{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/815/15/#35-subsequent-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"815","topic_title":"Derivatives and Hedging","subtopic":"815-15","subtopic_title":"Embedded Derivatives","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Hybrid Instruments That Are Not Separated","paragraphs":[{"citation":"815-15-35-1","para":"35-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_9F3578FE-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If an entity irrevocably elected to initially and subsequently measure a hybrid financial instrument in its entirety at <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.\"><span>fair value</span></a>, changes in fair value for that hybrid financial instrument shall be recognized in earnings. </span></span>Paragraph <a href=\"/asc/815/20/#815-20-25-71\" class=\"xref\">815-20-25-71(a)(3)</a> states that the entire contract shall not be designated as a hedging instrument pursuant to Subtopic <a altsource=\"GUID-833E0BEF-54EA-4A70-A256-093762A05A13.ditamap\" class=\"ditamap\">815-20</a>.</div></div>","snippet":"If an entity irrevocably elected to initially and subsequently measure a hybrid financial instrument in its entirety at fair value, changes in fair value for that hybrid financial instrument shall be recognized in earnin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:68dcaca915ef06e8e81ae009c163c7406b8d95b357fe0119cb693c73f0df3fa7","downloaded_from":"2026-09-10T01:36:12.754Z","last_downloaded_at":"2026-09-10T01:36:12.754Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481051","source_sha256":"a055fd2af09ee263d74d58aa8fd68374400abf230d5e9034045aa54eddc57cbe"}},{"citation":"815-15-35-2","para":"35-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_9F357A7D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If an entity cannot reliably identify and measure the <a href=\"/glossary/e/#embedded-derivative\" class=\"term\" title=\"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.\"><span>embedded derivative</span></a> that paragraph <a href=\"/asc/815/15/#815-15-25-1\" class=\"xref\">815-15-25-1</a> requires be separated from the host contract, the entire contract shall be measured subsequently at fair value with gain or loss recognized in earnings. Paragraph <a href=\"/asc/815/20/#815-20-25-71\" class=\"xref\">815-20-25-71(a)(4)</a> states that the entire contract shall not be designated as a hedging instrument pursuant to Subtopic <a altsource=\"GUID-833E0BEF-54EA-4A70-A256-093762A05A13.ditamap\" class=\"ditamap\">815-20</a>. </span></span></div></div>","snippet":"If an entity cannot reliably identify and measure the embedded derivative that paragraph 815-15-25-1 requires be separated from the host contract, the entire contract shall be measured subsequently at fair value with gai…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1a6980c22522b3331db5491dd4de921ba37e96b61978bae5f9c29288d8d8a8b3","downloaded_from":"2026-09-10T01:36:12.754Z","last_downloaded_at":"2026-09-10T01:36:12.754Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481051","source_sha256":"a055fd2af09ee263d74d58aa8fd68374400abf230d5e9034045aa54eddc57cbe"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dcf19681b15396c92c46b3706ada650b701bf1c67242a614c6f51deb82e76d01","downloaded_from":"2026-09-10T01:36:12.754Z","last_downloaded_at":"2026-09-10T01:36:12.754Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481051","source_sha256":"a055fd2af09ee263d74d58aa8fd68374400abf230d5e9034045aa54eddc57cbe"}},{"block":null,"heading":"Hybrid Instruments That Are Separated","paragraphs":[{"citation":"815-15-35-2A","para":"35-2A","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_9F357BF0-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Paragraph <a href=\"/asc/815/15/#815-15-25-1\" class=\"xref\">815-15-25-1</a> requires that an embedded derivative be separated from the host contract and accounted for as a derivative instrument pursuant to Subtopic <a altsource=\"GUID-F827BBCC-41BF-479A-9C1D-5A5E98904787.ditamap\" class=\"ditamap\">815-10</a> if and only if all of the criteria in paragraph <a href=\"/asc/815/15/#815-15-25-1\" class=\"xref\">815-15-25-1</a> are met. </span></span></div></div>","snippet":"Paragraph 815-15-25-1 requires that an embedded derivative be separated from the host contract and accounted for as a derivative instrument pursuant to Subtopic 815-10 if and only if all of the criteria in paragraph 815-…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3d1885f4f98514edc500afdc144521a9ee62f167b76ac7cd2a6fb8861bafb952","downloaded_from":"2026-09-10T01:36:12.754Z","last_downloaded_at":"2026-09-10T01:36:12.754Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481051","source_sha256":"a055fd2af09ee263d74d58aa8fd68374400abf230d5e9034045aa54eddc57cbe"}},{"citation":"815-15-35-3","para":"35-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_9F357D49-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the host contract component of a <a href=\"/glossary/h/#hybrid-instrument\" class=\"term\" title=\"A contract that embodies both an embedded derivative and a host contract.\"><span>hybrid instrument</span></a> is reported at fair value with changes in fair value recognized in earnings or <a href=\"/glossary/o/#other-comprehensive-income\" class=\"term\" title=\"Revenues, expenses, gains, and losses that under generally accepted accounting principles (GAAP) are included in comprehensive income but excluded from net income.\"><span>other comprehensive income</span></a>, then the sum of the fair values of the host contract component and the embedded derivative shall not exceed the overall fair value of the hybrid instrument. </span></span></div></div>","snippet":"If the host contract component of a hybrid instrument is reported at fair value with changes in fair value recognized in earnings or other comprehensive income, then the sum of the fair values of the host contract compon…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e87d01812b8a9eaa8c5f557da83d9b9327bb9cbfb9b5c5a151fb19400044fa0","downloaded_from":"2026-09-10T01:36:12.754Z","last_downloaded_at":"2026-09-10T01:36:12.754Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481051","source_sha256":"a055fd2af09ee263d74d58aa8fd68374400abf230d5e9034045aa54eddc57cbe"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3c46fbb9a4855b6b32954fad1416bdcf9ad3f9576d6bb05f2a5b05cb5ea5abb6","downloaded_from":"2026-09-10T01:36:12.754Z","last_downloaded_at":"2026-09-10T01:36:12.754Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481051","source_sha256":"a055fd2af09ee263d74d58aa8fd68374400abf230d5e9034045aa54eddc57cbe"}},{"block":null,"heading":"Embedded Conversion Option That No Longer Meets Bifurcation Criteria","paragraphs":[{"citation":"815-15-35-4","para":"35-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_9F357E70-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If an embedded conversion option in a convertible debt instrument no longer meets the bifurcation criteria in this Subtopic, an issuer shall account for the previously bifurcated conversion option by reclassifying the carrying amount of the liability for the conversion option (that is, its fair value on the date of reclassification) to shareholders' equity. </span></span><span class=\"sfragment\" id=\"sfr_9F357F8D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Any debt discount recognized when the conversion option was bifurcated from the convertible debt instrument shall continue to be amortized. </span></span></div></div>","snippet":"If an embedded conversion option in a convertible debt instrument no longer meets the bifurcation criteria in this Subtopic, an issuer shall account for the previously bifurcated conversion option by reclassifying the ca…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:86cd8f1828ff3c8165c617f0b23c741906973c5cc929eceab2f668217762d1f7","downloaded_from":"2026-09-10T01:36:12.754Z","last_downloaded_at":"2026-09-10T01:36:12.754Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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