# ASC 825-20: Financial Instruments — Registration Payment Arrangements Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/825/20/) 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): 2026-09-10T01:44:46.252Z to 2026-09-10T01:45:09.668Z Record version: sha256:cf882d46ec1e24e27f0f3291c3aa81857412fad9ba4d3584da69e626ebe71c65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20: Financial Instruments — Registration Payment Arrangements ### Machine-generated study aids ```json { "summary": "ASC 825-20 governs registration payment arrangements — agreements in which an issuer must file/obtain effectiveness of a registration statement (or obtain/maintain a stock exchange listing) for financial instruments and must transfer cash or shares to the counterparty if it fails. The core rule is that the arrangement is a separate unit of account: the underlying financial instruments are recognized and measured under other GAAP (e.g., 815-10, 815-40, 835-30) ignoring the contingent obligation, while the contingent obligation itself is recognized and measured under the loss-contingency model in Subtopic 450-20. Extensive disclosures are required even if payment is remote.", "key_points": [ "A registration payment arrangement is recognized and measured as a separate unit of account from the financial instrument(s) subject to it (825-20-25-1; 825-20-30-1).", "The underlying financial instruments are accounted for under other applicable GAAP (for example, Subtopics 815-10, 815-40, 835-30) without regard to the contingent obligation, so the arrangement does not affect equity-versus-liability classification of warrants (825-20-25-2; 825-20-30-2; 825-20-55-5).", "The contingent obligation to pay cash or transfer consideration is recognized and measured under Subtopic 450-20 (probable and reasonably estimable), and when a range exists with no better estimate, the minimum of the range is accrued (825-20-25-3; 825-20-30-3; 825-20-55-5).", "If transfer of consideration is probable and reasonably estimable at inception, the contingent liability is included in the allocation of financing proceeds, with remaining proceeds allocated to the instruments issued under other GAAP — possibly creating a discount (825-20-30-4; 825-20-55-8).", "Where shares must be delivered, transfer is probable, and the number of shares can be reasonably estimated, the issuer's share price at the reporting date is used to measure the liability (825-20-30-5).", "Initial recognition after inception, and subsequent increases or decreases in the previously recognized contingent liability, are recognized in earnings (825-20-35-1).", "Required disclosures include the nature and term of the arrangement, settlement alternatives and who controls them, maximum undiscounted potential consideration (or that there is no limit), carrying amount of the liability, and income statement classification of related gains or losses — even if payment is remote (825-20-50-1; 825-20-50-2)." ], "categories": [ "Recognition", "Initial measurement", "Subsequent measurement", "Disclosure" ], "audience_level": "intermediate", "student_note": "The exam trap is thinking that a registration payment penalty taints the classification of the related warrants or shares — it does not; the arrangement is bifurcated as its own unit of account and accounted for as an ASC 450-20 loss contingency. Also remember the scope exclusions (conversion-ratio adjustments, non-stock market/index-referenced consideration, and instruments settled when consideration is transferred) and that disclosure is required even when payment is remote.", "related_topics": [ "450-20", "815-40", "815-15", "470-20", "505-10", "835-30" ], "key_concepts": [ "registration payment arrangement", "separate unit of account", "contingent liability", "loss contingency accrual", "liquidated damages", "allocation of proceeds", "warrant classification", "effective registration statement" ] } ``` Source downloaded (UTC): 2026-09-10T01:44:46.252Z to 2026-09-10T01:44:46.252Z Record version: sha256:ae280a9d6e9bc11e8df5ff7e6491fa16c200914ae82b22cf3be62fc626c6ef63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/825/20/#00-status) SEC content: no ##### [825-20-00-1](https://asc.understandingaccounting.org/asc/825/20/#825-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:46.252Z to 2026-09-10T01:44:46.252Z Record version: sha256:8b576157f962e78ae526b67508d83627c9e96782610693f289e3f75350ada249 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Financial InstrumentAmendedAccounting Standards Update No. 2024-0203/29/2024
Registration Payment ArrangementAddedAccounting Standards Update No. 2016-1912/14/2016
825-20-05-1AmendedAccounting Standards Update No. 2016-1912/14/2016
825-20-15-1AmendedAccounting Standards Update No. 2016-1912/14/2016
825-20-15-2AmendedAccounting Standards Update No. 2016-1912/14/2016
825-20-15-3SupersededAccounting Standards Update No. 2016-1912/14/2016
825-20-15-4AmendedAccounting Standards Update No. 2020-0608/05/2020
825-20-30-1AmendedAccounting Standards Update No. 2016-1912/14/2016
