{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/815/40/#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":"815-40","subtopic_title":"Contracts in Entity's Own Equity","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Overall","paragraphs":[{"citation":"815-40-35-1","para":"35-1","html":"
All contracts shall be subsequently accounted for based on the current classification and the assumed or required settlement method in Section 815-40-15 or Section 815-40-25 as follows.
","snippet":"All contracts shall be subsequently accounted for based on the current classification and the assumed or required settlement method in Section 815-40-15 or Section 815-40-25 as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:14c52b2638d94d2d9998e2db32415cbd4f35a50fe2304ef5f6801db600aa2fc8","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-2","para":"35-2","html":"
Contracts that are initially classified as equity under Section 815-40-25 shall be accounted for in permanent equity as long as those contracts continue to be classified as equity. Subsequent changes in fair value shall not be recognized as long as the contracts continue to be classified as equity. Both of the following shall be reported in permanent equity:
  1. a
    Contracts that require that the entity deliver shares as part of a physical settlement or a net share settlement
  2. b
    Contracts that give the entity a choice of either of the following:
    1. 1
      Net cash settlement or settlement in shares (including net share settlement and physical settlement that requires that the entity deliver shares)
    2. 2
      Either net share settlement or physical settlement that requires that the entity deliver cash.
","snippet":"Contracts that are initially classified as equity under Section 815-40-25 shall be accounted for in permanent equity as long as those contracts continue to be classified as equity. Subsequent changes in fair value shall …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e781ddded8cd223cd356544bff285185097ff6e278389a104e3f6cafe0ee0a65","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-3","para":"35-3","html":"
See paragraphs
815-40-35-14 through 35-18
for guidance on an issuer's accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange.
","snippet":"See paragraphs 815-40-35-14 through 35-18 for guidance on an issuer's accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or e…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c1536dd30dda1ed4db7513fc5f6a94c478dc96d011a539cec8e14d6b1264416","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-4","para":"35-4","html":"
All other contracts classified as assets or liabilities under Section 815-40-25or paragraph 815-40-15-8Ashall be measured subsequently at fair value, with changes in fair value reported in earnings and disclosed in the financial statements as long as the contracts remain classified as assets or liabilities (see paragraph 815-40-50-1).
","snippet":"All other contracts classified as assets or liabilities under Section 815-40-25or paragraph 815-40-15-8Ashall be measured subsequently at fair value, with changes in fair value reported in earnings and disclosed in the f…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fbbf64d4937e4dff22dcc29941422e37b3154ef28711d32c8e9ab85cd619afe3","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:93fde21a3430f9cb2d64f7478c781cdb07929ee49dda983314a67cbe541e2dd1","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"block":null,"heading":"Settlement Assumptions","paragraphs":[{"citation":"815-40-35-5","para":"35-5","html":"
Net share settlement should be assumed for contracts that are classified under Section 815-40-25 as equity instruments that provide the entity with a choice of either of the following:
  1. a
    Net share settlement
  2. b
    Physical settlement that may require that the entity deliver cash.
","snippet":"Net share settlement should be assumed for contracts that are classified under Section 815-40-25 as equity instruments that provide the entity with a choice of either of the following:\n(a) Net share settlement\n(b) Physic…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8ddfc599eb25625d66ff04800e82dd5d18984982dcf1e728e39c5ccd15f63f9a","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-6","para":"35-6","html":"
Physical settlement should be assumed for contracts that are classified under Section 815-40-25 as equity instruments that provide the counterparty with a choice of either of the following:
  1. a
    Net share settlement
  2. b
    Physical settlement that may require that the entity deliver cash.
","snippet":"Physical settlement should be assumed for contracts that are classified under Section 815-40-25 as equity instruments that provide the counterparty with a choice of either of the following:\n(a) Net share settlement\n(b) P…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f15c4c074cf1d52d00b505e9f3ac2ebad3d0de822950f015a39b4fed4187a643","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-7","para":"35-7","html":"
Paragraph not used.
","snippet":"Paragraph not used.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f019a62f838bd05160d1110bf220d6e5a8fdf5861887334da14d8fc4b7788aa","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7d7cd1bb8a70d27a3623cb40c577edd2dd2915c2e32062beb7b5a429e3360832","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"block":null,"heading":"Reclassification of Contracts","paragraphs":[{"citation":"815-40-35-8","para":"35-8","html":"
The classification of a contract (including freestanding financial instruments and embedded features) shall be reassessed at each balance sheet date. If the classification required under this Subtopic changes as a result of events during the period (if, for example, as a result of voluntary issuances of stock the number of authorized but unissued shares is insufficient to satisfy the maximum number of shares that could be required to net share settle the contract [see discussion in paragraph 815-40-25-20]), the contract shall be reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.
