal bonds, entity obligation for special assessment amount (Case A) 2. b Tax increment financing entity, entity obligation for tax increment financing entity debt (Case B) 3. c Tax increment financing entity, assessment to individual property owners not fixed or determinable, no entity obligation (Case C) 4. d Tax increment financing entity, assessment to individual property owners is not fixed or determinable, no entity obligation (Case D). ##### [470-970-55-2](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:e3ee6b1e28067d17e8d2f87217370f758a7b8602797986edb1a383f09a3bb6d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A, B, C, and D share all of the following assumptions: 1. a The entity owns 100 percent of the land under development. 2. b $10 million of bonds are issued for construction of the development infrastructure. 3. c The interest rate on the bonds is 6 percent and the term is 20 years. 4. d The annual debt service requirement is $500,000 principal repayment plus interest accrued during the year. 5. e The project is expected to take 10 years to complete, and no significant sales of property are expected until the third year. All of the property under development is intended for sale. 6. f The property under development is subject to lien if there is a default on the assessment. ##### [470-970-55-3](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:57a275fc6027b75b80d3ad4fcd70b4b5893e5eeb4d81058581b7b3d9743f3c34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A municipality issues bonds to finance construction of the infrastructure assets. The municipality levies a special assessment on the property that is equal to the face amount of the bonds. The special assessment bears interest at the same rate as the bonds. In this Case, if there are 100 equal-sized parcels in the development, each parcel will be assessed $5,000 per year plus accrued interest for 20 years. The assessment remains with the property. Accordingly, upon sale or partial sale of the development, the entity must pay the remaining assessment on the property sold or the purchaser must assume the obligation. ##### [470-970-55-4](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:b1ebe9bbb5ddeab1d384a6718e4943da05e5adf247a806a9785c3dbd76c4b944 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity must recognize an obligation for the special assessment because the amount is fixed for a fixed period of time. Subsequent property owners that assume the obligation must recognize the obligation related to the parcels purchased. ##### [470-970-55-5](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:f211e3eb016ee8a016832d58a456b15f633f0cb107355f4a2071847a902053c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A tax increment financing entity is formed to issue bonds. On completion of construction of the infrastructure assets, title to such assets (including any land upon which the infrastructure is constructed) passes from the tax increment financing entity to the municipality. The entity does not guarantee the tax increment financing entity debt. ##### [470-970-55-6](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:5d443f6e65a8ed2a9e0a93cdca236f2e9909cef03fbaa0b7cc5c1b981c5de11b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Property owners will be subject to a tax on an equal basis determined by the number of lots in the district. The tax will be levied annually, based on the tax increment financing entity's debt service requirement for that year. Accordingly, if there are 100 parcels in the development, $5,000 plus interest accrued for the year is expected to be levied on each parcel annually for the 20 years the debt is outstanding. Additional assessments may be levied by the tax increment financing entity for maintenance or other services. These assessments are in addition to normal property tax assessments. ##### [470-970-55-7](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:8e1927525a6ed95340c4812f12d6e1b5889098d2ceead8c444af0c9642ee63e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Upon sale of a portion of the property, either the entity must repay a pro rata portion of the tax increment financing entity debt or the purchaser must assume the obligation. ##### [470-970-55-8](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:15d4154c23e63ae8375bc046c54fb6145d5e8845cd34741899b52a1e154dfe99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity must recognize an obligation for the tax increment financing entity debt because the assessment in this example is a determinable amount for a determinable period of time. ##### [470-970-55-9](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:bac2b9f98ded4edd5178f256875ef6158fc02b8a11e298d71385bddd6f33c8fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A tax increment financing entity is formed to issue bonds. On completion of construction of the infrastructure assets, title to such assets (including any land upon which the infrastructure is constructed) passes from the tax increment financing entity to the municipality. The entity does not guarantee the tax increment financing entity