{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/480/10/#30-initial-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"480","topic_title":"Distinguishing Liabilities from Equity","subtopic":"480-10","subtopic_title":"Overall","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Mandatorily Redeemable Financial Instruments","paragraphs":[{"citation":"480-10-30-1","para":"30-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_64EE70B9-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"> <a href=\"/glossary/m/#mandatorily-redeemable-financial-instrument\" class=\"term\" title=\"Any of various financial instruments issued in the form of shares that embody an unconditional obligation requiring the issuer to redeem the instrument by transferring its assets at a specified or determinable date (or dates) or upon an event that is certain to occur.\"><span>Mandatorily redeemable financial instruments</span></a> shall be measured initially at <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"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.\"><span>fair value</span></a>. </span></span> </div> </div>","snippet":"Mandatorily redeemable financial instruments shall be measured initially at fair value.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b3e1caa2ec6459e2573cdbefe804093fe6616036e3618b0551002a1f5306812b","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}},{"citation":"480-10-30-2","para":"30-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_64EE7232-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If a conditionally redeemable instrument becomes mandatorily redeemable, upon reclassification the <a href=\"/glossary/i/#issuer\" class=\"term\" title=\"The entity that issued a financial instrument or may be required under the terms of a financial instrument to issue its equity shares.\"><span>issuer</span></a> shall measure that liability initially at fair value and reduce equity by the amount of that initial measure, recognizing no gain or loss. </span></span> </div> </div>","snippet":"If a conditionally redeemable instrument becomes mandatorily redeemable, upon reclassification the issuer shall measure that liability initially at fair value and reduce equity by the amount of that initial measure, reco…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1b45a19818930b5b37afc9766a75820d45c8da2da8bc00d77cebfef495e3de5d","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:89337afd479324afc1506f3fbeb1048b5db72ca731dee92ffe5d3166fab8e663","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}},{"block":null,"heading":"Certain Physically Settled Forward Purchase Contracts","paragraphs":[{"citation":"480-10-30-3","para":"30-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_64EE73A6-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Forward contracts that require <a href=\"/glossary/p/#physical-settlement\" class=\"term\" title=\"A form of settling a financial instrument under which both of the following conditions are met: The party designated in the contract as the buyer delivers the full stated amount of cash or other financial instruments to the seller. The seller delivers the full stated number of shares of stock or other financial instruments or nonfinancial instruments to the buyer.\"><span>physical settlement</span></a> by repurchase of a fixed number of the <a href=\"/glossary/i/#issuer-s-equity-shares\" class=\"term\" title=\"The equity shares of any entity whose financial statements are included in the consolidated financial statements.\"><span>issuer's equity shares</span></a> in exchange for cash shall be measured initially at the fair value of the shares at inception, adjusted for any consideration or unstated rights or privileges. </span></span> </div> </div>","snippet":"Forward contracts that require physical settlement by repurchase of a fixed number of the issuer's equity shares in exchange for cash shall be measured initially at the fair value of the shares at inception, adjusted for…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3dbe6bd6db390ca10b0ec9dd4e8efcd75ba35739b303eacce5489f9cdc632f5d","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}},{"citation":"480-10-30-4","para":"30-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">Two ways to obtain the adjusted fair value include:<ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_64EE74EE-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Determining the amount of cash that would be paid under the conditions specified in the contract if the shares were repurchased immediately </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_64EE762F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Discounting the settlement amount, at the rate implicit at inception after taking into account any consideration or unstated rights or privileges that may have affected the terms of the transaction. </span></span></div></li></ol></div> </div>","snippet":"Two ways to obtain the adjusted fair value include:\n(a) Determining the amount of cash that would be paid under the conditions specified in the contract if the shares were repurchased immediately\n(b) Discounting the sett…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d1f7797abe4182533cc5c7bcecce08ae2d74f13a01392e528951db2d1fa8712c","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}},{"citation":"480-10-30-5","para":"30-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_64EE776A-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Equity shall be reduced by an amount equal to the fair value of the shares at inception. </span></span> </div> </div>","snippet":"Equity shall be reduced by an amount equal to the fair value of the shares at inception.