825-20-35-1AmendedAccounting Standards Update No. 2016-1912/14/2016
825-20-50-1AmendedAccounting Standards Update No. 2016-1912/14/2016
825-20-55-1AmendedAccounting Standards Update No. 2016-1912/14/2016
Source downloaded (UTC): 2026-09-10T01:44:49.567Z to 2026-09-10T01:44:49.567Z Record version: sha256:1c5f719a4db909186ff5ce3b173603d78dec3fb3fa41b9c6a29bf83cd1c32c91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/825/20/#05-overview-and-background) SEC content: no ##### [825-20-05-1](https://asc.understandingaccounting.org/asc/825/20/#825-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:49.567Z to 2026-09-10T01:44:49.567Z Record version: sha256:bccfe87036db5050a3ce7d4de9dca0b6247912dd73307a2bf15de5ac97a9adc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may issue financial instruments (for example, equity shares, warrants, or debt instruments) that are 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)."). This Subtopic provides guidance related to such arrangements. Source downloaded (UTC): 2026-09-10T01:44:52.569Z to 2026-09-10T01:44:52.569Z Record version: sha256:23fef164d6f7fdec0d971c0d61f27e8e0b7e5afa93354474fae10285b6ab01ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/825/20/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [825-20-15-1](https://asc.understandingaccounting.org/asc/825/20/#825-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:52.569Z to 2026-09-10T01:44:52.569Z Record version: sha256:c53f4e397a2998dcedb21c8f08dc403f1b995639a015a97e16b0f86f9771fd3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities that issue 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)."). #### Transactions ##### [825-20-15-2](https://asc.understandingaccounting.org/asc/825/20/#825-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:52.569Z to 2026-09-10T01:44:52.569Z Record version: sha256:c091335348ab33e0f3d8a26688aea0222f50522f3a3f6a8d656b805e17c7b55a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to the following transactions and activities: 1. a 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).") regardless of whether it is issued as a separate agreement or included as a provision of 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.") or other agreement. An arrangement that requires the issuer to obtain and/or maintain a listing on a stock exchange, instead of, or in addition to, obtaining and/or maintaining an effective registration statement, is within the scope of this Subtopic if the remaining characteristics of the definition of the term _registration payment arrangement_ are met. ##### [825-20-15-3](https://asc.understandingaccounting.org/asc/825/20/#825-20-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:52.569Z to 2026-09-10T01:44:52.569Z Record version: sha256:c107857f87cec9fcd445099241144635ff07b8da88c28117453865b3cb359af1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-19](https://asc.understandingaccounting.org/updates/asu-2016-19/). ##### [825-20-15-4](https://asc.understandingaccounting.org/asc/825/20/#825-20-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:52.569Z to 2026-09-10T01:44:52.569Z Record version: sha256:bb03f0519b9590ec3b2f2fae104426fa3848000ac3dc4f38d9a65ba228466e34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to any of the following: 1. a Arrangements that require registration or listing of convertible debt instruments or convertible preferred stock if the form of consideration that would be transferred to the counterparty is an adjustment to the conversion ratio. See Subtopic 470-20 on debt with conversion and other options or Subtopic 505-10 on equity for related guidance. 2. b Arrangements in which the amount of consideration transferred is determined by reference to either of the following: 1. 1 An observable market other than the market for the issuer's stock 2. 2 An observable index. For example, if the consideration to be transferred if the issuer is unable to obtain an effective registration statement is determined by reference to the price of a commodity. See Subtopic 815-15 for related guidance. 3. c Arrangements in which the financial instrument or instruments subject to the arrangement are settled when the consideration is transferred (for example, a warrant that is contingently puttable if an effective registration statement for the resale of the equity shares that are issuable upon exercise of the warrant is not declared effective by the SEC within a specified grace period). ##### [825-20-15-5](https://asc.understandingaccounting.org/asc/825/20/#825-20-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:52.569Z to 2026-09-10T01:44:52.569Z Record version: sha256:eb2379bb09d9dcb46da8c62f0dbecf55886f8709fe659abe1ceb2fee054059bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic shall not be applied by analogy to the accounting for contracts that are not registration payment arrangements meeting the criteria in paragraphs [825-20-15-2 through 15-3](https://asc.understandingaccounting.org/asc/825/20/#825-20-15-2) . For example, a building contract that includes a