# ASC 852-10: Reorganizations — Overall Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/852/10/) 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): 2026-09-10T02:02:52.609Z to 2026-09-10T02:03:24.197Z Record version: sha256:1458adcd4207ce1d2731e49dd40ebfe670cc946fc9a23fcafe37d08d227ee4ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10: Reorganizations — Overall ### Machine-generated study aids ```json { "summary": "ASC 852-10 governs financial reporting by entities that have filed a Chapter 11 petition and expect to reorganize as going concerns, plus their reporting upon emergence under a confirmed plan. During the case, GAAP continues to apply but the statements must separate reorganization-related transactions from ongoing operations: prepetition liabilities subject to compromise are segregated on the balance sheet at expected allowed amounts, and reorganization items are shown separately in the income statement and cash flow statement. On emergence, an entity adopts fresh-start reporting only if reorganization value is less than postpetition liabilities plus allowed claims and pre-confirmation voting shareholders receive less than 50% of the emerging entity's voting shares.", "key_points": [ "Entering Chapter 11 does not change the GAAP an entity applies, but financial statements for periods including and after the filing must distinguish transactions and events directly associated with the reorganization from ongoing operations (852-10-45-1 through 45-2).", "The balance sheet must separate prepetition liabilities subject to compromise from those not subject to compromise and from postpetition liabilities; liabilities that may be affected by the plan are reported at expected allowed amounts under Subtopic 450-20, and doubtful secured claims stay in the subject-to-compromise category (852-10-45-4 through 45-5).", "Revenues, expenses (including professional fees), realized gains and losses, and loss provisions resulting from the reorganization are reported separately as reorganization items; professional fees are expensed as incurred, not deferred or accrued at filing (852-10-45-9 through 45-10).", "Interest expense is reported only to the extent it will be paid or is probable to be an allowed priority, secured, or unsecured claim and is not a reorganization item, while interest income earned only because of the proceeding is a reorganization item; the difference between reported and contractual interest must be disclosed (852-10-45-11, 45-12, 852-10-50-3).", "Reorganization items are presented separately within operating, investing, and financing categories of the statement of cash flows (direct method preferred); if the indirect method is used, related operating receipts and payments go in a supplementary schedule or the notes (852-10-45-13, 852-10-50-6A).", "Fresh-start reporting is required upon emergence only if reorganization value of the assets immediately before confirmation is less than total postpetition liabilities and allowed claims and pre-confirmation voting shareholders receive less than 50% of the emerging entity's voting shares, with the loss of control substantive and not temporary (852-10-45-19).", "Under fresh-start reporting the reorganization value is assigned to assets and liabilities using Subtopic 805-20 procedures with any residual reported as goodwill, the new entity starts with no retained earnings or deficit, debt forgiveness is reported as extinguishment under Subtopic 220-20, and comparative statements straddling the confirmation date are prohibited (852-10-45-20, 45-21, 45-26)." ], "categories": [ "Financial statement presentation", "Disclosure", "Debt and equity", "Cash flows" ], "audience_level": "advanced", "student_note": "Exam questions almost always hinge on the two-part fresh-start test in 852-10-45-19 (reorganization value < postpetition liabilities plus allowed claims AND old shareholders get <50% of new voting shares) — both must be met, and failing them means the emerging entity merely restates compromised liabilities at present value instead of resetting its balance sheet. A common misunderstanding is treating interest expense as a reorganization item; it is not, and interest is only recorded to the extent it will be paid or is probably an allowed claim.", "related_topics": [ "852-20", "852-740", "805-20", "450-20", "220-20", "205-30" ], "key_concepts": [ "liabilities subject to compromise", "reorganization items", "fresh-start reporting", "reorganization value", "allowed claims", "plan of reorganization confirmation", "debtor-in-possession", "forgiveness of debt" ] } ``` Source downloaded (UTC): 2026-09-10T02:02:52.609Z to 2026-09-10T02:02:52.609Z Record version: sha256:d15f6ca0be54c03e50c563e1ccd8bee5df54c8431556427d8f694393cf869b28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/852/10/#00-status) SEC content: no ##### [852-10-00-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:52.609Z to 2026-09-10T02:02:52.609Z Record version: sha256:ab0f621c5160fdf4b32516b9dbd14f3ec2a1c21af600441b4c2f3aa69c80ecf2 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
Plan (1st def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Plan of Reorganization (formerly Plan (1st def.))AddedAccounting Standards Update No. 2014-0603/14/2014
Reorganization ValueAmendedAccounting Standards Update No. 2012-0410/01/2012
852-10-05-3AmendedAccounting Standards Update No. 2014-0603/14/2014
852-10-45-4AmendedAccounting Standards Update No. 2014-0603/14/2014
852-10-45-9AmendedAccounting Standards Update No. 2015-0101/09/2015
852-10-45-13AmendedAccounting Standards Update No. 2020-1010/29/2020
852-10-45-21AmendedMaintenance Update 2017-19 (PDF)11/15/2017
852-10-45-29AmendedMaintenance Update 2017-19 (PDF)11/15/2017
852-10-50-6AAddedAccounting Standards Update No. 2020-1010/29/2020
852-10-55-3AmendedAccounting Standards Update No. 2025-1212/17/2025
852-10-55-9 through 55-11
AmendedAccounting Standards Update No. 2025-1212/17/2025
852-10-55-9AmendedMaintenance Update 2020-18 (PDF)11/25/2020
852-10-55-10AmendedMaintenance Update 2020-18 (PDF)11/25/2020
852-10-55-10AmendedAccounting Standards Update No. 2012-0410/01/2012
852-10-55-11AmendedMaintenance Update 2016-11 (PDF)06/27/2016
852-10-55-11AmendedAccounting Standards Update No. 2012-0410/01/2012
852-10-60-1AmendedAccounting Standards Update No. 2013-0704/22/2013
Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:cb16dfa6a7b149616227466c377214d8ef3fd5fe40e67791cdf3594755ee9f8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/852/10/#05-overview-and-background) SEC content: no ##### [852-10-05-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:4e8ef81f172250f86386391e3e0d216c534f73b32a8972a8789529af64be48c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reorganizations Topic includes the following Subtopics: 1. a Overall 2. b Quasi-Reorganizations 3. c Income Taxes. ##### [852-10-05-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:6ae6a6a289395352208a051129d353c925a4ac98f0f691ff15d50c8f7a8b731a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the accounting and financial statement disclosure for entities that have filed petitions with the [Bankruptcy Court](https://asc.understandingaccounting.org/glossary/b/#bankruptcy-court "The United States Bankruptcy Court is an adjunct of the United States District Courts. Under the jurisdiction of the District Court, the Bankruptcy Court is generally responsible for cases filed under Chapters 7, 11, 12, and 13 of the Bankruptcy Code.") and expect to reorganize as going concerns under Chapter 11 of the [Bankruptcy Code](https://asc.understandingaccounting.org/glossary/b/#bankruptcy-code "A federal statute, enacted October 1, 1979, as title 11 of the United States Code by the Bankruptcy Reform Act of 1978, that applies to all cases filed on or after its enactment and that provides the basis for the current federal bankruptcy system."). This Subtopic necessarily contains many references to provisions of the Bankruptcy Code; however, the material in this Subtopic should not be relied upon as definitive interpretations of the law for any purposes. The accounting and reporting guidance in this Subtopic is incremental to guidance that otherwise applies to an entity. ##### [852-10-05-3](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:7170f19d8f79ea66ad28e51782ee338a8210c74c83488a806c070c9c7051bfec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity enters reorganization under [Chapter 11](https://asc.understandingaccounting.org/glossary/c/#chapter-11 "A reorganization action, either voluntarily or involuntarily initiated under the provisions of the Bankruptcy Code, that provides for a reorganization of the debt and equity structure of the business and allows the business to continue operations. A debtor may also file a plan of liquidation under Chapter 11.") by filing a [petition](https://asc.understandingaccounting.org/glossary/p/#petition "A document filed in a court of bankruptcy, initiating proceedings under the Bankruptcy Code.") with the Bankruptcy Court, an adjunct of the United States District Courts. The filing of the petition starts the [reorganization proceeding](https://asc.understandingaccounting.org/glossary/r/#reorganization-proceeding "A Chapter 11 case from the time at which the petition is filed until the plan is confirmed."). The goal of the proceeding is to maximize recovery by creditors and shareholders by preserving it as a viable entity with a going concern value. For that purpose, the entity prepares a [plan of reorganization](https://asc.understandingaccounting.org/glossary/p/#plan-of-reorganization "An agreement formulated in Chapter 11 proceedings under the supervision of the Bankruptcy Court that enables the debtor to continue in business. The plan, once confirmed, may affect the rights of undersecured creditors, secured creditors, and stockholders as well as those of unsecured creditors. Before a plan is confirmed by the Bankruptcy Court, it must comply with general provisions of the Bankruptcy Code. Those provisions mandate, for example, that the plan is feasible, the plan is in the best interest of the creditors, and, if an impaired class does not accept the plan, the plan must be determined to be fair and equitable before it can be confirmed.") intended to be confirmed by the court. The plan provides for treatment of all the assets and liabilities of the debtor, which might result in forgiveness of indebtedness. For the plan to be confirmed and the reorganization proceedings thereby concluded, the consideration to be received by parties in interest under the plan must exceed the consideration they would otherwise receive on liquidation of the entity under Chapter 7 of the Bankruptcy Code. The court may confirm a plan even if some classes of creditors or some of the stockholders have not accepted it, provided that it meets standards of fairness required by Chapter 11 to the dissenting class of creditors or the dissenting stockholders. ##### [852-10-05-4](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:0dd13eb30188c0ebbeb78c26573e823d17dec9f26939272cc71b20fef73d3e5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The plan is the heart of every Chapter 11 reorganization. The provisions of the plan specify the treatment of all creditors and equity holders upon its approval by the Bankruptcy Court. Moreover, the plan shapes the financial structure of the entity that emerges. ##### [852-10-05-5](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:27acdd67a0c9db7fbf5d88ae065d824ee98c6d0b80540c4c04e33af2dd3220e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Chapter 11 provides that, unless a [trustee](https://asc.understandingaccounting.org/glossary/t/#trustee "A person appointed by the Bankruptcy Court in certain situations based on the facts of the case, not related to the size of the entity or the amount of unsecured debt outstanding, at the request of a party in interest after a notice and hearing.") is appointed, the debtor has the exclusive right to file a plan for the first 120 days of the case, or such longer or shorter time as the Bankruptcy Court decrees, for cause. If a plan is filed within the exclusive period, additional time is provided to allow the debtor to obtain plan acceptance. The appointment of the trustee immediately terminates the debtor's exclusive right to file a plan, and any party in interest may then do so. ##### [852-10-05-6](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:87611302f00a10589dc017138318e26a8722adf6344a59c9465323bf01decaf5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except to the extent that specific debts are determined by the Bankruptcy Court not to be discharged by the plan, the provisions of a [confirmed plan](https://asc.understandingaccounting.org/glossary/c/#confirmed-plan "An official approval by the court of a plan of reorganization under a Chapter 11 proceeding that makes the plan binding on the debtors and creditors. Before a plan is confirmed, it must satisfy 11 requirements in section 1129(a) of the Bankruptcy Code.") bind the debtor, any entity issuing securities under the plan, any entity acquiring assets under the plan, and any creditor, equity security holder, or general partner in the debtor, regardless of whether the [claim](https://asc.understandingaccounting.org/glossary/c/#claim "As defined by Section 101(4) of the Bankruptcy Code, a right to payment, regardless of whether the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, secured, or unsecured, or a right to an equitable remedy for breach of performance if such breach results in a right to payment, regardless of whether the right is reduced to a fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured right.") is impaired under the plan and whether such creditor, equity security holder, or general partner has accepted the plan. A claim is impaired if, subject to certain rights to cure defaults, its legal rights are affected adversely by the plan. ##### [852-10-05-7](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:7aa53606e06167e2411d830a5dce7a96b2c560f830c129328ce0416217f806cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general, except as provided in the plan or in the order confirming the plan, confirmation of the plan discharges the debtor from all preconfirmation claims and terminates all rights and interest of equity security holders or general partners as provided for in the plan. ##### [852-10-05-8](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:580b08c5691890b50bcbc4ee51c55c1b25bd8d9646c40ae7d4873503374381cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Bankruptcy Court confirms a plan if it finds all of the following: 1. a The plan and the plan proponent have complied with various technical requirements of the Bankruptcy Code. 2. b Disclosures made in soliciting acceptance of the plan have been adequate. 