{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/480/10/#50-disclosure","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":"50","label":"50 Disclosure","anchor":"50-disclosure","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"480-10-50-1","para":"50-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_65232586-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Entities that issue <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 disclose both of the following: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232698-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The nature and terms of the financial instruments </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232797-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The rights and obligations embodied in those instruments, including both: </span></span></div><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">1</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232887-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Settlement alternatives, if any, in the contract </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">2</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_6523296F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The entity that controls the settlement alternatives. </span></span></div></li></ol></li></ol></div></div>","snippet":"Entities that issue financial instruments recognized under the guidance in Section 480-10-25 shall disclose both of the following:\n(a) The nature and terms of the financial instruments\n(b) The rights and obligations embo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3483564979d92be9a45c4403e6e880457fb1bc31013c77b8054f0061cbd5bbad","downloaded_from":"2026-09-10T00:35:52.768Z","last_downloaded_at":"2026-09-10T00:35:52.768Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481648","source_sha256":"c539fcd4dcf68880a2c4e47d73f633a34d304b2dbb70476d6609ff6f14a82fb3"}},{"citation":"480-10-50-2","para":"50-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_65232A56-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Additionally, for all outstanding financial instruments recognized under the guidance in Section <a altsource=\"GUID-2DEB7D6D-D0BB-4449-A4E7-B11E67B5CAC9.ditamap\" class=\"ditamap\">480-10-25</a> and for each settlement alternative, issuers shall disclose all of the following: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232B37-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The amount that would be paid, or the number of <a href=\"/glossary/s/#shares\" class=\"term\" title=\"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.)\"><span>shares</span></a> that would be issued and their <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>, determined under the conditions specified in the contract if the settlement were to occur at the reporting date </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232C10-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">How changes in the fair value 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> would affect those settlement amounts (for example, \"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> is obligated to issue an additional X shares or pay an additional Y dollars in cash for each $1 decrease in the fair value of one share\") </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232CE1-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The maximum amount that the issuer could be required to pay to redeem the instrument by <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>, if applicable </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">d</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232DF4-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The maximum number of shares that could be required to be issued, if applicable </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">e</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232ECA-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">That a contract does not limit the amount that the issuer could be required to pay or the number of shares that the issuer could be required to issue, if applicable </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">f</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65232FA2-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For a forward contract or an option indexed to the issuer's equity shares, all of the following: </span></span></div><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">1</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65233074-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The forward price or option strike price </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">2</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65233174-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The number of issuer's shares to which the contract is indexed </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">3</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_65233240-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The settlement date or dates of the contract, as applicable. </span></span></div></li></ol></li></ol></div></div>","snippet":"Additionally, for all outstanding financial instruments recognized under the guidance in Section 480-10-25 and for each settlement alternative, issuers shall disclose all of the following:\n(a) The amount that would be pa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:01c9e6e0f34df68c7687dbe93520456ab422a8a927a551b442322f9bfe489057","downloaded_from":"2026-09-10T00:35:52.768Z","last_downloaded_at":"2026-09-10T00:35:52.768Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481648","source_sha256":"c539fcd4dcf68880a2c4e47d73f633a34d304b2dbb70476d6609ff6f14a82fb3"}},{"citation":"480-10-50-3","para":"50-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_65233315-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Paragraph <a href=\"/asc/505/10/#505-10-50-3\" class=\"xref\">505-10-50-3</a> requires additional disclosures for actual issuances and settlements that occurred during the accounting period. </span></span></div></div>","snippet":"Paragraph 505-10-50-3 requires additional disclosures for actual issuances and settlements that occurred during the accounting period.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd13d91990b079dea6190f9788ea7251f46fce4ca72f10badab770c9ab43fa82","downloaded_from":"2026-09-10T00:35:52.768Z","last_downloaded_at":"2026-09-10T00:35:52.768Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481648","source_sha256":"c539fcd4dcf68880a2c4e47d73f633a34d304b2dbb70476d6609ff6f14a82fb3"}},{"citation":"480-10-50-4","para":"50-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_652333DC-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Some entities have no equity instruments outstanding but have financial instruments in the form of shares, all of which are <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> required to be classified as liabilities. </span></span><span class=\"sfragment\" id=\"sfr_652334A2-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Those entities shall disclose the components of the liability that would otherwise be related to shareholders' interest and other comprehensive income (if any) subject to the redemption feature (for example, par value and other paid-in amounts of mandatorily redeemable instruments shall be disclosed separately from the amount of retained earnings or accumulated deficit). </span></span></div></div>","snippet":"Some entities have no equity instruments outstanding but have financial instruments in the form of shares, all of which are mandatorily redeemable financial instruments required to be classified as liabilities. Those ent…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05e381390378827fe84e445cc50b1840b46ee59428c42fb3069083fde70836e2","downloaded_from":"2026-09-10T00:35:52.768Z","last_downloaded_at":"2026-09-10T00:35:52.768Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481648","source_sha256":"c539fcd4dcf68880a2c4e47d73f633a34d304b2dbb70476d6609ff6f14a82fb3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bdbbdb5449824615f42841c7157a48fe6ef31197444ad71c27d78f25ae896ef8","downloaded_from":"2026-09-10T00:35:52.768Z","last_downloaded_at":"2026-09-10T00:35:52.768Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481648","source_sha256":"c539fcd4dcf68880a2c4e47d73f633a34d304b2dbb70476d6609ff6f14a82fb3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:40297b66d3ea2f389ecbaeccec048387c1af12b277ce8a2c50e7a0dbeff41bf2","downloaded_from":"2026-09-10T00:35:52.768Z","last_downloaded_at":"2026-09-10T00:35:52.768Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481648","source_sha256":"c539fcd4dcf68880a2c4e47d73f633a34d304b2dbb70476d6609ff6f14a82fb3"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:40297b66d3ea2f389ecbaeccec048387c1af12b277ce8a2c50e7a0dbeff41bf2","downloaded_from":"2026-09-10T00:35:52.768Z","last_downloaded_at":"2026-09-10T00:35:52.768Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481648","source_sha256":"c539fcd4dcf68880a2c4e47d73f633a34d304b2dbb70476d6609ff6f14a82fb3"}}