# ASC 480-10-45: Distinguishing Liabilities from Equity — Overall — 45 Other Presentation Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/480/10/#45-other-presentation-matters) 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): 2026-09-10T00:35:48.904Z to 2026-09-10T00:35:48.904Z Record version: sha256:15a79fed363a6665aa9027545cc7a4727319ac9019178b51d90a20d637f06da5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 480-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/480/10/#45-other-presentation-matters) SEC content: no #### Presentation ##### [480-10-45-1](https://asc.understandingaccounting.org/asc/480/10/#480-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:48.904Z to 2026-09-10T00:35:48.904Z Record version: sha256:d29db155fbdf7e47e7ded4db3cd9639dc558ab17d5aab4a2804121f5cfd19afe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Items within the scope of this Subtopic shall be presented as liabilities (or assets in some circumstances). Those items shall not be presented between the liabilities section and the equity section of the statement of financial position. ##### [480-10-45-2](https://asc.understandingaccounting.org/asc/480/10/#480-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:48.904Z to 2026-09-10T00:35:48.904Z Record version: sha256:1d17a42090affb1ff2b4c38d2807e630c3bb74e81a69b0efc0304cde5f6af6a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities that have no equity instruments outstanding but have [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.") issued in the form of [shares](https://asc.understandingaccounting.org/glossary/s/#shares "Shares includes various forms of ownership that may not take the legal form of securities (for example, partnership interests), as well as other interests, including those that are liabilities in substance but not in form. (Business entities have interest holders that are commonly known by specialized names, such as stockholders, partners, and proprietors, and by more general names, such as investors, but all are encompassed by the descriptive term owners. Equity of business entities is, thus, commonly known by several names, such as owners' equity, stockholders' equity, ownership, equity capital, partners' capital, and proprietorship. Some entities [for example, mutual organizations] do not have stockholders, partners, or proprietors in the usual sense of those terms but do have participants whose interests are essentially ownership interests, residual interests, or both.)"), all of which are [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.") required to be classified as liabilities, shall describe those instruments as shares subject to mandatory redemption in statements of financial position to distinguish those instruments from other liabilities. Similarly, payments to holders of such instruments and related accruals shall be presented separately from payments to and interest due to other creditors in statements of cash flows and income. ##### [480-10-45-2A](https://asc.understandingaccounting.org/asc/480/10/#480-10-45-2A) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:48.904Z to 2026-09-10T00:35:48.904Z Record version: sha256:d54c09d88ce1f4a6f19d68901c81e6e74880cc69b69dc60502366b1dcbc4d7b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some entities have outstanding shares, all of which are subject to mandatory redemption on the occurrence of events that are certain to occur. The redemption price may be a fixed amount or may vary based on specified conditions. If all of an entity's shares are subject to mandatory redemption and the entity is not subject to the deferral in paragraphs [480-10-15-7A through 15-7F](https://asc.understandingaccounting.org/asc/480/10/#480-10-15-7A) , an excess of the redemption price of the shares over the entity's equity balance shall be reported as an excess of liabilities over assets (a deficit), even though the mandatorily redeemable shares are reported as a liability. If the redemption price of the mandatorily redeemable shares is less than the book value of those shares, the entity should report the excess of that book value over the liability reported for the mandatorily redeemable shares as an excess of assets over liabilities (equity). ##### [480-10-45-2B](https://asc.understandingaccounting.org/asc/480/10/#480-10-45-2B) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:48.904Z to 2026-09-10T00:35:48.904Z Record version: sha256:34900277878a7c6e89160316be6726074b4baadae5407d9dba6e4c334bf324f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Depending on the settlement terms, this Subtopic requires that mandatorily redeemable shares that are not subject to the deferral in paragraphs [480-10-15-7A through 15-7F](https://asc.understandingaccounting.org/asc/480/10/#480-10-15-7A) be measured at either the present value of the amount to be paid at settlement or 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 as interest cost (change in redemption amount). ##### [480-10-45-3](https://asc.understandingaccounting.org/asc/480/10/#480-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:48.904Z to 2026-09-10T00:35:48.904Z Record version: sha256:3a3118fdc2a71f8976d25a711581a87f32e1ceee2607ae6c33a7653c37782663 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any amounts paid or to be paid to holders of the contracts discussed in paragraph [480-10-35-3](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-3) in excess of the initial measurement amount shall be reflected in interest cost. #### EPS ##### [480-10-45-4](https://asc.understandingaccounting.org/asc/480/10/#480-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:35:48.904Z to 2026-09-10T00:35:48.904Z Record version: sha256:74f130a5902c477c03b245bc96c02283abf951a47c9aa2fb9c316707b772360a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities that have issued mandatorily redeemable shares of common stock or entered into 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.") of common stock in exchange for cash shall exclude the common shares that are to be redeemed or repurchased in calculating basic and diluted earnings per share (EPS). Any amounts, including contractual (accumulated) dividends and participation rights in undistributed earnings, attributable to shares that are to be redeemed or repurchased that have not been recognized as interest costs in accordance with paragraph [480-10-35-3](https://asc.understandingaccounting.org/asc/480/10/#480-10-35-3) shall be deducted in computing income available to common shareholders (the numerator of the EPS calculation), consistently with the two-class method set forth in paragraphs [260-10-45-60 through 45-70](https://asc.understandingaccounting.org/asc/260/10/#260-10-45-60) .