3. c Dissenting members of [consenting classes](https://asc.understandingaccounting.org/glossary/c/#consenting-classes "Classes of creditors or stockholders that approve the proposed plan.") of [impaired claims](https://asc.understandingaccounting.org/glossary/i/#impaired-claims "In determining which class of creditors' claims or stockholders' interests must approve the plan, it is first necessary to determine if the class is impaired. A class of creditors' claims or stockholders' interests under a plan is not impaired if the plan leaves unaltered the legal, equitable, and contractual right of a class, cures defaults that lead to acceleration of debt or equity interest, or pays in cash the full amount of the claim, or for equity interests, the greater of the fixed liquidation preference or redemption price.") would receive under the plan at least the amount they would have received under a [Chapter 7](https://asc.understandingaccounting.org/glossary/c/#chapter-7 "A liquidation, voluntarily or involuntarily initiated under the provisions of the Bankruptcy Code, that provides for liquidation of the business or the debtor's estate.") proceeding. 4. d Claims entitled to priority under the Bankruptcy Code will be paid in cash. 5. e Confirmation of the plan is not likely to be followed by liquidation or further reorganization. 6. f At least one class of impaired claims, apart from insiders, has accepted the plan. 7. g The plan proponent has obtained the consent of all impaired classes of claims or equity securities, or the plan proponent can comply with the [cram-down provisions](https://asc.understandingaccounting.org/glossary/c/#cram-down-provisions "Provisions requiring that for a plan to be confirmed, a class of claims or interests must either accept the plan or not be impaired. However, the Bankruptcy Code allows the Bankruptcy Court under certain conditions to confirm a plan even though an impaired class has not accepted the plan. To do so, the plan must not discriminate unfairly and must be fair and equitable to each class of claims or interests impaired under the plan that have not accepted it. The Bankruptcy Code states examples of conditions for secured claims, unsecured claims, and stockholder interests in the fair and equitable requirement.") of the Bankruptcy Code. Under the cram-down provisions, the court may confirm a plan even if one or more classes of holders of impaired claims or equity securities do not accept it, as long as the court finds the plan does not discriminate unfairly and is fair and equitable to each [nonconsenting class](https://asc.understandingaccounting.org/glossary/n/#nonconsenting-class "A class of creditors or stockholders that does not approve the proposed plan.") impaired by the plan. ##### [852-10-05-9](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:b567ef55a2c2fd9f9ecf6c318fdfed332a25984d53eef56a9b851e8703164fb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general, a [secured claim](https://asc.understandingaccounting.org/glossary/s/#secured-claim "A liability that is secured by collateral. A fully secured claim is one in which the value of the collateral is greater than the amount of the claim.") is deemed to be treated fairly and equitably if it remains adequately collateralized and will receive a stream of payments whose discounted value equals the amount of the secured claim on the effective date of the plan. In general, an [unsecured claim](https://asc.understandingaccounting.org/glossary/u/#unsecured-claim "A liability that is not secured by collateral. In the case of an undersecured creditor, the excess of the secured claim over the value of the collateral is an unsecured claim, unless the debtor elects in a Chapter 11 proceeding to have the entire claim considered secured. The term is generally used in bankruptcy to refer to unsecured claims that do not receive priority under the Bankruptcy Code. Sometimes referred to as an unsecured claim liability.") is deemed to be treated fairly and equitably if it receives assets whose discounted value equals the allowed amount of the claim, or if the holder of any claim or equity security interest that is junior to the dissenting class will not receive or retain any assets under the plan. Similarly, an equity security interest is deemed fairly and equitably treated if that interest receives assets whose discounted value equals the greatest of any fixed liquidation preference, any fixed redemption price, or the value of such interest, or if no junior equity security interest will receive any assets under the plan. #### Reorganization Value ##### [852-10-05-10](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:65f44fa7335826fb7cd0c286dac875dd5980044daafa8e2388f90dae73c05a61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An important part of the process of developing a plan is the determination of the [reorganization value](https://asc.understandingaccounting.org/glossary/r/#reorganization-value "The value attributed to the reconstituted entity, as well as the expected net realizable value of those assets that will be disposed of before reconstitution occurs. Therefore, this value is viewed as the value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring.") of the entity that emerges from bankruptcy. Reorganization value generally approximates fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring. The reorganization value of an entity is the amount of resources available and to become available for the satisfaction of [postpetition liabilities](https://asc.understandingaccounting.org/glossary/p/#postpetition-liabilities "Liabilities incurred after the filing of a petition that are not associated with prebankruptcy events. Thus, these liabilities are not considered prepetition liabilities.") and [allowed claims](https://asc.understandingaccounting.org/glossary/a/#allowed-claim "The amount allowed by the Bankruptcy Court as a claim against the estate. This amount may differ from the actual settlement amount.") and interest, as negotiated or litigated between the [debtor-in-possession](https://asc.understandingaccounting.org/glossary/d/#debtor-in-possession "Existing management continuing to operate an entity that has filed a petition under Chapter 11. The debtor-in-possession is allowed to operate the business in all Chapter 11 cases unless the court, for cause, authorizes the appointment of a trustee.") or trustee, the creditors, and the holders of equity interests. Reorganization value includes the sum of the value attributed to the reconstituted entity and other assets of the debtor that will not be included in the reconstituted entity. Reorganization value and the terms of the plan are determined only after extensive arm's-length negotiations or litigation between the interested parties. Before the negotiations, the debtor-in-possession, creditors, and equity holders develop their own ideas on the reorganization value of the entity that will emerge from Chapter 11. Several methods are used to determine the reorganization value; however, generally it is determined by discounting future cash flows for the reconstituted business that will emerge from Chapter 11 and from expected proceeds or collections from assets not required in the reconstituted business, at rates reflecting the business and financial risks involved. #### The Disclosure Statement ##### [852-10-05-11](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:e38a9fe9f54eafedd041fee536d90b35ffafa0e1e7866a9576c96fd1bee681e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [disclosure statement](https://asc.understandingaccounting.org/glossary/d/#disclosure-statement "A written statement containing information approved as adequate by the court. It is required to be presented by a party before soliciting the acceptance or rejection of a plan of reorganization from creditors and stockholders affected by the plan. Adequate information means information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's records, that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan.") approved by the court is transmitted to all parties entitled to vote on the plan at or before the time their acceptance of the plan is solicited. The disclosure statement provides information that enables them to make informed judgments about the plan. ##### [852-10-05-12](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:7adf9c1968e22fae5b158b401a0ba09b219d662190eb602c3dc627b9f9f7a275 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No postpetition solicitation of acceptance of a plan may be made unless by the time of the solicitation a disclosure statement previously approved by the Bankruptcy Court has been sent to those whose acceptance is required. The disclosure statement must contain adequate information, which is defined in the Bankruptcy Code as information that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan, as far as it is reasonably practicable to provide in light of the nature and history of the [emerging entity](https://asc.understandingaccounting.org/glossary/e/#emerging-entity "An entity (sometimes referred to as the reorganized entity), that has had its plan confirmed and begins to operate as a new entity.") and the condition of the emerging entity's records. Examples of the kinds of items that may be included in disclosure statements to provide such information include a summary of the reorganization plan, historical and prospective financial information, and a pro forma balance sheet reporting the reorganization value and the capital structure of the emerging entity. ##### [852-10-05-13](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:25dc19de40d974ee946ecdb07ffd1613382162cdea69793295c1fc8cccfff8ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. What constitutes adequate information depends on the circumstances of the entity in Chapter 11, the nature of the plan, and the sophistication of the various classes whose acceptance is required. Although a valuation is not required for a Bankruptcy Court's approval of a disclosure statement, the instances in which valuations are not made are generally restricted to those in which the reorganization value of the emerging entity is greater than the liabilities or in which holders of existing voting shares retain more than 50 percent of the emerging entity's voting shares when the entity emerges from reorganization. ##### [852-10-05-14](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:00926ed759bd46e5cc602d5bf38a8bfa232315c300c788ac6d42264176ca5422 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After reorganization proceedings have started, acceptances of a plan may not be solicited by any person without a disclosure statement approved by the court, but acceptances obtained before the proceedings started may be counted if they were solicited in compliance with applicable nonbankruptcy law governing the adequacy of disclosure or there is not any applicable nonbankruptcy law but there was in fact adequate information provided at the time of the prebankruptcy solicitation of acceptances of the plan. ##### [852-10-05-15](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:c4631e6537726739da799b2392e612cc3ab9287fa1e377a888b07c958de39429 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While the court determines the adequacy of the disclosure statement, entities that expect to adopt fresh-start reporting (see