","snippet":"The classification of a contract (including freestanding financial instruments and embedded features) shall be reassessed at each balance sheet date. If the classification required under this Subtopic changes as a result…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3053bc2a5c0e347cab3fab6d299403b72340488d90f47c7dfe58883d5f6965a0","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-9","para":"35-9","html":"
If a contract is reclassified from permanent or temporary equity to an asset or a liability, the change in fair value of the contract during the period the contract was classified as equity shall be accounted for as an adjustment to stockholders' equity. The contract subsequently shall be marked to fair value through earnings. If an embedded feature no longer qualifies for the derivatives scope exception under this Subtopic, the feature shall be separated from its host contract and accounted for as a derivative instrument in accordance with Subtopic 815-10 and Subtopic 815-15 (if all of the criteria in paragraph 815-15-25-1 are met).
","snippet":"If a contract is reclassified from permanent or temporary equity to an asset or a liability, the change in fair value of the contract during the period the contract was classified as equity shall be accounted for as an a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a84bdc2d3eff67fde9e2c12dc5ce5920d618c0ea621bdddffe68529164083ebb","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-10","para":"35-10","html":"
If a contract is reclassified from an asset or a liability to equity, gains or losses recorded to account for the contract at fair value during the period that the contract was classified as an asset or a liability shall not be reversed. The contract shall be marked to fair value immediately before the reclassification. An embedded derivative that qualifies for the derivatives scope exception upon reassessment under this Subtopic that was separated from its host contract and accounted for as a derivative instrument in accordance with Subtopic 815-10 shall be reclassified to equity. The previously bifurcated embedded derivative shall not be recombined with its host contract.
","snippet":"If a contract is reclassified from an asset or a liability to equity, gains or losses recorded to account for the contract at fair value during the period that the contract was classified as an asset or a liability shall…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:09d29bfdffb7317dc49eab0ccb200cc276266662d20596e90885a53d34d96709","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-11","para":"35-11","html":"
If a contract permits partial net share settlement and the total notional amount of the contract no longer can be classified as permanent equity, any portion of the contract that could be net share settled as of that balance sheet date shall remain classified in permanent equity. That is, a portion of the contract shall be classified as permanent equity and a portion of the contract shall be classified as an asset, a liability, or temporary equity, as appropriate.
","snippet":"If a contract permits partial net share settlement and the total notional amount of the contract no longer can be classified as permanent equity, any portion of the contract that could be net share settled as of that bal…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4667327f7103be3a4e2fb97a4c8ceb98ac3afb0e4bc6db1013c4457879a8ff21","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-12","para":"35-12","html":"
If an entity has more than one contract subject to this Subtopic, and partial reclassification is required, there may be different methods that could be used to determine which contracts, or portions of contracts, shall be reclassified. Methods that would comply with this Section could include any of the following:
  1. a
    Partial reclassification of all contracts on a proportionate basis
  2. b
    Reclassification of contracts with the earliest inception date first
  3. c
    Reclassification of contracts with the earliest maturity date first
  4. d
    Reclassification of contracts with the latest inception or maturity date first
  5. e
    Reclassification of contracts with the latest maturity date first.
","snippet":"If an entity has more than one contract subject to this Subtopic, and partial reclassification is required, there may be different methods that could be used to determine which contracts, or portions of contracts, shall …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0078e66739dfd0bc0bf0a9452a298fe3bf826f76f19fbf2c5d5b13ebae744a3d","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-13","para":"35-13","html":"
The method of reclassification shall be systematic, rational, and consistently applied.
","snippet":"The method of reclassification shall be systematic, rational, and consistently applied.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9279bac8d9a1c361e72dd8e98291bed8a0d5b9cc65ae9ffbef5710ddf850990c","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ec1df449bc953aaf41b403e42772c46218e3390226c893810e5a9d4c567e22b","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"block":null,"heading":"Issuer's Accounting for Modifications or Exchanges of Freestanding Equity-Classified Written Call Options","paragraphs":[{"citation":"815-40-35-14","para":"35-14","html":"
The guidance in paragraphs
815-40-35-15 through 35-18
applies to an issuer's accounting for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (for example, a warrant) that remains equity classified in accordance with this Subtopic after the modification or exchange and is not within the scope of another Topic. An entity shall account for the effects of a modification or an exchange in accordance with paragraphs
815-40-35-15 through 35-18
. The disclosure requirements in paragraphs
815-40-50-5 through 50-6
and 505-10-50-3 shall apply to a modification or an exchange of a freestanding equity-classified written call option. The guidance in paragraphs
815-40-35-16 through 35-17
does not apply to freestanding equity-classified written call options that are modified or exchanged to compensate grantees in a share-based payment arrangement. An entity shall recognize the effect of such modifications of freestanding equity-classified written call options by applying the requirements in Topic 718; however, classification of the instrument will remain subject to the requirements in this Subtopic.