debt. ##### [470-970-55-10](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:29ede38f8c8ffbbaf52e0f02948b38fc1504dec360c2a6909f6a9208ca630f9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rates for annual assessments are determined prior to issuance of the debt and are limited to a maximum annual tax rate based on anticipated debt service requirements. The rate levied is dependent on the land use category of each parcel of property in the district. Developed property is taxed at the maximum rate, unless a lesser amount is needed to meet current year debt service and maintenance obligations. If the amount levied for developed property is not sufficient, undeveloped property is subject to tax up to the maximum rate. If the maximum rate applied to both developed and undeveloped property is insufficient, additional taxes may be assessed only if approved by eligible voters. ##### [470-970-55-11](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:ff304c01615c7d28aef3709e916ccd46672e0f4210f4ffa7e900d48218f85c77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the assessment on each individual property owner is dependent on the rate of development and, therefore, is not fixed or determinable, an obligation is not required to be recognized. However, if the entity must satisfy any shortfall in annual debt service requirements, recognition of an obligation must be evaluated pursuant to Subtopic 450-20. ##### [470-970-55-12](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:4834da1790bf41ca7683f5c213535f95a4137aad4fbd358c8b773c2a6da675f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A tax increment financing entity is formed to issue bonds. On completion of construction of the infrastructure assets, title to such assets (including any land upon which the infrastructure is constructed) passes from the tax increment financing entity to the municipality. The entity does not guarantee the tax increment financing entity debt. ##### [470-970-55-13](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:62f0c5096b2821dc901fd26db3a71424983d5809f72761096923337b8e7007f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt service requirements of the tax increment financing entity will be met by normal property tax assessments. The increased value of the developed property is expected to generate sufficient taxes to meet the debt service and other obligations. If such assessments are not sufficient, the municipality must satisfy the shortfall. ##### [470-970-55-14](https://asc.understandingaccounting.org/asc/470/970/#470-970-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:11.229Z to 2026-09-10T00:35:11.229Z Record version: sha256:1772eae33f0040831d8744b18f34c4da7eeaa6fa76ab35b04928fd70ea5526f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment on each individual property is not determinable because it is based on the current tax rate and the assessed value of the property. Accordingly, the entity is not required to recognize an obligation. The assessments will be treated as property taxes. If, however, the entity had guaranteed the tax increment financing entity debt or must satisfy any shortfall in annual debt service requirements, the recognition of an obligation would be evaluated pursuant to Subtopic 450-20. Source downloaded (UTC): 2026-09-10T00:35:14.586Z to 2026-09-10T00:35:24.744Z Record version: sha256:fe0bccfe88283c40a4111c9d59dae4ea25c3456ebcad91cfc66c86f1a5ab2eb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-980: Debt — Regulated Operations ### Machine-generated study aids ```json { "summary": "This Subtopic modifies the general rule that gains and losses on early extinguishment of debt hit income immediately (Subtopic 470-50) for entities whose rates are set by a regulator. If the regulator will recover a reacquisition loss through future rates, the regulated entity capitalizes the excess of reacquisition price over net carrying amount as a regulatory asset; if the regulator will reduce future rates for a gain, the entity records a regulatory liability. Either amount is amortized as an adjustment of interest expense over the period reflected in rate-making.", "key_points": [ "Subtopic 470-50 normally requires a gain or loss on early extinguishment of debt to be recognized in income in the period of extinguishment, but for rate-making the difference between net carrying amount and reacquisition price may be amortized as an adjustment of interest expense over a future period (470-980-40-1).", "When debt is reacquired for more than its net carrying amount and the regulator increases future rates to amortize the difference, that decision gives reasonable assurance of an asset, so the entity capitalizes the excess cost (470-980-40-2; see 980-340-25-1).", "The capitalized excess is amortized over the period during which it will be allowed for rate-making purposes (470-980-40-2).", "When debt is reacquired for less than its net carrying amount and the regulator reduces future rates, a liability is imposed on the entity, which records the difference as a liability (470-980-40-3; see 980-405-25-1(c)).", "That liability is amortized over the period during which permitted rates will