# ASC 505-10-60: Equity — Overall — 60 Relationships Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/505/10/#60-relationships) 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): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:bf7dedd046dba0dfbd8aed02b8d82f9e1322ee8937bc31b7f658d5bada26bdca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/505/10/#60-relationships) SEC content: no #### Comprehensive Income ##### [505-10-60-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:ec22c78950a518ad7f4ca9374db91258340bb30f97aed48b576f0ac012ee3734 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the required presentation and disclosure related to other comprehensive income, see paragraphs [220-10-45-1 through 45-17](https://asc.understandingaccounting.org/asc/220/10/#220-10-45-1) . #### Debt ##### [505-10-60-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:53ae8885b1ce9026991d42a6f30a0e8999c7d62bcbec2d127a2916e9199dbfb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [505-10-60-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:301e3074135a85bc7a12f4a40508092a0b6e102cd8ee2233049b7fc0d7cde317 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the need to allocate proceeds from the sale of debt with stock purchase warrants to the debt and the warrants, see Subtopic 470-20. #### Distinguishing Liabilities from Equity ##### [505-10-60-3A](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-3A) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:28c4bd447f7d17fee257e9b62a855f5d1d0e5d166d18453510cf9ea93fd1500a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on whether a specific financial instrument shall be classified as equity or outside of the equity classification, see Topic 480. #### Consolidation ##### [505-10-60-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:6ddabf603fa0487a81bdc8b49c13d3333fe0d057b8a0ce2b4db4300feffb40ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the treatment of shares of a parent held by its subsidiary in the consolidated balance sheet, see paragraph [810-10-45-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-5). For guidance on the accounting for the purchase (early extinguishment) of a wholly owned subsidiary's mandatorily redeemable [preferred stock](https://asc.understandingaccounting.org/glossary/p/#preferred-stock "A security that has preferential rights compared to common stock."), see paragraphs [810-10-40-1 through 40-2A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-1). #### Derivatives and Hedging ##### [505-10-60-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:9541d5bd9767eb2628c687baa851771a3145224fb30f2e4c2a77985b2b942582 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the potential classification of an embedded derivative as an equity instrument, see Topic 815. #### Financial Instruments ##### [505-10-60-6](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:5ccc2455dce288bbbb42b5572288884efbe529d7bb884d6464a21454d5c15a55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the accounting for a [registration payment arrangement](https://asc.understandingaccounting.org/glossary/r/#registration-payment-arrangement "An arrangement with both of the following characteristics: It specifies that the issuer will endeavor to do either of the following: File a registration statement for the resale of specified financial instruments and/or for the resale of equity shares that are issuable upon exercise or conversion of specified financial instruments and for that registration statement to be declared effective by the U.S. Securities and Exchange Commission (SEC) (or other applicable securities regulator if the registration statement will be filed in a foreign jurisdiction) within a specified grace period Maintain the effectiveness of the registration statement for a specified period of time (or in perpetuity). It requires the issuer to transfer consideration to the counterparty if the registration statement for the resale of the financial instrument or instruments subject to the arrangement is not declared effective or if effectiveness of the registration statement is not maintained. That consideration may be payable in a lump sum or it may be payable periodically, and the form of the consideration may vary. For example, the consideration may be in the form of cash, equity instruments, or adjustments to the terms of the financial instrument or instruments that are subject to the registration payment arrangement (such as an increased interest rate on a debt instrument)."), see Subtopic 825-20. ##### [505-10-60-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:e0e669135e58bd7c244b48b1d0273f5b66726cd37ca828e10737f929fd89f48b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the accounting for an equity-classified freestanding [financial instrument](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.") with a [down round feature](https://asc.understandingaccounting.org/glossary/d/#down-round-feature "A feature in a financial instrument that reduces the strike price of an issued financial instrument if the issuer sells shares of its stock for an amount less than the currently stated strike price of the issued financial instrument or issues an equity-linked financial instrument with a strike price below the currently stated strike price of the issued financial instrument. A down round feature may reduce the strike price of a financial instrument to the current issuance price, or the reduction may be limited by a floor or on the basis of a formula that results in a price that is at a discount to the original exercise price but above the new issuance price of the shares, or may reduce the strike price to below the current issuance price. A standard antidilution provision is not considered a down round feature."), see Topic 260 on earnings per share. ##### [505-10-60-8](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:cff47bb5b14f503411573801afd790e2834409bdc221e2a84be02d1a9b744349 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange, see Subtopic 815-40 on contracts in entity's own equity.