Section 852-10-45 for guidance on what is referred to as fresh-start reporting) should report information about the reorganization value in the disclosure statement, so that creditors and stockholders can make an informed judgment about the plan. The most likely place to report the reorganization value is in the pro forma balance sheet that is commonly part of the disclosure statement. Because reorganization value may not have been allocated to individual assets concurrently with the preparation of the pro forma balance sheet included in the disclosure statement in some cases, it may be necessary to include in the pro forma balance sheet a separate line item to reflect the difference of the total reorganization value of the emerging entity over recorded amounts. When possible, reorganization value should be segregated into major categories. #### The Financial Reporting Consequences of the Absolute Priority Doctrine ##### [852-10-05-16](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:160dffa31530152c4a89e1668055190a771a89d5f8bb65beea37d41e49603e63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the [absolute priority doctrine](https://asc.understandingaccounting.org/glossary/a/#absolute-priority-doctrine "A doctrine that provides that if an impaired class does not vote in favor of a plan, the court may nevertheless confirm the plan under the cram-down provisions of the Bankruptcy Code. The absolute priority doctrine is triggered when the cram-down provisions apply. The doctrine states that all members of the senior class of creditors and equity interests must be satisfied in full before the members of the second senior class of creditors can receive anything, and the full satisfaction of that class must occur before the third senior class of creditors may be satisfied, and so on.") of the Bankruptcy Code, if the amount of postpetition liabilities and allowed claims exceeds the reorganization value of the emerging entity, existing shareholders lose their legal right to any economic interest without the consent of creditors. Therefore, any equity interest in the emerging entity ultimately held by existing shareholders is given to them by the creditors. Among the reasons the creditors might give such shareholders equity interests in the emerging entity are to avoid the expensive and time-consuming legal proceedings necessary to implement the cram-down provisions of the Bankruptcy Code or to preserve continuity of management. Consequently, in this situation, if all of the conditions stated in paragraph [852-10-45-19](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-19) are met, then upon an entity's emergence from Chapter 11, this Subtopic requires the entity to adopt fresh-start reporting. #### Terms ##### [852-10-05-17](https://asc.understandingaccounting.org/asc/852/10/#852-10-05-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:55.129Z to 2026-09-10T02:02:55.129Z Record version: sha256:412bc5ddefed68bcf1c01ab388c8d9bf3997afd08b52b4f965926808f5bf37bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following terms are widely used when addressing reorganizations, yet are not included in the text of the standards: 1. a [Administrative expenses](https://asc.understandingaccounting.org/glossary/a/#administrative-expenses "Claims that receive priority over all other unsecured claims in a bankruptcy case. Administrative expenses (sometimes referred to as administrative claims) include the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case. Fees paid to professionals for services rendered after the petition is filed are considered administrative expenses.") 2. b [Obligations subject to compromise](https://asc.understandingaccounting.org/glossary/o/#obligations-subject-to-compromise "Includes all prepetition liabilities (claims) except those that will not be impaired under the plan, such as claims in which the value of the security interest is greater than the claim.") 3. c [Undersecured claim](https://asc.understandingaccounting.org/glossary/u/#undersecured-claim "A secured claim whose collateral is worth less than the amount of the claim. Sometimes referred to as an undersecured claim liability."). Source downloaded (UTC): 2026-09-10T02:02:57.483Z to 2026-09-10T02:02:57.483Z Record version: sha256:e2828a2048c3e189785e358a12d36ba37803ed7bf9034f9f7264f3ea9ea6e1fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/852/10/#10-objectives) SEC content: no ##### [852-10-10-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:02:57.483Z to 2026-09-10T02:02:57.483Z Record version: sha256:110bed47ebbca5645e0b59dc23a2d44327665a3b81a83d35d6e6f0d9c4476a6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Presenting an entity's financial evolution in its financial statements during a [Chapter 11](https://asc.understandingaccounting.org/glossary/c/#chapter-11 "A reorganization action, either voluntarily or involuntarily initiated under the provisions of the Bankruptcy Code, that provides for a reorganization of the debt and equity structure of the business and allows the business to continue operations. A debtor may also file a plan of liquidation under Chapter 11.") [reorganization proceeding](https://asc.understandingaccounting.org/glossary/r/#reorganization-proceeding "A Chapter 11 case from the time at which the petition is filed until the plan is confirmed.") is an objective of the guidance in this Subtopic. Source downloaded (UTC): 2026-09-10T02:03:01.101Z to 2026-09-10T02:03:01.101Z Record version: sha256:fa37945d1089ca3b24391391fb10a1718a6b99e7cf51cdfb8e5207fe3a7287a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/852/10/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [852-10-15-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:01.101Z to 2026-09-10T02:03:01.101Z Record version: sha256:05b06e5386a22190132bdad11f26b4a86dd6dc4ce5b779ddf6406b32db1ba946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on financial reporting by entities that have filed petitions with the [Bankruptcy Court](https://asc.understandingaccounting.org/glossary/b/#bankruptcy-court "The United States Bankruptcy Court is an adjunct of the United States District Courts. Under the jurisdiction of the District Court, the Bankruptcy Court is generally responsible for cases filed under Chapters 7, 11, 12, and 13 of the Bankruptcy Code.") and expect to reorganize as going concerns under Chapter 11 of title 11 of the United States Code. The guidance in this Subtopic applies to all entities except governmental organizations. #### Transactions ##### [852-10-15-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:01.101Z to 2026-09-10T02:03:01.101Z Record version: sha256:d93a0f9975e4bcb9b320836e0305743c45217b20d7ca1d9d55239a6230769ea2 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 Reorganizations by entities that expect to reorganize as a going concern under [Chapter 11](https://asc.understandingaccounting.org/glossary/c/#chapter-11 "A reorganization action, either voluntarily or involuntarily initiated under the provisions of the Bankruptcy Code, that provides for a reorganization of the debt and equity structure of the business and allows the business to continue operations. A debtor may also file a plan of liquidation under Chapter 11.") 2. b Reorganizations by entities upon emergence from Chapter 11 under confirmed plans. ##### [852-10-15-3](https://asc.understandingaccounting.org/asc/852/10/#852-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:01.101Z to 2026-09-10T02:03:01.101Z Record version: sha256:6b109599fb8ab198dd8c941a234e217c40e3b3ab591014423eb7010c1bd7330a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Debt restructurings outside of Chapter 11 2. b Reorganization activities consisting of liquidation or adoption of plans of liquidation under the [Bankruptcy Code](https://asc.understandingaccounting.org/glossary/b/#bankruptcy-code "A federal statute, enacted October 1, 1979, as title 11 of the United States Code by the Bankruptcy Reform Act of 1978, that applies to all cases filed on or after its enactment and that provides the basis for the current federal bankruptcy system."). Source downloaded (UTC): 2026-09-10T02:03:08.094Z to 2026-09-10T02:03:08.094Z Record version: sha256:c216638c7cb66bbb1db172b2aa00e6e7f86337fb19ce837bb5e40cbeae43e14b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/852/10/#25-recognition) SEC content: no ##### [852-10-25-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:08.094Z to 2026-09-10T02:03:08.094Z Record version: sha256:3cfd4e79b33bea890b467c70231b6ae6c61402c6dec86104a86427bf515bf7ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As explained in paragraph [852-10-45-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-1), entering a [reorganization proceeding](https://asc.understandingaccounting.org/glossary/r/#reorganization-proceeding "A Chapter 11 case from the time at which the petition is filed until the plan is confirmed."), although a significant event, does not ordinarily affect or change the application of generally accepted accounting principles (GAAP) followed by the entity in the preparation of its financial statements. However, the needs of financial statement users change, and thus changes in the reporting practices previously followed by the entity are necessary. ##### [852-10-25-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:08.094Z to 2026-09-10T02:03:08.094Z Record version: sha256:ec29c52baf517bebcd52c89ac6125b61bc82f5bd1d205402bcd2a8dd96562298 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 852-10-45 for financial statement presentation guidance applicable to entities during and after reorganization proceedings. Source downloaded (UTC): 2026-09-10T02:03:09.960Z to 2026-09-10T02:03:09.960Z Record version: sha256:b28dfde92568998b899b4d2c4811340eb915239987c5a7b83577cdba37361ab9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/852/10/#30-initial-measurement) SEC content: no ##### [852-10-30-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:09.960Z to 2026-09-10T02:03:09.960Z Record version: sha256:d77d25f949dced3eadf678c7ed7fd77966bb606f5b03afe77fe11db3308bdbae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As explained in paragraph [852-10-45-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-1), entering a [reorganization proceeding](https://asc.understandingaccounting.org/glossary/r/#reorganization-proceeding "A Chapter 11 case from the time at which the petition is filed until the plan is confirmed."), although a significant event, does not ordinarily affect or change the application of generally accepted accounting principles (GAAP) followed by the entity in the preparation of its financial statements. However, the needs of financial statement users change, and thus changes in the reporting practices previously followed by the entity are necessary. ##### [852-10-30-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:09.960Z to 2026-09-10T02:03:09.960Z Record version: sha256:45327a8f0d0903da5e6926167d4421b96d235c7649d5b2ad2ed4435073254cc7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 852-10-45 for financial statement presentation guidance applicable to entities during and after reorganization proceedings. Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:3667eaf103b768134c2fbf1017a743397252e1f4a0c2f1258fc77202d4cd3d80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/852/10/#45-other-presentation-matters) SEC content: no #### Financial Reporting during Reorganization Proceedings ##### [852-10-45-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:5b29b0c7905113ee4033309e04a3e01b729e51dafd993c46a60306846362ed59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entering a [reorganization proceeding](https://asc.understandingaccounting.org/glossary/r/#reorganization-proceeding "A Chapter 11 case from the time at which the petition is filed until the plan is confirmed."), although a significant event, does not ordinarily affect or change the application of generally accepted accounting principles (GAAP) followed by the entity in the preparation of its financial statements. However, the needs of financial statement users change, and thus changes in the reporting practices previously followed by the entity are necessary. ##### [852-10-45-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:65d38b52f2b2dd889d290bca6d46b3d8957842aba24511f39939df6170a5a1f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the purpose of presenting an entity's financial evolution during a [Chapter 11](https://asc.understandingaccounting.org/glossary/c/#chapter-11 "A reorganization action, either voluntarily or involuntarily initiated under the provisions of the Bankruptcy Code, that provides for a reorganization of the debt and equity structure of the business and allows the business to continue operations. A debtor may also file a plan of liquidation under Chapter 11.") reorganization (see paragraph [852-10-10-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-10-1)), the financial statements for periods including and after filing the Chapter 11 [petition](https://asc.understandingaccounting.org/glossary/p/#petition "A document filed in a court of bankruptcy, initiating proceedings under the Bankruptcy Code.") shall distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. ##### [852-10-45-3](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:d8f9fbed75e5108df5c7423541662c2f52cecb2733ab5a9e700d16c2369c621f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [852-10-55-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-2)) provides an illustration of financial statements and notes thereto for an entity operating under Chapter 11. ##### [852-10-45-4](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:7bb6e56b1e4a64632c45b2581030ed699a4e2d743d8bb3005fb3a40b716ec0c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The balance sheet of an entity in Chapter 11 shall distinguish [prepetition liabilities](https://asc.understandingaccounting.org/glossary/p/#prepetition-liabilities "Liabilities that were incurred by an entity before its filing of a petition for protection under the Bankruptcy Code including those considered by the Bankruptcy Court to be prepetition claims, such as a rejection of a lease for real property.") subject to compromise from those that are not (such as fully secured liabilities that are expected not to be compromised) and [postpetition liabilities](https://asc.understandingaccounting.org/glossary/p/#postpetition-liabilities "Liabilities incurred after the filing of a petition that are not associated with prebankruptcy events. Thus, these liabilities are not considered prepetition liabilities."). Liabilities that may be affected by the plan shall be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. If there is uncertainty about whether a [secured claim](https://asc.understandingaccounting.org/glossary/s/#secured-claim "A liability that is secured by collateral. A fully secured claim is one in which the value of the collateral is greater than the amount of the claim.") is undersecured, or will be impaired under the [plan of reorganization](https://asc.understandingaccounting.org/glossary/p/#plan-of-reorganization "An agreement formulated in Chapter 11 proceedings under the supervision of the Bankruptcy Court that enables the debtor to continue in business. The plan, once confirmed, may affect the rights of undersecured creditors, secured creditors, and stockholders as well as those of unsecured creditors. Before a plan is confirmed by the Bankruptcy Court, it must comply with general provisions of the Bankruptcy Code. Those provisions mandate, for example, that the plan is feasible, the plan is in the best interest of the creditors, and, if an impaired class does not accept the plan, the plan must be determined to be fair and equitable before it can be confirmed."), the entire amount of the [claim](https://asc.understandingaccounting.org/glossary/c/#claim "As defined by Section 101(4) of the Bankruptcy Code, a right to payment, regardless of whether the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, secured, or unsecured, or a right to an equitable remedy for breach of performance if such breach results in a right to payment, regardless of whether the right is reduced to a fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured right.") shall be included with prepetition claims subject to compromise; such a claim shall not be reclassified unless it is subsequently determined that the claim is not subject to compromise. ##### [852-10-45-5](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:6e6fdadde1b0c824ff7c5efcd49b288285ee49f921f9e556a4181d6c3a2e580d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prepetition liabilities, including claims that become known after a petition is filed, shall be reported on the basis of the expected amount of the [allowed claims](https://asc.understandingaccounting.org/glossary/a/#allowed-claim "The amount allowed by the Bankruptcy Court as a claim against the estate. This amount may differ from the actual settlement amount.") in accordance with Subtopic 450-20, as opposed to the amounts for which those allowed claims may be settled. Once these claims satisfy the accrual provisions of that Subtopic, they shall be recorded in the accounts in accordance with this paragraph. Paragraph [852-10-50-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-2) notes that claims not subject to reasonable estimation are required to be disclosed in the notes to financial statements. ##### [852-10-45-6](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:400a863bbcb73116b2cb47a3d0fd47b418882e1bdcc5983808f87d914929187e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Debt discounts or premiums as well as debt issue costs shall be viewed as valuations of the related debt. When the debt has become an allowed claim and the allowed claim differs from the net carrying amount of the debt, the recorded amount shall be adjusted to the amount of the allowed claim (thereby adjusting existing discounts or premiums, and deferred issue costs to the extent necessary to report the debt at this allowed amount). The gain or loss resulting from the entries to record the adjustment shall be classified as reorganization items, as discussed in paragraph [852-10-45-9](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-9). Premiums and discounts as well as debt issuance cost on debts that are not subject to compromise, such as fully secured claims, shall not be adjusted. ##### [852-10-45-7](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:51b2739b313a4c7800334bca4b6e03ef05f8b76258680139217f2c40b29b380e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [852-10-45-4](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-4) addresses the separation of liabilities subject to compromise from those that are not. Circumstances arising during reorganization proceedings may require a change in the classification of liabilities between those subject to compromise and those not subject to compromise. Liabilities not subject to compromise shall be further segregated into current and noncurrent classifications if the entity presents a classified balance sheet. ##### [852-10-45-8](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:5e46d89ca98ece0c4aef80ff24df64bb96b613624ed3a011839fa5304ab5a5a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 470-10-45 requires current liabilities classification in a classified balance sheet for long-term liabilities that, by their terms, are due on demand or will be due on demand within one year, or the operating cycle, if longer. This classification requirement also applies to long-term liabilities that are or will be callable by the creditor because of a violation of a provision of the debt agreement. The [automatic stay provisions](https://asc.understandingaccounting.org/glossary/a/#automatic-stay-provisions "Provisions causing the filing of a petition under the Bankruptcy Code to automatically stay virtually all actions of creditors to collect prepetition debts. As a result of the stay, no party, with minor exceptions, having a security or adverse interest in the debtor's property can take any action that will interfere with the debtor or the debtor's property, regardless of where the property is located or who has possession, until the stay is modified or removed.") of Chapter 11 make it unnecessary to reclassify prepetition long-term liabilities even though prepetition creditors might demand payment or there is a violation of a covenant in the debt agreement. ##### [852-10-45-9](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:b014dea8afff88d9e463beba391cdcea651208546db6bf5446a9d3d0cb37dd0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The statement of operations shall portray the results of operations of the reporting entity while it is in Chapter 11. Revenues, expenses (including professional fees), realized gains and losses, and provisions for losses resulting from the reorganization and restructuring of the business shall be reported separately as [reorganization items](https://asc.understandingaccounting.org/glossary/r/#reorganization-items "Items of income, expense, gain, or loss that are realized or incurred by an entity because it is in reorganization."), except for those required to be reported as discontinued operations in conformity with Subtopic 205-20. ##### [852-10-45-10](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:2e47ace6cb8fc3a2585e4437c6e8cdff66c73cd62b0741e2f34d697bfcc9bdac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is not appropriate to defer professional fees and similar types of expenditures until the plan is confirmed and then reduce gain from debt discharge to the extent of the previously deferred expenses. It is also not appropriate to accrue professional fees and similar types of expenditures upon the filing of the Chapter 11 petition. Rather, because professional fees and similar types of expenditures directly relating to the Chapter 11 proceeding do not result in assets or liabilities, they shall be expensed as incurred and reported as reorganization items. ##### [852-10-45-11](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:4b76420e4a51c473b5cf06bf86b1d2b64bfbb786e38ead6027cb62ea07318e6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest expense shall be reported only to the extent that it will be paid during the proceeding or that it is probable that it will be an allowed priority, secured, or unsecured claim. Interest expense is not a reorganization item. ##### [852-10-45-12](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:fcde884d1d03931fbeaffbc101972a88467ac62c85ce02b7505bd3d3e13b012b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest income earned by an entity in Chapter 11 that it would not have earned but for the proceeding, normally all interest income, shall be reported as a reorganization item. ##### [852-10-45-13](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:e268563cd9dccd13c3e770d6d5481aeef5659af66922ff696756dd7bb15bfb28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reorganization items shall be presented separately within the operating, investing, and financing categories of the statement of cash flows. This presentation can be better accomplished by the use of the direct method of presenting the statement. Paragraph [230-10-45-25](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-25) lists the operating items that shall be reported separately when the direct method is used. That paragraph encourages further breakdown of those operating items if the entity considers such a breakdown meaningful and feasible. Further identification of cash flows from reorganization items should be provided to the extent feasible. For example, interest received might be segregated between estimated normal recurring interest received and interest received on cash accumulated because of the reorganization. If the indirect method is used, details of operating cash receipts and payments resulting from the reorganization shall be disclosed in a supplementary schedule or in the notes to financial statements. (See paragraph [852-10-50-6A](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-6A).) ##### [852-10-45-14](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:c8a358365e6debb9ece089ae129ae7c5a7976e9365b17898c094c1511f9c4c71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consolidated financial statements that include one or more entities in reorganization proceedings and one or more entities not in reorganization proceedings shall include condensed combined financial statements of the entities in reorganization proceedings. The combined financial statements shall be prepared on the same basis as the consolidated financial statements. ##### [852-10-45-15](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:ff5cd6b84d4dc465208049b1a616a7db1cdb328bc7d3c6c63a002525b8d38538 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to making the required paragraph [852-10-50-4](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-4) disclosures, the propriety of the carrying amounts of intra-entity receivables from entities in Chapter 11 shall be evaluated. ##### [852-10-45-16](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:ab4bbada48d79d82a9dff09e1734944270d8254513f355c4c2a3b2ca4e4dc156 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Earnings per share (EPS) shall be reported, if required, in conformity with Topic 260. If it is probable that the plan will require the issuance of common stock or common stock equivalents, thereby diluting current equity interests, that fact shall be disclosed. #### Financial Reporting When Entities Emerge from Chapter 11 Reorganization ##### [852-10-45-17](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:cdfe596a58851f4e7c802cd98bf4bbabc22a20237d15e5d5d4f5a3b586fc3ec8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities whose plans have been confirmed by the court and have thereby emerged from Chapter 11 shall apply the reporting principles in paragraphs [852-10-45-19 through 45-29](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-19) as of the confirmation date or as of a later date, as discussed in the following paragraph, when all material conditions precedent