provision requiring the contractor to obtain a certificate of occupancy by a certain date or pay a penalty every month until the certificate of occupancy is obtained is not addressed by this Subtopic. Source downloaded (UTC): 2026-09-10T01:44:57.618Z to 2026-09-10T01:44:57.618Z Record version: sha256:fabf832c9e40bd4744e9eb3582c8da003d38591d32570489b2650fc503d2679d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/825/20/#25-recognition) SEC content: no ##### [825-20-25-1](https://asc.understandingaccounting.org/asc/825/20/#825-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:57.618Z to 2026-09-10T01:44:57.618Z Record version: sha256:c71e94bfe57c9e4c3b93ef5483cd83294c2ed7633792207fad5ad1af72207ae6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall recognize a registration payment arrangement as a separate unit of account from the [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.")(s) subject to that arrangement. ##### [825-20-25-2](https://asc.understandingaccounting.org/asc/825/20/#825-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:57.618Z to 2026-09-10T01:44:57.618Z Record version: sha256:430d7afb4fd95d91e580d8b4638fded82d2cea1b6ee646fd80d66a1f02e1aca1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial instrument(s) subject to the registration payment arrangement shall be recognized in accordance with other applicable generally accepted accounting principles (GAAP) (for example, Subtopics 815-10; 815-40; and 835-30) without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement. ##### [825-20-25-3](https://asc.understandingaccounting.org/asc/825/20/#825-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:44:57.618Z to 2026-09-10T01:44:57.618Z Record version: sha256:c8de590e9fe521416a1196eb55c17ed1b455804b0389370ef4f0d092ea5f5913 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement shall be recognized separately in accordance with Subtopic 450-20. Source downloaded (UTC): 2026-09-10T01:45:00.078Z to 2026-09-10T01:45:00.078Z Record version: sha256:b4ad0d8d61b9cb993d68fadf94984b48ce8fc43e8521b4f238fcc37376c8a826 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/825/20/#30-initial-measurement) SEC content: no ##### [825-20-30-1](https://asc.understandingaccounting.org/asc/825/20/#825-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:00.078Z to 2026-09-10T01:45:00.078Z Record version: sha256:e4bda7752989c388fead0b01f29e025f479cbe1628210706086fab6cae503f39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall measure 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).") as a separate unit of account from the [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.")(s) subject to that arrangement. ##### [825-20-30-2](https://asc.understandingaccounting.org/asc/825/20/#825-20-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:00.078Z to 2026-09-10T01:45:00.078Z Record version: sha256:ad022386daf90435bd51edf2fb4360397c3c98a79681b325a201c1246001d329 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial instrument(s) subject to the registration payment arrangement shall be measured in accordance with other applicable generally accepted accounting principles (GAAP) (for example, Subtopics 815-10; 815-40; and 835-30) without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement. ##### [825-20-30-3](https://asc.understandingaccounting.org/asc/825/20/#825-20-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:00.078Z to 2026-09-10T01:45:00.078Z Record version: sha256:7a244b0d49f0bbd4e230251e15d7f9e21fb1927228a5ece65de23c391f95382c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement shall be measured separately in accordance with Subtopic 450-20. ##### [825-20-30-4](https://asc.understandingaccounting.org/asc/825/20/#825-20-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:00.078Z to 2026-09-10T01:45:00.078Z Record version: sha256:c71595e5ea3cee172c45068d80e43a197c6de71b5bc0ca0d39d67049e2516b1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the transfer of consideration under a registration payment arrangement is probable and can be reasonably estimated at inception, the contingent liability under the registration payment arrangement shall be included in the allocation of proceeds from the related financing transaction using the measurement guidance in Subtopic 450-20. The remaining proceeds shall be allocated to the financial instrument(s) issued in conjunction with the registration payment arrangement based on the provisions of other applicable GAAP. A financial instrument issued concurrently with a registration payment arrangement might be initially measured at a discount to its principal amount under this allocation methodology. For example, if the financial instruments issued concurrently with the registration payment arrangement are a debt instrument and an equity-classified warrant, the remaining proceeds after recognizing and measuring a liability for the registration payment arrangement under that Subtopic would be allocated on a relative [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "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.") basis between the debt and the warrant pursuant to paragraph [470-20-25-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-3). ##### [825-20-30-5](https://asc.understandingaccounting.org/asc/825/20/#825-20-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:00.078Z to 2026-09-10T01:45:00.078Z Record version: sha256:b588f4e480ed100fb200db6323b99022c839ebcdb40fea1254b692174d6e3e80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If all of the following criteria are met, the issuer's share price at the reporting date shall be used to measure the contingent liability under Subtopic 450-20: 1. a An entity would be required to deliver shares under a registration payment arrangement. 