# ASC 815-10-25: Derivatives and Hedging — Overall — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/815/10/#25-recognition) 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): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:18ca49cb5ebe46e61a98c66aac9a3731d4717c68af608baf55aae571ad1a8eb0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/815/10/#25-recognition) SEC content: no ##### [815-10-25-1](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:e311547c6cef103fe99aea2619de4dbc8c086e93554dab916051d789cbcceaf2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall recognize all of its [derivative instruments](https://asc.understandingaccounting.org/glossary/d/#derivative-instrument "Paragraphs 815-10-15-83815-10-15-84815-10-15-85815-10-15-86815-10-15-87815-10-15-88815-10-15-89815-10-15-90815-10-15-91815-10-15-92815-10-15-93815-10-15-94815-10-15-95815-10-15-96815-10-15-97815-10-15-98815-10-15-99815-10-15-100815-10-15-101815-10-15-102815-10-15-103815-10-15-104815-10-15-105815-10-15-106815-10-15-107815-10-15-108815-10-15-109815-10-15-110815-10-15-111815-10-15-112815-10-15-113815-10-15-114815-10-15-115815-10-15-116815-10-15-117815-10-15-118815-10-15-119815-10-15-120815-10-15-121815-10-15-122815-10-15-123815-10-15-124815-10-15-125815-10-15-126815-10-15-127815-10-15-128815-10-15-129815-10-15-130815-10-15-131815-10-15-132815-10-15-133815-10-15-134815-10-15-135815-10-15-136815-10-15-137815-10-15-138815-10-15-139 define the term derivative instrument.") in its statement of financial position as either assets or liabilities depending on the rights or obligations under the contracts. ##### [815-10-25-2](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:961e9f192de57a9390306ca385896ee9de905f3ce96a81a7b5e712fbcca25511 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a contract that did not meet the definition of a derivative instrument at acquisition by the entity meets the definition of a derivative instrument after acquisition by the entity, the contract shall be recognized immediately as either an asset or liability with the offsetting entry recorded in earnings. ##### [815-10-25-3](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:3a990cf2897915664bcafc21e106ba98024b40a8817650e771371542040216f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a contract ceases to be a derivative instrument pursuant to this Subtopic and an asset or liability had been recorded for that contract, the carrying amount of that contract becomes its cost basis and the entity shall apply other generally accepted accounting principles (GAAP) that are applicable to that contract prospectively from the date that the contract ceased to be a derivative instrument. If the derivative instrument had been designated in a cash flow hedging relationship and a gain or loss is recorded in accumulated other comprehensive income, then the guidance in Sections 815-30-35 and 815-30-40 shall be applied accordingly. ##### [815-10-25-4](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:e879967e56c014983606f68f20de86a2ea6b3605dd37a2d9e014d0636c26d681 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Synthetic instrument accounting](https://asc.understandingaccounting.org/glossary/s/#synthetic-instrument-accounting "Synthetic instrument accounting views two or more distinct financial instruments (generally a cash instrument and a derivative instrument) as having synthetically created another single cash instrument. The objective of synthetic instrument accounting is to present those multiple instruments in the financial statements as if they were the single instrument that the entity sought to create. Paragraph 815-10-25-4 states that synthetic instrument accounting is prohibited.") is prohibited. ##### [815-10-25-5](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:6432e984d375facacc5d19c9c1439f3968798c9990dcf79350406a89920d8f53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remainder of this Section addresses the following matters: 1. a Unit of accounting for recognition purposes 2. b [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). 3. c Forward commitment dollar rolls 4. d Derivative financial instruments subject to 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)."). Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [606-10-65-3](https://asc.understandingaccounting.org/asc/606/10/#606-10-65-3)The remainder of this Section addresses the following matters: 1. a Unit of accounting for recognition purposes 2. b [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). 3. c Forward commitment dollar rolls 4. d Derivative financial instruments subject to 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).") 5. e Share-based noncash consideration from a customer for the transfer of goods or services under Topic 606 6. f Share-based noncash consideration from a counterparty for the transfer of nonfinancial assets or in substance nonfinancial assets under Subtopic 610-20. #### Unit of Accounting for Recognition Purposes ##### [815-10-25-5A](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-5A) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:ff537d0e68213dea9d610bd579bfc7aab917f37dedefed937850bf57d1c7477c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section addresses the following unit of accounting questions with respect to recognition: 1. a Viewing two freestanding derivative instruments as a unit. Whether two or more contracts that are derivative instruments within the scope application of this Subtopic should be viewed as a unit for recognition and other purposes—including for hedge accounting purposes—is addressed beginning in paragraph [815-10-25-6](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-6). 