to the plan's becoming binding are resolved. ##### [852-10-45-18](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:477381f6160a046c234973e90c210ec1b38887c612cf0c92e31f833479c79a75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effects of a plan should be included in the entity's financial statements as of the date the plan is confirmed. However, inclusion shall be delayed to a date not later than the effective date if there is a material unsatisfied condition precedent to the plan's becoming binding on all the parties in interest or if there is a stay pending appeal. That might occur, for example, if obtaining financing for the plan or for the transfer of material assets to the debtor by a third party is a condition to the plan's becoming effective. Financial statements prepared as of the date after the parties in interest have approved a plan through the voting process, and issued after the plan has been confirmed by the court, shall report the effects of the plan if there are no material unsatisfied conditions. ##### [852-10-45-19](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:6982876c52515f62103111960df9c53f43f4b7c8280b515d8c608a52ae0a1f71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the reorganization value of the assets of the emerging entity immediately before the date of confirmation is less than the total of all postpetition liabilities and allowed claims, and if holders of existing voting shares immediately before confirmation receive less than 50 percent of the voting shares of the emerging entity, the entity shall adopt fresh-start reporting upon its emergence from Chapter 11. The loss of control contemplated by the plan must be substantive and not temporary. That is, the new controlling interest must not revert to the shareholders existing immediately before the plan was filed or confirmed. ##### [852-10-45-20](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:75cf663ccc6e4ef487214c7b672016625248ed0713cfdf772f95082539363cd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities that adopt fresh-start reporting in conformity with the preceding paragraph shall apply the following principles: 1. a The reorganization value of the entity shall be assigned to the entity's assets and liabilities in conformity with the procedures specified by Subtopic 805-20. If any portion of the reorganization value cannot be attributed to specific tangible or identified intangible assets of the emerging entity, such amounts shall be reported as goodwill in accordance with paragraph [350-20-25-2](https://asc.understandingaccounting.org/asc/350/20/#350-20-25-2). 2. b [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). 3. c Deferred taxes shall be determined under the requirements of paragraph [852-740-45-1](https://asc.understandingaccounting.org/asc/740/852/#740-852-45-1). 4. d [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [852-10-45-21](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:beeea83f1fd56389a099a3a43c9e5c9a43f46906682b060353067d3d07f7c32a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial statements of the entity as of and for the period immediately preceding the date determined in conformity with the guidance in paragraph [852-10-45-17](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-17) shall reflect all activity through that date in conformity with the guidance in paragraphs [852-10-45-1 through 45-16](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-1) . Additionally, the effects of the adjustments on the reported amounts of individual assets and liabilities resulting from the adoption of fresh-start reporting and the effects of the forgiveness of debt shall be reflected in the predecessor entity's final statement of operations. Forgiveness of debt, if any, shall be reported as an extinguishment of debt and classified in accordance with Subtopic 220-20. Adopting fresh-start reporting results in a new reporting entity with no beginning retained earnings or deficit. When fresh-start reporting is adopted, the notes to the initial fresh-start financial statements shall disclose the additional information identified in paragraph [852-10-50-7](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-7). ##### [852-10-45-22](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:de8915571bf7964a3a8edae550347f6e7faa0e691af397becfd4b1b37c1ece8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [852-10-45-23](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:f7439185b0417227285c2f1835c3b55728322e2dca8b9189f7294c1b95099b7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [852-10-45-24](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:a31e408e57a97d8f2b241a529e087f405cb3a5955222de3003ba93c03d619130 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [852-10-45-25](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:96915be86478abc9aac5248c9cab720e01240abf686517342c10dfe026f75c82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [852-10-45-26](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:d503d9f4c620c9c1df66d6a45db8e3214c071a7885e6dfaca28eca89c5d24d19 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fresh-start financial statements prepared by entities emerging from Chapter 11 will not be comparable with those prepared before their plans were confirmed because they are, in effect, those of a new entity. Thus, comparative financial statements that straddle a confirmation date shall not be presented. ##### [852-10-45-27](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:e79915791d32e791afe8ee0c39fe1b08d51787c07cbcfb288aeac7e8c08cdb18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regulatory agencies may require the presentation of predecessor financial statements. However, such presentations shall not be viewed as a continuum because the financial statements are those of a different reporting entity and are prepared using a different basis of accounting, and, therefore, are not comparable. Attempts to disclose and explain exceptions that affect comparability would likely result in reporting that is so unwieldy it would not be useful. ##### [852-10-45-28](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:291e510f79f24472480ae95a45af691d76ccad804900916e8d9cac6dd3ecff9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 2 (see paragraph [852-10-55-4](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-4)) provides an illustration of fresh-start reporting and the related illustrative notes to financial statements. ##### [852-10-45-29](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:11.975Z to 2026-09-10T02:03:11.975Z Record version: sha256:ecde9fbcc516c1ae1f7c8d00a42021a968c4f76834a5ed273a3fa95759d86f44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities emerging from Chapter 11 that do not meet the criteria in paragraph [852-10-45-19](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-19) do not qualify for fresh-start reporting. Liabilities compromised by confirmed plans shall be stated at present values of amounts to be paid, determined at appropriate current interest rates. Forgiveness of debt, if any, shall be reported as an extinguishment of debt and classified in accordance with Subtopic 220-20. Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:fc66a2919fa9c3c32fd4304751d3b477a81785f3e11dbc55c305e1dd3bcc65b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/852/10/#50-disclosure) SEC content: no ##### [852-10-50-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:35985804b2d5f6772c17670e74accfab6d97e68af70e8601469c1a1994e1aecf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides incremental disclosure guidance for entities with transactions within the scope of this Subtopic. It is incremental to disclosure guidance otherwise applicable to an entity under other generally accepted accounting principles (GAAP). #### Financial Reporting during Reorganization Proceedings ##### [852-10-50-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:94604ad5a5638be77899df07c6face6bd176e2522cb5a453471f50ca4751399d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The notes to financial statements of an entity in Chapter 11 shall disclose both of the following: 1. a [Claims](https://asc.understandingaccounting.org/glossary/c/#claim "As defined by Section 101(4) of the Bankruptcy Code, a right to payment, regardless of whether the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, secured, or unsecured, or a right to an equitable remedy for breach of performance if such breach results in a right to payment, regardless of whether the right is reduced to a fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured right.") not subject to reasonable estimation based on the provisions of Subtopic 450-20 2. b The principal categories of the claims subject to compromise. ##### [852-10-50-3](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:604d5440151671640f2daa70a6ae14d4ec4da1899e0c9d5a29d0e6c573974a00 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The extent to which reported interest expense differs from stated contractual interest shall be disclosed. It may be appropriate to disclose this parenthetically on the face of the statement of operations. ##### [852-10-50-4](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:ab601e37ebd8bdc968e8c5f6beea886ff594923a1a8cf62a75e5ef68b73ed3d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Intra-entity receivables and payables of entities in reorganization proceedings shall be disclosed in the condensed combined financial statements referred to in paragraph [852-10-45-14](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-14). ##### [852-10-50-5](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:783a5e4cb061214bb297bf731d4522c57049d1f46a974c182f393899e6e9ff24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [852-10-45-16](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-16) identifies a situation in which disclosure of a probable issuance of common stock or common stock equivalents is required. ##### [852-10-50-6](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:73354fdcd1611f2efdc5e6a6b71a9ed0ea2f7b04e544a36218596de3c6f36734 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [852-10-55-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-2)) provides an illustration of financial statements and notes thereto for an entity operating under [Chapter 11](https://asc.understandingaccounting.org/glossary/c/#chapter-11 "A reorganization action, either voluntarily or involuntarily initiated under the provisions of the Bankruptcy Code, that provides for a reorganization of the debt and equity structure of the business and allows the business to continue operations. A debtor may also file a plan of liquidation under Chapter 11."). ##### [852-10-50-6A](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-6A) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:4b048d6f5bdf892169d5ccd957e8ccf42bbda9992bcebf4fbeb8a802d626d97b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the indirect method is used to prepare the statement of cash flows, details of operating cash receipts and payments resulting from the reorganization shall be disclosed in a supplementary schedule or in the notes to financial statements. (See paragraph [852-10-45-13](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-13).) #### Financial Reporting When Entities Emerge from Chapter 11 Reorganization and Adopt Fresh-Start Reporting ##### [852-10-50-7](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:90a4c7a67260e011b3f7e44f217516aee5bc811e627ab3f35b83e7604a1153d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [852-10-45-21](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-21) requires additional information to be disclosed in the notes to the initial fresh-start financial statements when fresh-start reporting is adopted. That additional information consists of all of the following: 1. a Adjustments to the historical amounts of individual assets and liabilities 2. b The amount of debt forgiveness 3. c Significant matters relating to the determination of [reorganization value](https://asc.understandingaccounting.org/glossary/r/#reorganization-value "The value attributed to the reconstituted entity, as well as the expected net realizable value of those assets that will be disposed of before reconstitution occurs. Therefore, this value is viewed as the value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring."), including all of the following: 1. 1 The method or methods used to determine reorganization value and factors such as discount rates, tax rates, the number of years for which cash flows are projected, and the method of determining [terminal value](https://asc.understandingaccounting.org/glossary/t/#terminal-value "A component of reorganization value.Reorganization value calculated based on the discounting of cash flows normally consists of three parts; the discounted cash flows determined for the forecast period, the residual value or terminal value, and the current value of any excess working capital or other assets that are not needed in reorganization. Terminal or residual value represents the present value of the business attributable to the period beyond the forecast period.") 