2. b The transfer of that consideration is probable. 3. c The number of shares to be delivered can be reasonably estimated. Source downloaded (UTC): 2026-09-10T01:45:02.283Z to 2026-09-10T01:45:02.283Z Record version: sha256:003b0ae9305a9e49a87404455b9bd2615ef10352784da10eed477c85f7a469ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/825/20/#35-subsequent-measurement) SEC content: no ##### [825-20-35-1](https://asc.understandingaccounting.org/asc/825/20/#825-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:02.283Z to 2026-09-10T01:45:02.283Z Record version: sha256:7164d869010447c5553afe47ca22e0640c717e20c3ce1b18992a38758ea949e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the transfer of consideration under 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).") becomes probable and can be reasonably estimated after the inception of the arrangement or if the measurement of a previously recognized contingent liability increases or decreases in a subsequent period, the initial recognition of the contingent liability or the change in the measurement of the previously recognized contingent liability (in accordance with Subtopic 450-20) shall be recognized in earnings. Source downloaded (UTC): 2026-09-10T01:45:04.272Z to 2026-09-10T01:45:04.272Z Record version: sha256:87222b945a66e90a4136588246bb31d54d2d98c9a4751ac996ae6a2f3e10df6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/825/20/#50-disclosure) SEC content: no ##### [825-20-50-1](https://asc.understandingaccounting.org/asc/825/20/#825-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:04.272Z to 2026-09-10T01:45:04.272Z Record version: sha256:c0ab62a2ba7d0e4c3313f1178658991b764aa9cf4deec970601a217a08b2ee99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The issuer of 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).") shall disclose all of the following information about each registration payment arrangement or each group of similar arrangements: 1. a The nature of the registration payment arrangement, including all of the following: 1. 1 The approximate term of the arrangement 2. 2 The [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.")(s) subject to the arrangement 3. 3 The events or circumstances that would require the issuer to transfer consideration under the arrangement. 2. b Any settlement alternatives contained in the terms of the registration payment arrangement, including the party that controls the settlement alternatives 3. c The maximum potential amount of consideration, undiscounted, that the issuer could be required to transfer under the registration payment arrangement (including the maximum number of shares that may be required to be issued) 4. d If the terms of the arrangement provide for no limitation to the maximum potential consideration (including shares) to be transferred, that fact shall be disclosed 5. e The current carrying amount of the liability representing the issuer's obligations under the registration payment arrangement 6. f The income statement classification of any gains or losses resulting from changes in the carrying amount of the liability representing the issuer's obligations under the registration payment arrangement. ##### [825-20-50-2](https://asc.understandingaccounting.org/asc/825/20/#825-20-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:04.272Z to 2026-09-10T01:45:04.272Z Record version: sha256:ecad028ef397fbcc0eeef841275b110d36376b2623810878fb1cc02fd03f8715 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. These disclosures are incremental to the disclosures that may be required under other applicable generally accepted accounting principles (GAAP) and are required even if the likelihood of the issuer having to make any payments under the arrangement is remote. Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:1b867e44b40ba45eb343c1081cbf32bb3a3da0f738c651a7acc8fe63e245fb05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 825-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/825/20/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [825-20-55-1](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:6058296fccffe760dc11bd4a0449408b323eec3cb12c8350de1a47e9b4ca8bfa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the application of this Subtopic 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).") within the scope of this Subtopic: 1. a Transfer of consideration is not probable at inception (Case A). 