# ASC 810-30-35: Consolidation — Research and Development Arrangements — 35 Subsequent Measurement

Source: FASB Accounting Standards Codification, Basic View

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## ASC 810-30-35: 35 Subsequent Measurement

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##### [810-30-35-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-35-1)

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If there is a purchase option, the [sponsor](https://asc.understandingaccounting.org/glossary/s/#sponsor "An entity that capitalizes a research and development arrangement.") of a research and development arrangement shall account for the exercise of the option to acquire the new entity's Class A common stock like the acquisition of [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest."). That is, the excess of the option exercise price over the carrying amount of the new entity's Class A common stock should be allocated to the assets acquired (generally, in-process or completed research and development) and liabilities assumed (if any). However, if the sponsor does not exercise the purchase option, the new entity's Class A common stock should be reclassified to additional paid-in capital upon expiration of the option as an adjustment to the initial dividend. Example 1 (see paragraph [810-30-55-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-55-1)) provides an illustration of the application of this guidance to a research and development arrangement.