{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/820/10/#15-scope-and-scope-exceptions","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":"820","topic_title":"Fair Value Measurement","subtopic":"820-10","subtopic_title":"Overall","section":{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"820-10-15-1","para":"15-1","html":"
The Scope Section of the Overall Subtopic establishes the scope for the Fair Value Measurement Topic. Except as noted below, this Topic applies when another Topic requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements).
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The Fair Value Measurement Topic does not apply as follows:
  1. a
    To accounting principles that address share-based payment transactions (this includes all Subtopics in Topic 718 except for 718-40, which is within the scope of Topic 820)
  2. b
    To Sections, Subtopics, or Topics that require or permit measurements that are similar to fair value but that are not intended to measure fair value, including both of the following:
    1. 1
      Sections, Subtopics, or Topics that permit measurements that are determined on the basis of, or otherwise use, standalone selling price
    2. 2
      Topic 330.
  3. c
    Subparagraph superseded by Accounting Standards Update No. 2016-02.
  4. d
    To the recognition and measurement of revenue from contracts with customers in accordance with Topic 606
  5. e
    To the recognition and measurement of gains and losses upon the derecognition of nonfinancial assets in accordance with Subtopic 610-20.
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The Fair Value Measurement Topic does not eliminate the practicability exceptions to fair value measurements within the scope of this Topic. Those practicability exceptions to fair value measurements in specified circumstances include, among others, those stated in the following:
  1. a
    The use of a transaction price (an entry price) to measure fair value (an exit price) at initial recognition, including the following:
    1. 1
      Guarantees in accordance with Topic 460
    2. 2
      Subparagraph superseded by Accounting Standards Update No. 2009-16.
  2. b
    Subparagraph superseded by Accounting Standards Update No. 2016-01.
    1. 1
      Subparagraph superseded by Accounting Standards Update No. 2016-01.
    2. 2
      Subparagraph superseded by Accounting Standards Update No. 2009-16.
  3. c
    An exemption to the requirement to measure fair value if fair value is not reasonably determinable, such as all of the following:
    1. 1
      Nonmonetary assets in accordance with Topic 845 and Sections 605-20-25 and 605-20-50
    2. 2
      Asset retirement obligations in accordance with Subtopic 410-20 and Sections 440-10-50 and 440-10-55
    3. 3
      Restructuring obligations in accordance with Topic 420
    4. 4
      Participation rights in accordance with Subtopics 715-30 and 715-60.
  4. d
    Subparagraph superseded by Accounting Standards Update No. 2015-10.
  5. e
    The use of particular measurement methods referred to in paragraph 805-20-30-10 that allow measurements other than fair value for specified assets acquired and liabilities assumed in a business combination.
  6. ee
    Financial assets or financial liabilities of a consolidated variable interest entity that is a collateralized financing entity when the financial assets or financial liabilities are measured using the measurement alternative in paragraphs
    810-10-30-10 through 30-15
    and
    810-10-35-6 through 35-8
    .
  7. f
    An exemption to the requirement to measure fair value if fair value cannot be reasonably estimated, such as the following:
    1. 1
      Noncash consideration promised in a contract in accordance with the guidance in paragraphs
      606-10-32-21 through 32-24
      .
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Paragraphs
820-10-35-59 through 35-62
and 820-10-50-6A shall apply only to an investment that meets both of the following criteria as of the reporting entity's measurement date:
  1. a
    The investment does not have a readily determinable fair value
  2. b
    The investment is in an investment company within the scope of Topic 946 or is an investment in a real estate fund for which it is industry practice to measure investment assets at fair value on a recurring basis and to issue financial statements that are consistent with the measurement principles in Topic 946.
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The definition of readily determinable fair value indicates that an equity security would have a readily determinable fair value if any one of three conditions is met. One of those conditions is that sales prices or bid-and-asked quotations are currently available on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market, provided that those prices or quotations for the over-the-counter market are publicly reported by the National Association of Securities Dealers Automated Quotations systems or by OTC Markets Group Inc. The definition notes that restricted stock meets that definition if the restriction expires within one year. If an investment otherwise would have a readily determinable fair value, except that the investment has a restriction expiring in more than one year, the reporting entity shall not apply paragraphs
820-10-35-59 through 35-62
and 820-10-50-6A to the investment.
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