2. b Transfer of consideration is probable at inception (Case B). ##### [825-20-55-2](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:117929bd5aaff8cd5d0d2b75d493773f44e83646d5a71ba599a23c06b12d34b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A and B share all of the following assumptions: 1. a Entity A issues 10 million shares of common stock and 2 million freestanding warrants to purchase additional shares of common stock for total proceeds of $100 million in a private placement transaction. 2. b In connection with the offering, Entity A enters into a registration payment arrangement that requires Entity A to use its best efforts to do both of the following: 1. 1 File a registration statement with the Securities and Exchange Commission (SEC) for the resale of 12 million shares of common stock. That registration statement must be declared effective within 180 days of the offering's closing date 2. 2 Once the registration statement is effective, maintain its effectiveness for three years. 3. c If the registration statement is not declared effective within 180 days, or if it ceases to be effective during the 3-year period in which Entity A is required to maintain its effectiveness, the investors are entitled to liquidated damages in the form of monthly cash payments computed as 1.5 percent per month of the $100 million total offering proceeds. ##### [825-20-55-3](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:b64b96926b641ac52e5d0ca3e8b7b12de78c7f3a0ea9dbd0dd7b9237a948dcae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At closing, Entity A concludes that it is not probable that it will be required to remit any payments to the investors for failing to obtain an effective registration statement or failing to maintain its effectiveness. ##### [825-20-55-4](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:29187fb13c3421329917e846a4d66c988f22f7cd2f4cf2a2bb5e059b9c00c29d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A files a registration statement for the resale of the shares that is declared effective within the 180-day grace period. One year after the effective date of the registration statement, circumstances have changed such that Entity A concludes that it is probable that the effectiveness of the registration statement will not be maintained for some portion of the remaining two-year period. Although Entity A is unable to estimate the exact amount of time that the registration statement will cease to be effective, its reasonable estimate at the reporting date is a period of time ranging between 9 and 18 months. Accordingly, the range of loss is between $13.5 million ($100 million × 1.5 percent × 9 months) and $27 million ($100 million × 1.5 percent × 18 months). At the reporting date, no amount within that range appears to be a better estimate than any other amount. ##### [825-20-55-5](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:5171081b6dfc53cb76583721eacdfe550cdb75c1c6100d35686142b1bda97b58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The common stock and warrants subject to the registration payment arrangement must be recognized and measured in accordance with other applicable generally accepted accounting principles (GAAP) without regard to the contingent obligation to make payments pursuant to the registration payment arrangement. Therefore, that contingent obligation does not affect Entity A's analysis of whether the warrants are classified as liabilities or equity instruments under Subtopic 815-40, regardless of whether the transfer of consideration under the registration payment arrangement is probable. In the period in which it became probable that Entity A will be required to remit payments to the investors for failing to maintain an effective registration statement and a range of payments can be reasonably estimated, a contingent liability should be accrued by a charge to earnings. Because no amount within the range of payments is a better estimate than any other amount, the $13.5 million minimum amount in the range should be accrued. ##### [825-20-55-6](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:4621d3c4d3e463428f1655b8af00d7f4d9ce768ee83ad7a42c700a7dfa66d006 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, at closing, Entity A concludes that it is probable that it will be required to remit payments to the investors for failing to obtain an effective registration statement within the 180-day grace period. ##### [825-20-55-7](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:3f1ecad9a81a1a7783440f6e527cc9e23aa1faadf11fc89d9d31599fc4dbe011 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the relevant facts and circumstances, Entity A can reasonably estimate both of the following: 1. a The registration statement will become effective six months after the grace period expires. 