2. 2 Sensitive assumptions—that is, assumptions about which there is a reasonable possibility of the occurrence of a variation that would have significantly affected measurement of reorganization value 3. 3 Assumptions about anticipated conditions that are expected to be different from current conditions, unless otherwise apparent. ##### [852-10-50-8](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:15.208Z to 2026-09-10T02:03:15.208Z Record version: sha256:03314b1160ae6c629a7358019b88cdb7e66d440dc3b9ece10a75f810f8e800d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:9e749e4676c3957e657fcb5a7f2c21cfc32a8e2eda7519b916fab60e70d409b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/852/10/#55-implementation-guidance-and-illustrations) SEC content: no ##### [852-10-55-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:740df714358240b92b41b9aad9695c86e36f377a24a610007c675184056d527e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is an integral part of the requirements of this Subtopic. This Section provides illustrations that address the application of requirements to specific aspects of accounting and reporting for entities in reorganization under Chapter 11 of the [Bankruptcy Code](https://asc.understandingaccounting.org/glossary/b/#bankruptcy-code "A federal statute, enacted October 1, 1979, as title 11 of the United States Code by the Bankruptcy Reform Act of 1978, that applies to all cases filed on or after its enactment and that provides the basis for the current federal bankruptcy system."). The illustrations that follow may be based on provisions of law that are subject to change. These assumptions about the law are for illustrative purposes only. #### Illustrations ##### [852-10-55-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:528b4b1966e0ff9ff19e95768019f5c82d4374088e8ca2126589a2e4e5ed4679 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Example illustrates the guidance in paragraphs [852-10-45-1 through 45-13](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-1) and [852-10-50-2 through 50-3](https://asc.understandingaccounting.org/asc/852/10/#852-10-50-2) relating to financial statement reporting practices during the period that an entity is in reorganization. Illustrative financial statements and accompanying notes follow. ##### [852-10-55-3](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-3) Pending content: yes Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:1f72297c5362ae4a0eb327be380c49e2bb41baccf51dc48b035665066a8d1d37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. XYZ Company is a manufacturing concern headquartered in Tennessee, with a fiscal year ending on December 31. On January 10, 19X1, XYZ filed a [petition](https://asc.understandingaccounting.org/glossary/p/#petition "A document filed in a court of bankruptcy, initiating proceedings under the Bankruptcy Code.") for relief under Chapter 11 of the federal bankruptcy laws. The following financial statements (balance sheet and statements of operations and cash flows) are presented as of and for the year ended December 31. - Illustrative Financial Statements and Notes to Financial Statements for an Entity Operating Under Chapter 11 - ![](https://asc.understandingaccounting.org/asc-img/GUID-CE6E1D02-E98F-4555-9396-4CF95282FD22-low.gif) XYZ Company (Debtor in Possession) Balance Sheet "December 31, 19X1" Assets (000s) Current assets Cash $110 "Accounts receivable, net" 300 Inventory 250 Other current assets 30 Total current assets 690 "Property, plant and equipment, net" 430 Goodwill 210 Total assets " $1,330 " Liabilities and Shareholders' Deficit (000s) Liabilities not subject to compromise current liabilities: Short-term borrowings $25 Accounts payable—trade 200 Other liabilities 50 Total current liabilities 275 Liabilities subject to compromise " 1,100 " (a) Total liabilities " 1,375 " shareholders' (deficit) Preferred stock 325 Common stock 75 Retained earnings (deficit) (445) (45) Total Liabilities & Shareholders' (Deficit) " $1,330 " (a) Liabilities subject to compromise consist of the following: "Secured debt, 14%, secured by first mortgage on building" " $300,000 " (b) Priority tax claims " 50,000 " "Senior subordinated secured notes, 15%" " 275,000 " Trade and other miscellaneous claims " 225,000 " "Subordinated debentures, 17%" " 250,000 " " $1,100,000 " (b) "The secured debt in this case should be considered, due to various factors, subject to compromise." The accompanying notes are an integral part of the financial statements. - ![](https://asc.understandingaccounting.org/asc-img/GUID-57CE05EF-CD69-4F6B-AB7E-600265574C2C-low.gif) XYZ Company (Debtor-in-Possession) Statement of Operations "For the Year Ended December 31, 19X1" (000s) 19X1 Revenues: Sales " $2,400 " Cost and expenses: Cost of goods sold " 1,800 " "Selling, operating and administrative" 550 Interest (contractual interest $5) 3 " 2,353 " Earnings before reorganization items and income tax benefit 47 Reorganization items: Loss on disposal of facility (60) Professional fees (50) Provision for rejected executory contracts (10) Interest earned on accumulated cash resulting from Chapter 11 proceeding 1 (119) Loss before income tax benefit and discontinued operations (72) Income tax benefit 10 Loss before discontinued operations (62) Discontinued operations: Loss from operations of discontinued products segment (56) Net loss $(118) Loss per common share: Loss before discontinued operations $(0.62) Discontinued operations $(0.56) Net loss $(1.18) The accompanying notes are an integral part of the financial statements. - ![](https://asc.understandingaccounting.org/asc-img/GUID-A4F01AFA-AA43-4469-8DDF-3A86AC2340A7-low.gif) XYZ Company (Debtor-in-Possession) Statement of Cash Flows "For the Year Ended December 31, 19X1" Increase in Cash and Cash Equivalents (000s) 19X1 Cash flows from operating activities: Cash received from customers " $2,220 " Cash paid to suppliers and employees " (2,070)" Interest paid (3) Net cash provided by operating activities before reorganization items 147 Operating cash flows from reorganization items: Interest received on cash accumulated because of the Chapter 11 proceeding 1 Professional fees paid for services rendered in connection with the Chapter 11 proceeding (50) Net cash used by reorganization items (49) Net cash provided by operating activities 98 Cash flows from investing activities: Capital expenditures (5) Proceeds from sale of facility due to Chapter 11 proceeding 40 Net cash provided by investing activities 35 Cash flow used by financing activities: Net borrowings under short-term credit facility (post petition) 25 Repayment of cash overdraft (45) Principal payments on prepetition debt authorized by court (3) Net cash provided by financing activities (23) Net increase in cash and cash equivalents 110 Cash and cash equivalents at beginning of year - Cash and cash equivalents at end of year $110 Reconciliation of net loss to net cash provided by operating activities Net loss $(118) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation 20 Loss on disposal of facility 60 Provision for rejected executory contracts 10 Loss on discontinued operations 56 Increase in postpetition payables and other liabilities 250 Increase in accounts receivable (180) Net cash provided by operating activities $98 The accompanying notes are an integral part of the financial statements. - XYZ Company Notes to Financial Statements December 31, 19X1 - Note X—Petition for Relief Under Chapter 11 - On January 10, 19X1, XYZ Company (the Debtor) filed petitions for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the Western District of Tennessee. Under Chapter 11, certain claims against the Debtor in existence before the filing of the petitions for relief under the federal bankruptcy laws are stayed while the Debtor continues business operations as Debtor-in-possession. These claims are reflected in the December 31, 19X1, balance sheet as liabilities subject to compromise. Additional claims (liabilities subject to compromise) may arise after the filing date resulting from rejection of executory contracts, including leases, and from the determination by the court (or agreed to by parties in interest) of allowed claims for contingencies and other disputed amounts. Claims secured against the Debtor's assets (secured claims) also are stayed, although the holders of such claims have the right to move the court for relief from the stay. Secured claims are secured primarily by liens on the Debtor's property, plant, and equipment. - The Debtor received approval from the Bankruptcy Court to pay or otherwise honor certain of its prepetition obligations, including employee wages and product warranties. The Debtor has determined that there is insufficient collateral to cover the interest portion of scheduled payments on its prepetition debt obligations. Contractual interest on those obligations amounts to $5,000, which is $2,000 in excess of reported interest expense; therefore, the debtor has discontinued accruing interest on these obligations. See Note X in Example 2 (paragraph [852-10-55-11](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-11)) for a discussion of the credit arrangements entered into after the Chapter 11 filings. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)XYZ Company is a manufacturing concern headquartered in Tennessee, with a fiscal year ending on December 31. On January 10, 19X1, XYZ filed a [petition](https://asc.understandingaccounting.org/glossary/p/#petition "A document filed in a court of bankruptcy, initiating proceedings under the Bankruptcy Code.") for relief under Chapter 11 of the federal bankruptcy laws. The following financial statements (balance sheet and statements of operations and cash flows) are presented as of and for the year ended December 31. - Illustrative Financial Statements and Notes to Financial Statements for an Entity Operating Under Chapter 11 - ![](https://asc.understandingaccounting.org/asc-img/GUID-CE6E1D02-E98F-4555-9396-4CF95282FD22-low.gif) XYZ Company (Debtor in Possession) Balance Sheet "December 31, 19X1" Assets (000s) Current assets Cash $110 "Accounts receivable, net" 300 Inventory 250 Other current assets 30 Total current assets 690 "Property, plant and equipment, net" 430 Goodwill 210 Total assets " $1,330 " Liabilities and Shareholders' Deficit (000s) Liabilities not subject to compromise current liabilities: Short-term borrowings $25 Accounts payable—trade 200 Other liabilities 50 Total current liabilities 275 Liabilities subject to compromise " 1,100 " (a) Total liabilities " 1,375 " shareholders' (deficit) Preferred stock 325 Common stock 75 Retained earnings (deficit) (445) (45) Total Liabilities & Shareholders' (Deficit) " $1,330 " (a) Liabilities subject to compromise consist of the following: "Secured debt, 14%, secured by first mortgage on building" " $300,000 " (b) Priority tax claims " 50,000 " "Senior subordinated secured notes, 15%" " 275,000 " Trade and other miscellaneous claims " 225,000 " "Subordinated debentures, 17%" " 250,000 " " $1,100,000 " (b) "The secured debt in this case should be considered, due to various factors, subject to compromise." The accompanying notes are an integral part of the financial statements. - ![](https://asc.understandingaccounting.org/asc-img/GUID-57CE05EF-CD69-4F6B-AB7E-600265574C2C-low.gif) XYZ Company (Debtor-in-Possession) Statement of Operations "For the Year Ended December 31, 19X1" (000s) 19X1 Revenues: Sales " $2,400 " Cost and expenses: Cost of goods sold " 1,800 " "Selling, operating and administrative" 550 Interest (contractual interest $5) 3 " 2,353 " Earnings before reorganization items and income tax benefit 47 Reorganization items: Loss on disposal of facility (60) Professional fees (50) Provision for rejected executory contracts (10) Interest earned on accumulated cash resulting from Chapter 11 proceeding 1 (119) Loss before income tax benefit and discontinued operations (72) Income tax benefit 10 Loss before discontinued operations (62) Discontinued operations: Loss from operations of discontinued products segment (56) Net loss $(118) Loss per common share: Loss before discontinued operations $(0.62) Discontinued operations $(0.56) Net loss $(1.18) The accompanying notes are an integral part of the financial statements. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B9C5A640-DED9-4CA2-8978-6B7A29BF9B58-low.gif) XYZ Company (Debtor-in-Possession) Statement of Cash Flows "For the Year Ended December 31, 19X1" Increase in Cash and Cash Equivalents (000s) 19X1 Cash flows from operating activities: Cash received from customers " $2,220 " Cash paid to suppliers and employees " (2,070)" Interest paid (3) Net cash provided by operating activities before reorganization items 147 Operating cash flows from reorganization items: Interest received on cash accumulated because of the Chapter 11 proceeding 1 Professional fees paid for services rendered in connection with the Chapter 11 proceeding (50) Net cash used in reorganization items (49) Net cash provided by operating activities 98 Cash flows from investing activities: Capital expenditures (5) Proceeds from sale of facility due to Chapter 11 proceeding 40 Net cash provided by investing activities 35 Cash flows from financing activities: Net borrowings under short-term credit facility (post petition) 25 Repayment of cash overdraft (45) Principal payments on prepetition debt authorized by court (3) Net cash used in financing activities (23) Net increase in cash and cash equivalents 110 Cash and cash equivalents at beginning of year - Cash and cash equivalents at end of year $110 Reconciliation of net loss to net cash provided by operating activities Net loss $(118) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation 20 Loss on disposal of facility 60 Provision for rejected executory contracts 10 Loss on discontinued operations 56 Increase in postpetition payables and other liabilities 250 Increase in accounts receivable (180) Net cash provided by operating activities $98 The accompanying notes are an integral part of the financial statements. - XYZ Company Notes to Financial Statements December 31, 19X1 - Note X—Petition for Relief Under Chapter 11 - On January 10, 19X1, XYZ Company (the Debtor) filed petitions for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the Western District of Tennessee. Under Chapter 11, certain claims against the Debtor in existence before the filing of the petitions for relief under the federal bankruptcy laws are stayed while the Debtor continues business operations as Debtor-in-possession. These claims are reflected in the December 31, 19X1, balance sheet as liabilities subject to compromise. Additional claims (liabilities subject to compromise) may arise after the filing date resulting from rejection of executory contracts, including leases, and from the determination by the court (or agreed to by parties in interest) of allowed claims for contingencies and other disputed amounts. Claims secured against the Debtor's assets (secured claims) also are stayed, although the holders of such claims have the right to move the court for relief from the stay. Secured claims are secured primarily by liens on the Debtor's property, plant, and equipment. - The Debtor received approval from the Bankruptcy Court to pay or otherwise honor certain of its prepetition obligations, including employee wages and product warranties. The Debtor has determined that there is insufficient collateral to cover the interest portion of scheduled payments on its prepetition debt obligations. Contractual interest on those obligations amounts to $5,000, which is $2,000 in excess of reported interest expense; therefore, the debtor has discontinued accruing interest on these obligations. See Note X in Example 2 (paragraph [852-10-55-11](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-11)) for a discussion of the credit arrangements entered into after the Chapter 11 filings. ##### [852-10-55-4](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:33692b30462d6468de5a551f343d174ba2e3eb9ce8035545176fba07f0eb2833 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the fresh-start-related guidance in paragraphs [852-10-45-19 through 45-27](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-19) and uses the same hypothetical XYZ Company as in Example 1 (see paragraph [852-10-55-2](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-2)). Illustrative accounting and associated note disclosures follow. ##### [852-10-55-5](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:51693b96eb963bc41bb3c24df1fb1d6bae8651b657159779b3762ba094c54dbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Bankruptcy Court confirmed XYZ's plan of reorganization as of June 30, 19X2. It was determined that XYZ's reorganization value computed immediately before June 30, 19X2, the date of plan confirmation, was $1,300,000, which consisted of the following. - ![](https://asc.understandingaccounting.org/asc-img/GUID-31107C57-9EFB-498F-955F-204148424F4F-low.gif) Cash in excess of normal operating requirements generated by operations " $150,000 " Net realizable value of asset dispositions " 75,000 " Present value of discounted cash flows of the emerging entity " 1,075,000 " Reorganization value " $1,300,000 " ##### [852-10-55-6](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:89089ce1bd822bbe7efe5e2a04abab60e63b612e11d0f0d7d29cfe06cdfb66a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. XYZ Company adopted fresh-start reporting because holders of existing voting shares immediately before filing and confirmation of the plan received less than 50% of the voting shares of the emerging entity and its reorganization value is less than its postpetition liabilities and [allowed claims](https://asc.understandingaccounting.org/glossary/a/#allowed-claim "The amount allowed by the Bankruptcy Court as a claim against the estate. This amount may differ from the actual settlement amount."), as shown in the following table. - ![](https://asc.understandingaccounting.org/asc-img/GUID-AC1B4CC4-0E30-487B-A3C7-09907D7F6468-low.gif) Postpetition current liabilities " $300,000 " Liabilities deferred pursuant to Chapter 11 proceeding " 1,100,000 " Total postpetition liabilities and allowed claims " 1,400,000 " Reorganization value " (1,300,000)" Excess of liabilities over reorganization value " $100,000 " ##### [852-10-55-7](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:2736f9a6b9858bb5eec3a34ceaa73bfc357bb31e161b319bf8b197773e13d389 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reorganization value of the XYZ Company was determined in consideration of several factors and by reliance on various valuation methods, including discounting cash flow and price/earnings and other applicable ratios. The factors considered by XYZ Company included all of the following: 1. a Forecasted operating and cash flow results that gave effect to the estimated impact of both of the following: 1. 1 Corporate restructuring and other operating program changes 2. 2 Limitations on the use of available net operating loss carryovers and other tax attributes resulting from the plan of reorganization and other events. 2. b The discounted residual value at the end of the forecast period based on the capitalized cash flows for the last year of that period 3. c Market share and position 4. d Competition and general economic considerations 5. e Projected sales growth 6. f Potential profitability 7. g Seasonality and working capital requirements. ##### [852-10-55-8](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:a63039fe5cbaab9c6c266de88069eba904901de988d04296d547f0b831e34776 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After consideration of XYZ Company's debt capacity and other capital structure considerations, such as industry norms, projected earnings to fixed charges, earnings before interest and taxes to interest, free cash flow to interest, and free cash flow to debt service and other applicable ratios, and after extensive negotiations among parties in interest, it was agreed that XYZ's reorganization capital structure should be as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-6C681657-8AF1-48C4-A7AB-78FECC644101-low.gif) Postpetition current liabilities " $300,000 " Internal Revenue Service (IRS) note " 50,000 " Senior debt " 275,000 " (a) Subordinated debt " 175,000 " Common stock " 350,000 " Reorganization capital structure " $1,150,000 " (b) (a) "Due $50,000 per year for each of the next 4 years, at 12% interest, with $75,000 due in the fifth year." (b) See the table in paragraph 852-10-55-10 for the balance sheet adjustments required to reflect XYZ Company's reorganization value as of the date of plan confirmation. ##### [852-10-55-9](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-9) Pending content: yes Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:0a84831a6f11729a290cb88bf4d79c57bce17a6cb71158149b1bccb82fec278c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following entries record the provisions of the plan and the adoption of fresh-start reporting. - ![](https://asc.understandingaccounting.org/asc-img/GUID-EE559453-A486-4AA8-8C5A-D731A8049509-low.gif) Entries to record debt discharge: Liabilities subject to compromise " $1,100,000 " Senior debt—current " $50,000 " Senior debt—long-term " 225,000 " IRS note " 50,000 " Cash " 150,000 " Subordinated debt " 175,000 " Common stock (new) " 86,000 " Additional paid-in capital " 215,000 " Gain on debt discharge " 149,000 " Entries to record exchange of stock for stock: Preferred stock " 325,000 " Common stock (old) " 75,000 " Common stock (new) " 14,000 " Additional paid-in capital " 386,000 " Entries to record the adoption of fresh-start reporting and to eliminate the deficit: Inventory " 50,000 " "Property, plant an equipment" " 175,000 " Reorganization value in excess of amounts allocable to identifiable assets " 175,000 " Gain on debt discharge " 149,000 " Additional paid-in capital " 351,000 " Goodwill " 200,000 " Deficit " 700,000 " Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)The following entries record the provisions of the plan and the adoption of fresh-start reporting. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D765E72D-825D-453E-ADB4-A46E7CEAA518-low.gif) Entries to record debt discharge: Liabilities subject to compromise " $1,100,000 " Senior debt—current " $50,000 " Senior debt—long-term " 225,000 " IRS note " 50,000 " Cash " 150,000 " Subordinated debt " 175,000 " Common stock (new) " 86,000 " Additional paid-in capital " 215,000 " Gain on debt discharge " 149,000 " Entries to record exchange of stock for stock: Preferred stock " 325,000 " Common stock (old) " 75,000 " Common stock (new) " 14,000 " Additional paid-in capital " 386,000 " Entries to record the adoption of fresh-start reporting and to eliminate the deficit: Inventory " 50,000 " "Property, plant, and equipment" " 175,000 " Goodwill (new) " 175,000 " Gain on debt discharge " 149,000 " Additional paid-in capital " 351,000 " Goodwill (old) " 200,000 " Deficit " 700,000 " ##### [852-10-55-10](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-10) Pending content: yes Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:1e835513329fb51a3a6a674b9302c271ad3aaca975c693e680a944fb7a80ad2b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effect of the plan of reorganization on XYZ Company's balance sheet, as of June 30, 19X2, is as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B4554DDA-514C-4791-A606-2BBA9DEA7A73-low.gif) Adjustments to Record Confirmation of Plan XYZ Company's Reorganized Balance Sheet Preconfirmation Debt discharge Exchange of stock Fresh start Assets: Current Assets Cash " $200,000 " " $(150,000)" " $50,000 " Receivables " 250,000 " " 250,000 " Inventory " 175,000 " " $50,000 " " 225,000 " "Assets to be disposed of valued at market, which is lower than cost" " 25,000 " " 25,000 " Other current assets " 25,000 " " 25,000 " " 675,000 " " (150,000)" " 50,000 " " 575,000 " "Property, plant, and equipment" " 175,000 " " 175,000 " " 350,000 " "Assets to be disposed of valued at market, which is lower than cost" " 50,000 " " 50,000 " Goodwill " 200,000 " " (200,000)" Reorganization value in excess of amounts allocable to identifiable assets " 175,000 " " 175,000 " " $1,100,000 " " $(150,000)" " $200,000 " " $1,150,000 " "Liabilities and Shareholders' Deficit:" Liabilities Not Subject to Compromise Current liabilities Short-term borrowings " $25,000 " " $25,000 " Current maturities of senior debt " $50,000 " " 50,000 " Accounts payable trade " 175,000 " " 175,000 " Other liabilities " 100,000 " " 100,000 " " 300,000 " " 50,000 " " 350,000 " Liabilities Subject to Compromise Prepetition liabilities " 1,100,000 " " (1,100,000)" IRS note " 50,000 " " 50,000 " "Senior debt, less current maturities" " 225,000 " " 225,000 " Subordinated debt " 175,000 " " 175,000 " Shareholders' deficit: Preferred stock " 325,000 " " $(325,000)" Additional paid-in capital " 215,000 " " 386,000 " " $(351,000)" " 250,000 " Common stock—old " 75,000 " " (75,000)" Common stock—new " 86,000 " " 14,000 " " 100,000 " Retained earnings (deficit) " (700,000)" " 149,000 " " 700,000 " " (149,000)" " (300,000)" " 450,000 " - " 200,000 " " 350,000 " " $1,100,000 " " $(150,000)" $- " $200,000 " " $1,150,000 " Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)The effect of the plan of reorganization on XYZ Company's balance sheet, as of June 30, 19X2, is as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-1B9DB7CE-737A-4223-A2F2-DF80E65F6E54-low.gif) Adjustments to Record Confirmation of Plan XYZ Company's Reorganized Balance Sheet Preconfirmation Debt discharge Exchange of stock Fresh start Assets: Current Assets Cash " $200,000 " " $(150,000)" " $50,000 " Receivables " 250,000 " " 250,000 " Inventory " 175,000 " " $50,000 " " 225,000 " "Assets to be disposed of valued at market, which is lower than cost" " 25,000 " " 25,000 " Other current assets " 25,000 " " 25,000 " " 675,000 " " (150,000)" " 50,000 " " 575,000 " "Property, plant, and equipment" " 175,000 " " 175,000 " " 350,000 " "Assets to be disposed