","snippet":"The guidance in paragraphs 815-40-35-15 through 35-18 applies to an issuer's accounting for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (for example, a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:46b7d883819c9a79aa21319e710b96dfd9db244987618dfd956d422fe5c79b49","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-15","para":"35-15","html":"
An entity shall consider the circumstances of the modification or exchange of a freestanding equity-classified written call option to determine whether the modification or exchange is related to a financing or other arrangement or a multiple-element arrangement (for example, an arrangement involving both debt financing and equity financing). In making that determination, an entity shall consider all of the terms and conditions of the modification or exchange, other transactions entered into contemporaneously or in contemplation of the modification or exchange, other rights and privileges obtained or obligations incurred (including services) as a result of the modification or exchange, and the overall economic effects of the modification or exchange. If the modification or exchange is not within the scope of another Topic, an entity shall apply the guidance in paragraphs
815-40-35-16 through 35-18
.
","snippet":"An entity shall consider the circumstances of the modification or exchange of a freestanding equity-classified written call option to determine whether the modification or exchange is related to a financing or other arra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0faf6b744ec3d52f26354f24bb38614053b230cabd12aade49d3ebde4ad232b8","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-16","para":"35-16","html":"
An entity shall treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option as an exchange of the original instrument for a new instrument. In substance, the entity repurchases the original instrument by issuing a new instrument. For transactions recognized in accordance with paragraph 815-40-35-17(c), the effect of a modification or an exchange shall be measured as the difference between the fair value of the modified or exchanged instrument and the fair value of that instrument immediately before it is modified or exchanged. For all other transactions recognized in accordance with paragraph 815-40-35-17, the effect of a modification or an exchange shall be measured as the excess, if any, of the fair value of the modified or exchanged instrument over the fair value of that instrument immediately before it is modified or exchanged. In a multiple-element transaction, the total effect of the modification or exchange shall be allocated to the respective elements in the transaction.
","snippet":"An entity shall treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option as an exchange of the original instrument for a new instrument. In substance, the ent…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6a10363145a8de49570c3f0c6b9fa642bf4c68a05ade07f39a8de2d732d791d4","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-17","para":"35-17","html":"
An entity shall recognize the effect of a modification or an exchange (calculated in accordance with paragraph 815-40-35-16) in the same manner as if cash had been paid as consideration, as follows:
  1. a
    Equity issuance. An entity shall recognize the effect of a modification or an exchange that is directly attributable to a proposed or actual equity offering as an equity issuance cost. For additional guidance see SAB Topic 5.A, Expenses of Offering (paragraph 340-10-S99-1).
  2. b
    Debt origination. An entity shall recognize the effect of a modification or an exchange that is a part of or directly related to an issuance of a debt instrument as a debt discount or debt issuance cost in accordance with the guidance in Topic 835 on interest.
  3. c
    Debt modification. An entity shall recognize the effect of a modification or an exchange that is a part of or directly related to a modification or an exchange of an existing debt instrument in accordance with the guidance in Subtopic 470-50 on debt modifications and extinguishments and Subtopic 470-60 on troubled debt restructurings by debtors.
  4. d
    Other. An entity shall recognize the effect of a modification or an exchange that is not related to a financing transaction in (a) through (c) and is not within the scope of any other Topics (such as Topic 718) as a dividend. Additionally, for an entity that presents earnings per share (EPS) in accordance with Topic 260, that effect shall be treated as a reduction of income available to common stockholders in basic earnings per share in accordance with the guidance in paragraph 260-10-45-15.
","snippet":"An entity shall recognize the effect of a modification or an exchange (calculated in accordance with paragraph 815-40-35-16) in the same manner as if cash had been paid as consideration, as follows:\n(a) Equity issuance. …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:956e4ccb879416d0c628652dc7e5448a5cb869b0b9c9e920dc92e5ae531822f7","downloaded_from":"2026-09-10T01:39:05.251Z","last_downloaded_at":"2026-09-10T01:39:05.251Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480299","source_sha256":"ae21077f19bf3607325b992d2dbdcfd59caedf239e8273b145c887f6b6d721da"}},{"citation":"815-40-35-18","para":"35-18","html":"
Example 22 (see paragraphs
815-40-55-49 through 55-52
) illustrates the application of the guidance in paragraphs
815-40-35-14 through 35-17
.
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