2. b Once effective, registration will be maintained for the three-year required period of effectiveness. ##### [825-20-55-8](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:a6e02da1c21b7f382503c0e36b1751220f164a0d4f971384e136ad755c97b775 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The common stock and warrants subject to the registration payment arrangement must be recognized and measured in accordance with other applicable GAAP without regard to the contingent obligation to make payments pursuant to the registration payment arrangement. Therefore, that contingent obligation does not affect Entity A's analysis of whether the warrants are classified as liabilities or equity instruments under Subtopic 815-40, regardless of whether the transfer of consideration under the registration payment arrangement is probable. Because a transfer of consideration under the registration payment arrangement is probable and can be reasonably estimated at inception, the $9 million ($100 million × 1.5 percent × 6 months) contingent liability under the registration payment arrangement must be included in the allocation of proceeds from the offering. The $91 million of remaining proceeds should be allocated between the common stock and warrants based on the guidance in other applicable GAAP. ##### [825-20-55-9](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:83f63336dd2493c1ea704a147038812fadcfd647b6e13bb17292314ca9bd6913 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of this Subtopic to debt issued subject to a registration payment arrangement within the scope of this Subtopic. ##### [825-20-55-10](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:2d7550c54aa64f064eabde491b26eb83b22867973134468145c71b7a24f01a78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A issues notes with an aggregate principal amount of $100 million in a private placement transaction. The notes were issued at par, bear interest at 8 percent per annum, and are not convertible into equity shares of the issuer. ##### [825-20-55-11](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:dc59fcd2d0bfdb313cfa4b3a17208cc41b8d444a34924121dca56630235f6bb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In connection with the offering, Entity A enters into a registration payment arrangement that requires Entity A to use its best efforts to do both of the following: 1. a File a registration statement with the SEC for the resale of the notes. That registration statement must be declared effective within 180 days of the offering's closing date 2. b Once the registration statement is effective, maintain its effectiveness for two years. ##### [825-20-55-12](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:8f7648afee499907be74f8166d0947a09bf96d42c1eadc16474800eeecf822f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the registration statement is not declared effective within 180 days, or if it ceases to be effective during the 2-year period in which Entity A is required to maintain its effectiveness, the investors are entitled to liquidated damages in the form of an increase to the interest coupon of 50 basis points per month. At closing, Entity A concludes that it is not probable that it will be required to remit any payments to the investors for failing to obtain an effective registration statement or failing to maintain its effectiveness. ##### [825-20-55-13](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:5fddf7354946242b6699a5b2a2406f77c7f9dd64af2b09d44a5a6b72c376bc40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A files a registration statement for the resale of the notes that is declared effective within the 180-day grace period. One year after the effective date of the registration statement, circumstances have changed such that Entity A concludes that it is probable that the effectiveness of the registration statement will not be maintained for some portion of the remaining one-year period. Although Entity A is unable to estimate the exact amount of time that the registration statement will cease to be effective, its reasonable estimate at the reporting date is a period of time ranging between three and six months. Accordingly, the range of loss is between $1.5 million ($100 million × 0.5 percent × 3 months) and $3 million ($100 million × 0.5 percent × 6 months). At the reporting date, no amount within that range appears to be a better estimate than any other amount. ##### [825-20-55-14](https://asc.understandingaccounting.org/asc/825/20/#825-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:45:06.511Z to 2026-09-10T01:45:06.511Z Record version: sha256:cb1d3045ed7eacad965147442bb7b0cb78e3df9ab9505e7efdd6a7e70453ab7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the period in which it became probable that Entity A will be required to remit payments to the investors for failing to maintain an effective registration statement and a range of payments can be reasonably estimated, a contingent liability should be accrued by a charge to earnings. Because no amount within the range of payments is a better estimate than any other amount, the $1.5 million minimum amount in the range should be accrued.