of valued at market, which is lower than cost" " 50,000 " " 50,000 " Goodwill—old " 200,000 " " (200,000)" Goodwill—new " 175,000 " " 175,000 " " $1,100,000 " " $(150,000)" " $200,000 " " $1,150,000 " "Liabilities and Shareholders' Deficit:" Liabilities Not Subject to Compromise Current liabilities Short-term borrowings " $25,000 " " $25,000 " Current maturities of senior debt " $50,000 " " 50,000 " Accounts payable trade " 175,000 " " 175,000 " Other liabilities " 100,000 " " 100,000 " " 300,000 " " 50,000 " " 350,000 " Liabilities Subject to Compromise Prepetition liabilities " 1,100,000 " " (1,100,000)" IRS note " 50,000 " " 50,000 " "Senior debt, less current maturities" " 225,000 " " 225,000 " Subordinated debt " 175,000 " " 175,000 " Shareholders' deficit: Preferred stock " 325,000 " " $(325,000)" Additional paid-in capital " 215,000 " " 386,000 " " $(351,000)" " 250,000 " Common stock—old " 75,000 " " (75,000)" Common stock—new " 86,000 " " 14,000 " " 100,000 " Retained earnings (deficit) " (700,000)" " 149,000 " " 700,000 " " (149,000)" " (300,000)" " 450,000 " - " 200,000 " " 350,000 " " $1,100,000 " " $(150,000)" $- " $200,000 " " $1,150,000 " ##### [852-10-55-11](https://asc.understandingaccounting.org/asc/852/10/#852-10-55-11) Pending content: yes Source downloaded (UTC): 2026-09-10T02:03:19.355Z to 2026-09-10T02:03:19.355Z Record version: sha256:28fd471363fa89757d6f045fcf97f7e59cade8007d13cc626812b6288cd6925d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following illustrative disclosure discusses the details of XYZ Company's [confirmed plan](https://asc.understandingaccounting.org/glossary/c/#confirmed-plan "An official approval by the court of a plan of reorganization under a Chapter 11 proceeding that makes the plan binding on the debtors and creditors. Before a plan is confirmed, it must satisfy 11 requirements in section 1129(a) of the Bankruptcy Code.") of reorganization. In this illustration a tabular presentation entitled Plan of Reorganization Recovery Analysis is incorporated in the note disclosure. The plan of reorganization recovery analysis may alternatively be presented as supplementary information to the financial statements. - Note X - Plan of Reorganization - On June 30, 19X2, the Bankruptcy Court confirmed the Company's plan of reorganization. The Company accounted for the reorganization using fresh-start reporting. Accordingly, all assets and liabilities are adjusted to fair value in accordance with accounting requirements for business combinations under ASC Topic 805. The excess of reorganization value over the fair value of tangible and intangible assets was recorded as "reorganization value in excess of amounts allocable to identifiable assets." The confirmed plan provided for the following: - Secured Debt—The Company's $300,000 of secured debt (secured by a first mortgage lien on a building located in Nashville, Tennessee) was exchanged for $150,000 in cash and a $150,000 secured note, payable in annual installments of $27,300 commencing on June 1, 19X3, through June 1, 19X6, with interest at 12% per annum, with the balance due on June 1, 19X7. - Priority Tax Claims—Payroll and withholding taxes of $50,000 are payable in equal annual installments commencing on July 1, 19X3, through July 1, 19X8, with interest at 11% per annum. - Senior Debt—The holders of approximately $275,000 of senior subordinated secured notes received the following instruments in exchange for their notes: $87,000 in new senior secured debt, payable in annual installments of $15,800 commencing March 1, 19X3, through March 1, 19X6, with interest at 12% per annum, secured by first liens on certain property, plants, and equipment, with the balance due on March 1, 19X7; $123,000 of subordinated debt with interest at 14% per annum due in equal annual installments commencing on October 1, 19X3, through October 1, 19X9, secured by second liens on certain property, plant, and equipment; and 11.4% of the new issue of outstanding voting common stock of the Company. - Trade and Other Miscellaneous Claims—The holders of approximately $225,000 of trade and other miscellaneous claims received the following for their claims: $38,000 in senior secured debt, payable in annual installments of $6,900 commencing March 1, 19X3, through March 1, 19X6, with interest at 12% per annum, secured by first liens on certain property, plants, and equipment, with the balance due on March 1, 19X7; $52,000 of subordinated debt, payable in equal annual installments commencing October 1, 19X3, through October 1, 19X8, with interest at 14% per annum; and 25.7% of the new issue of outstanding voting common stock of the Company. - Subordinated Debentures—The holders of approximately $250,000 of subordinated unsecured debt received, in exchange for the debentures, 48.9% of the new issue outstanding voting common stock of the Company. - Preferred Stock—The holders of 3,250 shares of preferred stock received 12% of the outstanding voting common stock of the new issue of the Company in exchange for their preferred stock. - Common Stock—The holders of approximately 75,000 outstanding shares of the Company's existing common stock received, in exchange for their shares, 2% of the new outstanding voting common stock of the Company. - The following table (Plan of Reorganization Recovery Analysis) summarizes the adjustments required to record the reorganization and the issuance of the various securities in connection with the implementation of the plan. - ![](https://asc.understandingaccounting.org/asc-img/GUID-C886CE2F-00ED-4A43-A61E-06B4682A8758-low.gif) Recovery "Elimination of Debt and Equity" Surviving Debt Senior Debt Subordinated Debt Common Stock (a) Total Recovery Cash IRS Note % Value $ % Postpetition liabilities " $300,000 " " $300,000 " " $300,000 " 100% Claim or Interest Secured debt " 300,000 " " $150,000 " " $150,000 " " 300,000 " 100 Priority tax claim " 50,000 " " $50,000 " " 50,000 " 100 Senior debt " 275,000 " " $(25,000)" " 87,000 " " $123,000 " 11.4% " $40,000 " " 250,000 " 91 Trade and other miscellaneous claims " 225,000 " " (45,000)" " 38,000 " " 52,000 " 25.7 " 90,000 " " 180,000 " 80 Subordinated debentures " 250,000 " " (79,000)" 48.9 " 171,000 " " 171,000 " 68 " 1,100,000 " Preferred stockholders " 325,000 " " (283,000)" 12.0 " 42,000 " " 42,000 " Common stockholders " 75,000 " " (68,000)" 2.0 " 7,000 " " 7,000 " Deficit " (700,000)" " 700,000 " Total " $1,100,000 " " $200,000 " " $300,000 " " $150,000 " " $50,000 " " $275,000 " " $175,000 " 100.0% " $350,000 " " $1,300,000 " (a) "The aggregate par value of the common stock issued under the plan is $100,000." Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)The following illustrative disclosure discusses the details of XYZ Company's [confirmed plan](https://asc.understandingaccounting.org/glossary/c/#confirmed-plan "An official approval by the court of a plan of reorganization under a Chapter 11 proceeding that makes the plan binding on the debtors and creditors. Before a plan is confirmed, it must satisfy 11 requirements in section 1129(a) of the Bankruptcy Code.") of reorganization. In this illustration a tabular presentation entitled Plan of Reorganization Recovery Analysis is incorporated in the note disclosure. The plan of reorganization recovery analysis may alternatively be presented as supplementary information to the financial statements. - Note X - Plan of Reorganization - On June 30, 19X2, the Bankruptcy Court confirmed the Company's plan of reorganization. The Company accounted for the reorganization using fresh-start reporting. Accordingly, all assets and liabilities are adjusted to fair value in accordance with accounting requirements for business combinations under ASC Topic 805. The excess of reorganization value over the fair value of tangible and intangible assets was recorded as “Goodwill (new)." The confirmed plan provided for the following: - Secured Debt—The Company's $300,000 of secured debt (secured by a first mortgage lien on a building located in Nashville, Tennessee) was exchanged for $150,000 in cash and a $150,000 secured note, payable in annual installments of $27,300 commencing on June 1, 19X3, through June 1, 19X6, with interest at 12% per annum, with the balance due on June 1, 19X7. - Priority Tax Claims—Payroll and withholding taxes of $50,000 are payable in equal annual installments commencing on July 1, 19X3, through July 1, 19X8, with interest at 11% per annum. - Senior Debt—The holders of approximately $275,000 of senior subordinated secured notes received the following instruments in exchange for their notes: $87,000 in new senior secured debt, payable in annual installments of $15,800 commencing March 1, 19X3, through March 1, 19X6, with interest at 12% per annum, secured by first liens on certain property, plants, and equipment, with the balance due on March 1, 19X7; $123,000 of subordinated debt with interest at 14% per annum due in equal annual installments commencing on October 1, 19X3, through October 1, 19X9, secured by second liens on certain property, plant, and equipment; and 11.4% of the new issue of outstanding voting common stock of the Company. - Trade and Other Miscellaneous Claims—The holders of approximately $225,000 of trade and other miscellaneous claims received the following for their claims: $38,000 in senior secured debt, payable in annual installments of $6,900 commencing March 1, 19X3, through March 1, 19X6, with interest at 12% per annum, secured by first liens on certain property, plants, and equipment, with the balance due on March 1, 19X7; $52,000 of subordinated debt, payable in equal annual installments commencing October 1, 19X3, through October 1, 19X8, with interest at 14% per annum; and 25.7% of the new issue of outstanding voting common stock of the Company. - Subordinated Debentures—The holders of approximately $250,000 of subordinated unsecured debt received, in exchange for the debentures, 48.9% of the new issue outstanding voting common stock of the Company. - Preferred Stock—The holders of 3,250 shares of preferred stock received 12% of the outstanding voting common stock of the new issue of the Company in exchange for their preferred stock. - Common Stock—The holders of approximately 75,000 outstanding shares of the Company's existing common stock received, in exchange for their shares, 2% of the new outstanding voting common stock of the Company. - The following table (Plan of Reorganization Recovery Analysis) summarizes the adjustments required to record the reorganization and the issuance of the various securities in connection with the implementation of the plan. - ![](https://asc.understandingaccounting.org/asc-img/GUID-C886CE2F-00ED-4A43-A61E-06B4682A8758-low.gif) Recovery "Elimination of Debt and Equity" Surviving Debt Senior Debt Subordinated Debt Common Stock (a) Total Recovery Cash IRS Note % Value $ % Postpetition liabilities " $300,000 " " $300,000 " " $300,000 " 100% Claim or Interest Secured debt " 300,000 " " $150,000 " " $150,000 " " 300,000 " 100 Priority tax claim " 50,000 " " $50,000 " " 50,000 " 100 Senior debt " 275,000 " " $(25,000)" " 87,000 " " $123,000 " 11.4% " $40,000 " " 250,000 " 91 Trade and other miscellaneous claims " 225,000 " " (45,000)" " 38,000 " " 52,000 " 25.7 " 90,000 " " 180,000 " 80 Subordinated debentures " 250,000 " " (79,000)" 48.9 " 171,000 " " 171,000 " 68 " 1,100,000 " Preferred stockholders " 325,000 " " (283,000)" 12.0 " 42,000 " " 42,000 " Common stockholders " 75,000 " " (68,000)" 2.0 " 7,000 " " 7,000 " Deficit " (700,000)" " 700,000 " Total " $1,100,000 " " $200,000 " " $300,000 " " $150,000 " " $50,000 " " $275,000 " " $175,000 " 100.0% " $350,000 " " $1,300,000 " (a) "The aggregate par value of the common stock issued under the plan is $100,000." Source downloaded (UTC): 2026-09-10T02:03:22.162Z to 2026-09-10T02:03:22.162Z Record version: sha256:d2f46483446436e0dbb89c18b9f6dcd90a609a104c0776f15be12245fe63a946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/852/10/#60-relationships) SEC content: no #### Financial Services—Depository and Lending ##### [852-10-60-1](https://asc.understandingaccounting.org/asc/852/10/#852-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:22.162Z to 2026-09-10T02:03:22.162Z Record version: sha256:803aa792734ae46aea8aa8fb646b5bfda3c5da3353862d514a58e1a738b1046d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the required financial statement reporting of a [liquidating bank](https://asc.understandingaccounting.org/glossary/l/#liquidating-bank "A bank with a substantial amount of nonperforming assets may transfer some or all of those assets to a newly created bank whose stock will be distributed to existing shareholders or to new investors. The newly created bank will be a liquidating bank; that is, it will manage the assets it receives and collect cash from loan repayments or dispositions of assets. All cash remaining after paying expenses and debt service, if any, will be distributed to the shareholders of the liquidating bank. The liquidating bank will likely be in the process of liquidation for several years."), see Subtopic 205-30.