# ASC 480-10-30: Distinguishing Liabilities from Equity — Overall — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/480/10/#30-initial-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:35:43.016Z to 2026-09-10T00:35:43.016Z Record version: sha256:a9a461f71fd2640077b2a73446186e9d2e65439f2d851dd0247521d21d84b3f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 480-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/480/10/#30-initial-measurement) SEC content: no #### Mandatorily Redeemable Financial Instruments ##### [480-10-30-1](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:43.016Z to 2026-09-10T00:35:43.016Z Record version: sha256:b3e1caa2ec6459e2573cdbefe804093fe6616036e3618b0551002a1f5306812b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Mandatorily redeemable financial instruments](https://asc.understandingaccounting.org/glossary/m/#mandatorily-redeemable-financial-instrument "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.") shall be measured initially at [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."). ##### [480-10-30-2](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:43.016Z to 2026-09-10T00:35:43.016Z Record version: sha256:1b45a19818930b5b37afc9766a75820d45c8da2da8bc00d77cebfef495e3de5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a conditionally redeemable instrument becomes mandatorily redeemable, upon reclassification the [issuer](https://asc.understandingaccounting.org/glossary/i/#issuer "The entity that issued a financial instrument or may be required under the terms of a financial instrument to issue its equity shares.") shall measure that liability initially at fair value and reduce equity by the amount of that initial measure, recognizing no gain or loss. #### Certain Physically Settled Forward Purchase Contracts ##### [480-10-30-3](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:43.016Z to 2026-09-10T00:35:43.016Z Record version: sha256:3dbe6bd6db390ca10b0ec9dd4e8efcd75ba35739b303eacce5489f9cdc632f5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Forward contracts that require [physical settlement](https://asc.understandingaccounting.org/glossary/p/#physical-settlement "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.") by repurchase of a fixed number of the [issuer's equity shares](https://asc.understandingaccounting.org/glossary/i/#issuer-s-equity-shares "The equity shares of any entity whose financial statements are included in the consolidated financial statements.") 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. ##### [480-10-30-4](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:43.016Z to 2026-09-10T00:35:43.016Z Record version: sha256:d1f7797abe4182533cc5c7bcecce08ae2d74f13a01392e528951db2d1fa8712c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Two ways to obtain the adjusted fair value include: 1. a Determining the amount of cash that would be paid under the conditions specified in the contract if the shares were repurchased immediately 2. b 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. ##### [480-10-30-5](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:43.016Z to 2026-09-10T00:35:43.016Z Record version: sha256:3c35570a40bdd5f2239bf572c13d86e5d41f384d43a88cac6224445b8523b6c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Equity shall be reduced by an amount equal to the fair value of the shares at inception. ##### [480-10-30-6](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:43.016Z to 2026-09-10T00:35:43.016Z Record version: sha256:8ea6ae2124cfead693e8fce8c5e52734af4dc6c9a3f2e6f951ad3efeb0851550 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash (as that term is used in paragraph [480-10-30-3](https://asc.understandingaccounting.org/asc/480/10/#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 through 30-5](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-3) and [480-10-35-3](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-3), then remeasured under Topic 830. #### All Other Financial Instruments ##### [480-10-30-7](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:43.016Z to 2026-09-10T00:35:43.016Z Record version: sha256:d51a3f887b8b3b8bd5b8c1338c3fdc03ae700c4097d7e43047c5ff2e6b7f6eb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All other [financial instruments](https://asc.understandingaccounting.org/glossary/f/#financial-instrument "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.") recognized under the guidance in Section 480-10-25 shall be measured initially at fair value.