2. b Viewing combinations of options as separate options or as a single forward contract. Whether combinations of options that individually are within the scope application of this Subtopic or Subtopic 815-15 should be viewed as separate options or as a single forward is addressed beginning in paragraph [815-10-25-7](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-7). ##### [815-10-25-5B](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-5B) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:d49cab9af071e4c1312d9ac6993c6b37bea11ec59621a994946021be9c54231e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [815-10-15-4A](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-4A) explains that Section 815-10-15 addresses the following unit of accounting questions on scope: 1. a Viewing a contract as freestanding or embedded. Whether a feature should be viewed as freestanding or embedded in determining the scope application of this Subtopic and Subtopic 815-15 is addressed beginning in paragraph [815-10-15-5](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-5). 2. b Viewing two or more contracts as a unit in applying the scope of this Subtopic. Whether two or more legally separate transactions should be viewed as a unit in determining the scope application of this Subtopic is addressed beginning in paragraph [815-10-15-8](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-8). ##### [815-10-25-6](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:d8f81b36a81f42edf703d93a83aa9997916a5a1265c71e9fd67110af488dd240 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic generally does not provide for the combination of separate financial instruments to be evaluated as a unit, unless, pursuant to paragraph [815-20-25-45](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-45), two or more derivative instruments in combination are jointly designated as a hedging instrument. If separate derivative instruments have all of the following characteristics, judgment shall be applied to determine whether the separate derivative instruments have been entered into in lieu of a structured [transaction](https://asc.understandingaccounting.org/glossary/t/#transaction "An external event involving transfer of something of value (future economic benefit) between two (or more) entities. (See FASB Concepts Statement No. 6, Elements of Financial Statements.)(P) December 16, 2024; (N) December 16, 2025105-10-65-9An external event involving transfer of something of value (future economic benefit) between two (or more) entities.") in an effort to circumvent GAAP: 1. a They are entered into contemporaneously and in contemplation of one another. (See Example 18 \[paragraph [815-10-55-171](https://asc.understandingaccounting.org/asc/815/10/#815-10-55-171)\] for an illustration.) 2. b They are entered into with the same counterparty. 3. c They relate to the same risk. 4. d There is no substantive business purpose for structuring the transactions separately. If such a determination is made, the derivative instruments shall be viewed as a unit. ##### [815-10-25-7](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:ceb2760183788475d2ab6d76c09e50665bddf06d7498ba1152ac4917bbeaa90c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses a combination of two options—one that is a purchased call (put) option and another that is a written put (call) option—having all of the following characteristics: 1. a They have the same strike price, [notional amount](https://asc.understandingaccounting.org/glossary/n/#notional-amount "A number of currency units, shares, bushels, pounds, or other units specified in a derivative instrument. Sometimes other names are used. For example, the notional amount is called a face amount in some contracts."), and exercise date. 2. b They have the same [underlying](https://asc.understandingaccounting.org/glossary/u/#underlying "A specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract). An underlying may be a price or rate of an asset or liability but is not the asset or liability itself. An underlying is a variable that, along with either a notional amount or a payment provision, determines the settlement of a derivative instrument."). 3. c Neither is required to be exercised. ##### [815-10-25-8](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:e5fd8cf0d8d2c2773c8ad4690eeba0b4fb6c301b1dd9c4071565b7cb63148b00 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance addresses such options in two contexts: 1. a Combinations of two freestanding options or a freestanding and embedded option 2. b Combinations of two embedded options. ##### [815-10-25-9](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:bc6f53061db591b22c9f8f9cbd93e6df73463518b09ba236251f13b80b4b1ebc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Derivative instruments that are transferable are, by their nature, separate and distinct contracts. Accordingly, a separate [freestanding](https://asc.understandingaccounting.org/glossary/f/#freestanding-contract "A freestanding contract is entered into either: Separate and apart from any of the entity's other financial instruments or equity transactions In conjunction with some other transaction and is legally detachable and separately exercisable.") purchased call (put) option and written put (call) option with all of the characteristics in paragraph [815-10-25-7](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-7) convey rights and obligations that are distinct whether involving the same or different counterparties and