# ASC 480-10-35: Distinguishing Liabilities from Equity — Overall — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/480/10/#35-subsequent-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): 2026-09-10T00:35:44.796Z to 2026-09-10T00:35:44.796Z Record version: sha256:89fd0fbff9f0923f4e628a238fd78b80398f218a5d350feca5360f1d85839e24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 480-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/480/10/#35-subsequent-measurement) SEC content: no #### Derivative Financial Instruments ##### [480-10-35-1](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:44.796Z to 2026-09-10T00:35:44.796Z Record version: sha256:cf6274236eb984619ea63f3fa2bc1ec50f495aaa2ca53ba3909616702f7847f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") within the scope of Topic 815 shall be measured subsequently as required by the provisions of that Topic. ##### [480-10-35-2](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:44.796Z to 2026-09-10T00:35:44.796Z Record version: sha256:4f0cfb67a9dfbb3027a486ad7a0d034f9321b58d7962031f68f8499804852294 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Certain Physically Settled Forward Purchase Contracts and Mandatorily Redeemable Financial Instruments ##### [480-10-35-3](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:44.796Z to 2026-09-10T00:35:44.796Z Record version: sha256:964f7fae2e7cfc14f6330b93d9ade4ef6cb346f04c31e85224034c12146b8a7d 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 and [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 subsequently in either of the following ways: 1. a If both the amount to be paid and the settlement date are fixed, those instruments shall be measured subsequently at the present value of the amount to be paid at settlement, accruing interest cost using the rate implicit at inception. 2. b If either the amount to be paid or the settlement date varies based on specified conditions, those instruments shall be measured subsequently at the amount of cash that would be paid under the conditions specified in the contract if settlement occurred at the reporting date, recognizing the resulting change in that amount from the previous reporting date as interest cost. ##### [480-10-35-4](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:44.796Z to 2026-09-10T00:35:44.796Z Record version: sha256:3cdca14a79d75d5858434dab9ede08617e53745e333a611df342426d45c98c85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash (as that term is used in the preceding paragraph) includes foreign currency, so physically settled forward purchase contracts in exchange for foreign currency shall be measured as provided in the preceding paragraph then remeasured under Topic 830. #### Contingent Consideration in a Business Combination ##### [480-10-35-4A](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-4A) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:44.796Z to 2026-09-10T00:35:44.796Z Record version: sha256:d8bf82789371dd38c9a769b82a54654e3100fb188e84591358843297517d4215 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contingent consideration issued in a business combination that is classified as a liability in accordance with the requirements of this Topic shall be subsequently measured at fair value in accordance with [805-30-35-1](https://asc.understandingaccounting.org/asc/805/30/#805-30-35-1). #### All Other Financial Instruments ##### [480-10-35-5](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:44.796Z to 2026-09-10T00:35:44.796Z Record version: sha256:db4b34ab80918949850b557f3993d9c9a65569b66beb19451302b7e62075d3fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All other financial instruments recognized under the guidance in Section 480-10-25 shall be measured subsequently 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.") with changes in fair value recognized in earnings, unless either this Subtopic or another Subtopic specifies another measurement attribute.