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3c35570a40bdd5f2239bf572c13d86e5d41f384d43a88cac6224445b8523b6c3","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}},{"citation":"480-10-30-6","para":"30-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_64EE789F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Cash (as that term is used in paragraph <a href=\"/asc/480/10/#480-10-30-3\" class=\"xref\">480-10-30-3</a>) includes foreign currency, so physically settled forward purchase contracts in exchange for foreign currency shall be measured as provided in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/480/10/#480-10-30-3\" class=\"xref\">480-10-30-3 through 30-5</a></div> and <a href=\"/asc/480/10/#480-10-35-3\" class=\"xref\">480-10-35-3</a>, then remeasured under Topic <a altsource=\"GUID-ED6493FA-FACA-49EA-BFF9-D8F2E43F43C5.ditamap\" class=\"ditamap\">830</a>. </span></span> </div> </div>","snippet":"Cash (as that term is used in paragraph 480-10-30-3) includes foreign currency, so physically settled forward purchase contracts in exchange for foreign currency shall be measured as provided in paragraphs 480-10-30-3 th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8ea6ae2124cfead693e8fce8c5e52734af4dc6c9a3f2e6f951ad3efeb0851550","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:708dcb3ba4a14dff329b4294bef6a112e56c790bee7f8931413858283da4a29b","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}},{"block":null,"heading":"All Other Financial Instruments","paragraphs":[{"citation":"480-10-30-7","para":"30-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_64EE79E1-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">All other <a href=\"/glossary/f/#financial-instrument\" class=\"term\" title=\"Cash, evidence of an ownership interest in an entity, or a contract that both: Imposes on one entity a contractual obligation either: To deliver cash or another financial instrument to a second entity To exchange other financial instruments on potentially unfavorable terms with the second entity. Conveys to that second entity a contractual right either: To receive cash or another financial instrument from the first entity To exchange other financial instruments on potentially favorable terms with the first entity. The use of the term financial instrument in this definition is recursive (because the term financial instrument is included in it), though it is not circular. The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity. Any number of obligations to deliver financial instruments can be links in a chain that qualifies a particular contract as a financial instrument. Contractual rights and contractual obligations encompass both those that are conditioned on the occurrence of a specified event and those that are not. All contractual rights (contractual obligations) that are financial instruments meet the definition of asset (liability) set forth in FASB Concepts Statement No. 6, Elements of Financial Statements, although some may not be recognized as assets (liabilities) in financial statements—that is, they may be off-balance-sheet—because they fail to meet some other criterion for recognition. For some financial instruments, the right is held by or the obligation is due from (or the obligation is owed to or by) a group of entities rather than a single entity. (P) December 16, 2024; (N) December 16, 2025105-10-65-9Cash, evidence of an ownership interest in an entity, or a contract that both: Imposes on one entity a contractual obligation either: To deliver cash or another financial instrument to a second entity To exchange other financial instruments on potentially unfavorable terms with the second entity. Conveys to that second entity a contractual right either: To receive cash or another financial instrument from the first entity To exchange other financial instruments on potentially favorable terms with the first entity. The use of the term financial instrument in this definition is recursive (because the term financial instrument is included in it), though it is not circular. The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity. Any number of obligations to deliver financial instruments can be links in a chain that qualifies a particular contract as a financial instrument. Contractual rights and contractual obligations encompass both those that are conditioned on the occurrence of a specified event and those that are not. Some contractual rights (contractual obligations) that are financial instruments may not be recognized in financial statements—that is, they may be off-balance-sheet—because they fail to meet some other criterion for recognition. For some financial instruments, the right is held by or the obligation is due from (or the obligation is owed to or by) a group of entities rather than a single entity.\"><span>financial instruments</span></a> recognized under the guidance in Section <a altsource=\"GUID-2DEB7D6D-D0BB-4449-A4E7-B11E67B5CAC9.ditamap\" class=\"ditamap\">480-10-25</a> shall be measured initially at fair value. </span></span> </div> </div>","snippet":"All other financial instruments recognized under the guidance in Section 480-10-25 shall be measured initially at fair value.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d51a3f887b8b3b8bd5b8c1338c3fdc03ae700c4097d7e43047c5ff2e6b7f6eb1","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9d3cb5caccbf095c23e1489bd96e5f8d138d8d97b18270d6524236518d01f162","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a9a461f71fd2640077b2a73446186e9d2e65439f2d851dd0247521d21d84b3f0","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a9a461f71fd2640077b2a73446186e9d2e65439f2d851dd0247521d21d84b3f0","downloaded_from":"2026-09-10T00:35:43.016Z","last_downloaded_at":"2026-09-10T00:35:43.016Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481737","source_sha256":"7a9bbd22f8b858e77f9d2593d866d07bb1d22be73200604531a81d15a8696de9"}}