do not warrant bundling as a single forward contract for accounting purposes under this Subtopic by any party to the contracts. (The separate purchased option and written option can be viewed in combination and jointly designated as the hedging instrument pursuant to paragraph [815-20-25-45](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-45).) ##### [815-10-25-9A](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-9A) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:147aa53ca62df5053e38da1a30e3de328aa8231ab0fe93a589c0e7e4fc94c3a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A combination of a freestanding purchased call (put) option and a freestanding or embedded (nontransferable) written put (call) option shall be considered for accounting purposes as separate option contracts, rather than a single forward contract, by both parties to the contracts even though all of the following conditions are met: 1. a The options have the same terms. 2. b The options have the same underlying. 3. c The options are entered into contemporaneously with the same counterparty at inception. ##### [815-10-25-9B](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-9B) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:0d2a09430378896607e0e77d38bb2d29b6ecdeae51e92003b6212446a36a2174 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Both a combination of a freestanding purchased call (put) option and a freestanding or embedded (nontransferable) written put (call) option and a combination of a freestanding written call (put) option and an embedded (nontransferable) purchased put (call) option shall be considered for accounting purposes as separate option contracts, rather than a single forward contract, by both parties to the contracts even though all of the following conditions are met: 1. a The options have the same terms. 2. b The options have the same underlying. 3. c The options are entered into contemporaneously with different counterparties at inception. ##### [815-10-25-10](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:d4f627dce1c531dd3bcb7a424e8a646ad883d355fc46504b91c0d7a64a5dff3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A combination of an embedded (nontransferable) purchased call (put) option and an embedded (nontransferable) written put (call) option in a single [hybrid instrument](https://asc.understandingaccounting.org/glossary/h/#hybrid-instrument "A contract that embodies both an embedded derivative and a host contract.") with all of the characteristics in paragraph [815-10-25-7](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-7)and that are entered into contemporaneously with the same counterparty shall be considered as a single forward contract for purposes of applying the provisions of this Subtopic. The notion of the same counterparty encompasses contracts entered into directly with a single counterparty and contracts entered into with a single party that are structured through an intermediary. (Note that a share of stock being puttable by the holder and callable by the issuer under the same terms does not render the stock mandatorily redeemable under the provisions of Topic 480.) Topic 480 requires that [mandatorily redeemable financial instruments](https://asc.understandingaccounting.org/glossary/m/#mandatorily-redeemable-financial-instrument "Any of various financial instruments issued in the form of shares that embody an unconditional obligation requiring the issuer to redeem the instrument by transferring its assets at a specified or determinable date (or dates) or upon an event that is certain to occur.") be classified as liabilities. ##### [815-10-25-11](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:a834d1618de19941d4923df41e35ab3b3f413090702c6af53a76125c3b44eae3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The embedded options are in substance an embedded forward contract because they meet both of the following conditions: 1. a They convey rights (to the holder) and obligations (to the writer) that are equivalent from an economic and risk perspective to an embedded forward contract. 2. b They cannot be separated from the hybrid instrument in which they are embedded. ##### [815-10-25-12](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:1228abac273aa897d7b61a5147fc14bd6d48de97ff8f515f60cefeac5fe4a251 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Even though neither party is required to exercise its purchased option, the result of the overall structure is a hybrid instrument that will likely be redeemed at a point earlier than its stated maturity. That result is expected by both the hybrid instrument's issuer and investor regardless of whether the embedded feature that triggers the redemption is in the form of two separate options or a single forward contract. ##### [815-10-25-13](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:eb7eb04086c4a3e1c1efefbd2d062b8853dcc35c7b3540683fcd14fa369aeea9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, if either party is required to exercise its purchased option before the stated maturity date of the hybrid instrument, the hybrid instrument shall not be viewed for accounting purposes as containing one or more [embedded derivatives](https://asc.understandingaccounting.org/glossary/e/#embedded-derivative "Implicit or explicit terms that affect some or all of the cash flows or the value of other exchanges required by a contract in a manner similar to a derivative instrument."). In substance, the debtor (issuer) and creditor (investor) have agreed to terms that accelerate the stated maturity of the hybrid instrument and the