# ASC 505-10-45: Equity — Overall — 45 Other Presentation Matters

Source: FASB Accounting Standards Codification, Basic View

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## ASC 505-10-45: 45 Other Presentation Matters

[Read section](https://asc.understandingaccounting.org/asc/505/10/#45-other-presentation-matters)

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##### [505-10-45-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-1)

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This Section provides guidance related to whether an entity shall report a note receivable arising from the issuance of equity interests either as a reduction of shareholders' equity or as an asset. Guidance is also provided related to appropriations of retained earnings.

#### Receivables for Issuance of Equity

##### [505-10-45-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-2)

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An entity may receive a note, rather than cash, as a contribution to its equity. The transaction may be a sale of capital stock or a contribution to paid-in capital. Reporting the note as an asset is generally not appropriate, except in very limited circumstances in which there is substantial evidence of ability and intent to pay within a reasonably short period of time, for example, as discussed for public entities in paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1) (paragraphs 27 through 29), which requires a deduction of the receivable from equity. However, such notes may be recorded as an asset if collected in cash before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25).

#### Appropriations of Retained Earnings

##### [505-10-45-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-3)

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Appropriation of retained earnings is permitted, provided that it is shown within the shareholders' equity section of the balance sheet and is clearly identified as an appropriation of retained earnings.

##### [505-10-45-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-4)

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Costs or losses shall not be charged to an appropriation of retained earnings, and no part of the appropriation shall be transferred to income.