# ASC 505-10-35: Equity — Overall — 35 Subsequent Measurement

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/505/10/#35-subsequent-measurement)

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## ASC 505-10-35: 35 Subsequent Measurement

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##### [505-10-35-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-35-1)

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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 paragraph [480-10-30-2](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-2) 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). 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 preferred stock. That financial instrument would be subsequently measured under the provisions of Topic 480.