{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/505/10/#35-subsequent-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":"505","topic_title":"Equity","subtopic":"505-10","subtopic_title":"Overall","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"505-10-35-1","para":"35-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_FC2BE155-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If convertible preferred stock is </span></span><span class=\"sfragment\" id=\"sfr_FC2BE2A4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">required to be redeemed </span></span><span class=\"sfragment\" id=\"sfr_FC2BE39D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">once the conversion feature expires, </span></span><span class=\"sfragment\" id=\"sfr_FC2BE48E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">the financial instrument becomes a liability under the guidance in Topic <a altsource=\"GUID-AE097C79-B098-4CDF-AD11-A6A27694968A.ditamap\" class=\"ditamap\">480</a> upon expiration of the conversion </span></span><span class=\"sfragment\" id=\"sfr_FC2BE664-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">feature </span></span><span class=\"sfragment\" id=\"sfr_FC2BE766-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">and paragraph <a href=\"/asc/480/10/#480-10-30-2\" class=\"xref\">480-10-30-2</a> requires the issuer to reclassify an instrument that becomes mandatorily redeemable as a liability, measured initially at fair value with a corresponding reduction of equity (no gain or loss is to be recognized). </span></span><span class=\"sfragment\" id=\"sfr_FC2BE855-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">That may entail an adjustment to paid-in capital if, upon reclassification, the fair value of the liability differs from the carrying amount of the previously convertible </span></span><span class=\"sfragment\" id=\"sfr_FC2BE918-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">preferred stock. </span></span><span class=\"sfragment\" id=\"sfr_FC2BE9E8-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">That financial instrument would be subsequently measured under the provisions of Topic <a altsource=\"GUID-AE097C79-B098-4CDF-AD11-A6A27694968A.ditamap\" class=\"ditamap\">480</a>. </span></span></div></div>","snippet":"If convertible preferred stock is required to be redeemed once the conversion feature expires, the financial instrument becomes a liability under the guidance in Topic 480 upon expiration of the conversion feature and pa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a49d0f26c1373b5a25ee90562d3bb00b549880e7fe0a2e0f93cfd7e26004343e","downloaded_from":"2026-09-10T00:36:48.162Z","last_downloaded_at":"2026-09-10T00:36:48.162Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481171","source_sha256":"09d8b3888d6ebf9b6a2850d19e814c336bb68a007b05df3aa4094709b05dec2c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dc1deeb5f194d84dfa345360c9d4fc79d22eed39fe4dcf606bf48c04d6a52155","downloaded_from":"2026-09-10T00:36:48.162Z","last_downloaded_at":"2026-09-10T00:36:48.162Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481171","source_sha256":"09d8b3888d6ebf9b6a2850d19e814c336bb68a007b05df3aa4094709b05dec2c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:617bbc72b624b8f2a8b915edfba5af6df1ecc4fa66fbe886ea7072820f3f4e6a","downloaded_from":"2026-09-10T00:36:48.162Z","last_downloaded_at":"2026-09-10T00:36:48.162Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481171","source_sha256":"09d8b3888d6ebf9b6a2850d19e814c336bb68a007b05df3aa4094709b05dec2c"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:617bbc72b624b8f2a8b915edfba5af6df1ecc4fa66fbe886ea7072820f3f4e6a","downloaded_from":"2026-09-10T00:36:48.162Z","last_downloaded_at":"2026-09-10T00:36:48.162Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481171","source_sha256":"09d8b3888d6ebf9b6a2850d19e814c336bb68a007b05df3aa4094709b05dec2c"}}