exercise date of the option is essentially the hybrid instrument's actual maturity date. As a result, it is inappropriate to characterize the hybrid instrument as containing either of the following: 1. a Two embedded option contracts that are exercisable only on the actual maturity date 2. b An embedded forward contract that is a combination of an embedded purchased call (put) and a written put (call) with the same terms. ##### [815-10-25-14](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:f859c326dff2fa44c059d37f4d7eb53c13c4744446f7f544bf74da1376d367b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Forward Commitment Dollar Rolls ##### [815-10-25-15](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:10dfda883df47eabd0b93397f0c4796854bbe4143e7060e84342f75730a80b8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Forward commitment dollar rolls that are not otherwise subject to this Subtopic's provisions shall be recognized as either assets or liabilities depending on the rights or obligations under the contracts. #### Derivative Financial Instruments Subject to a Registration Payment Arrangement ##### [815-10-25-16](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:e16dc09d3ca0cd20e4267dfa0a1b6b44bbb99b9f814fe00d3b6afd8d73f54cae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [825-20-25-2](https://asc.understandingaccounting.org/asc/825/20/#825-20-25-2) and [825-20-30-2](https://asc.understandingaccounting.org/asc/825/20/#825-20-30-2) require that a [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.") subject to a registration payment arrangement be recognized and measured in accordance with other applicable GAAP (for example, this Subtopic) without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement. That is, those paragraphs require that an entity recognize and measure a registration payment arrangement as a separate unit of account from the financial instrument(s) subject to that arrangement. #### Share-Based Noncash Consideration from a Customer for the Transfer of Goods or Services under Topic 606 ##### [815-10-25-16A](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-16A) Pending content: yes Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:252a76b44c2704644dfaf8978e428f2c588ccddac981664c1c198b213b6b76ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [606-10-65-3](https://asc.understandingaccounting.org/asc/606/10/#606-10-65-3)An entity shall not apply the guidance in this Topic to share-based noncash consideration from a customer for the transfer of goods or services unless and until the entity’s right to receive or retain the share-based noncash consideration is unconditional under Topic 606 in accordance with paragraph [606-10-15-3A](https://asc.understandingaccounting.org/asc/606/10/#606-10-15-3A). #### Share-Based Noncash Consideration from a Counterparty for the Transfer of Nonfinancial Assets or In Substance Nonfinancial Assets under Subtopic 610-20 ##### [815-10-25-16B](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-16B) Pending content: yes Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:851325f3f4d935a3e506f941d5fba0228458f79fe56e558f809ef259aab810e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [606-10-65-3](https://asc.understandingaccounting.org/asc/606/10/#606-10-65-3)An entity shall not apply the guidance in this Topic to share-based noncash consideration from a counterparty for the transfer of nonfinancial assets or in substance nonfinancial assets unless and until the entity’s right to receive or retain the share-based noncash consideration is unconditional under Subtopic 610-20 in accordance with paragraph [610-20-15-3A](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-3A). ### Certain Contracts on Debt and Equity Securities ##### [815-10-25-17](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:4423d760ea8a2dc7fb6b6616c6774c46307bd78309ae1f70b0747d32ec8d0ec7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Forward contracts and purchased options on debt securities within the scope of this Subsection (see the [Certain Contracts on Debt and Equity Securities Subsection](https://asc.understandingaccounting.org/asc/815/10/#15-scope-and-scope-exceptions) of Section 815-10-15) shall, at inception, be designated as held to maturity, available for sale, or [trading](https://asc.understandingaccounting.org/glossary/t/#trading "An activity involving securities sold in the near term and held for only a short period of time. The term trading contemplates a holding period generally measured in hours and days rather than months or years. See paragraph 948-310-40-1 for clarification of the term trading for a mortgage banking entity.") in a manner consistent with the accounting prescribed by Topic 320 for debt securities. Such forward and option contracts are not eligible to be hedging instruments. ##### [815-10-25-18](https://asc.understandingaccounting.org/asc/815/10/#815-10-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:04.738Z to 2026-09-10T01:35:04.738Z Record version: sha256:db4931c03a1a5e5f401c879bef7dbc8dab78b0d9dae1d13e3e93d58c39c51627 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Forward contracts and purchased options on equity securities within the scope of this Subsection (see the [Certain Contracts on Debt and Equity Securities Subsection](https://asc.understandingaccounting.org/asc/815/10/#15-scope-and-scope-exceptions) of Section 815-10-15) shall, at inception, be recognized in a manner consistent with the accounting prescribed by Topic 321 for equity securities. Such forward and option contracts are not eligible to be hedging instruments.