be reduced (470-980-40-3).", "The scope of this Subtopic is the same as the Regulated Operations Overall Subtopic scope in Section 980-10-15 (470-980-15-1)." ], "categories": [ "Derecognition", "Industry-specific", "Subsequent measurement", "Debt and equity" ], "audience_level": "intermediate", "student_note": "This is the classic example of rate regulation overriding normal income-statement timing: the gain or loss is deferred on the balance sheet as a regulatory asset or liability rather than recognized immediately. The common mistake is assuming deferral is automatic for any utility — it depends on the regulator actually reflecting the amount in future rates.", "related_topics": [ "470-50", "980-10", "980-340", "980-405", "980-360" ], "key_concepts": [ "early extinguishment of debt", "regulated operations", "regulatory asset", "regulatory liability", "reacquisition price", "net carrying amount", "rate-making", "amortization of interest expense" ] } ``` Source downloaded (UTC): 2026-09-10T00:35:14.586Z to 2026-09-10T00:35:14.586Z Record version: sha256:6a0c1053cfbc5e6528bb720efbedb9638d09bb1384ec52c8b7cb928cc86a0e26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-980-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/980/#05-overview-and-background) SEC content: no ##### [470-980-05-1](https://asc.understandingaccounting.org/asc/470/980/#470-980-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:14.586Z to 2026-09-10T00:35:14.586Z Record version: sha256:476a183229c78ea458d4f16f700024bf956323894a2b5235217d5eb969bc007b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for debt for entities with regulated operations. Source downloaded (UTC): 2026-09-10T00:35:17.809Z to 2026-09-10T00:35:17.809Z Record version: sha256:7968f0fb60b169b971b450a6b08b3020f56dd03140208cd7cd58e6c1ed71e1f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-980-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/980/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [470-980-15-1](https://asc.understandingaccounting.org/asc/470/980/#470-980-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:17.809Z to 2026-09-10T00:35:17.809Z Record version: sha256:58025bd41b5982401a27ea7b8f7f4e1ff989df0c1e0aa4f1bb0c34ad4c6461d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 980-10-15. Source downloaded (UTC): 2026-09-10T00:35:22.975Z to 2026-09-10T00:35:22.975Z Record version: sha256:24001608b59cdbdb332d00971eac4cf3ec2c4e783ac3b2d81f1a5a8292bc09fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-980-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/470/980/#40-derecognition) SEC content: no #### Early Extinguishment of Debt ##### [470-980-40-1](https://asc.understandingaccounting.org/asc/470/980/#470-980-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:22.975Z to 2026-09-10T00:35:22.975Z Record version: sha256:51b87beeed7830e01a2a22dcb167f065fffc39a4188e49cdea99fadda3159082 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 470-50 requires recognition in income of a gain or loss on an early extinguishment of debt in the period in which the debt is extinguished. For rate-making purposes, the difference between the entity's net carrying amount of the extinguished debt and the reacquisition price may be amortized as an adjustment of interest expense over some future period. ##### [470-980-40-2](https://asc.understandingaccounting.org/asc/470/980/#470-980-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:22.975Z to 2026-09-10T00:35:22.975Z Record version: sha256:db2434e2e0aa5d25f8b8fb56796b587bd41b95102a117275f039a4508f90b9c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the debt is reacquired for an amount in excess of the entity's net carrying amount, the regulator's decision to increase future rates by amortizing the difference for rate-making purposes provides reasonable assurance of the existence of an asset (see paragraph [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1)). Accordingly, the regulated entity shall [capitalize](https://asc.understandingaccounting.org/glossary/c/#capitalize "Capitalize is used to indicate that the cost would be recorded as the cost of an asset. That procedure is often referred to as deferring a cost, and the resulting asset is sometimes described as a deferred cost.") the excess cost and amortize it over the period during which it will be allowed for rate-making purposes. ##### [470-980-40-3](https://asc.understandingaccounting.org/asc/470/980/#470-980-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:22.975Z to 2026-09-10T00:35:22.975Z Record version: sha256:9de0af0f98b19e582fc420c451956213c3a982bed8cee17e694036f724b8cd39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the debt is reacquired for an amount that is less than the entity's net carrying amount, the regulator's decision to reduce future rates by amortizing the difference for rate-making purposes imposes a liability on the regulated entity (see paragraph [980-405-25-1(c)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1)). Accordingly, the entity would record the difference as a liability and amortize it over the period during which permitted rates will be reduced.