# ASC 852-20: Reorganizations — Quasi-Reorganizations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/852/20/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T02:03:26.455Z to 2026-09-10T02:03:59.595Z Record version: sha256:9190cfa082ba40fe3acfbc3d2a5adcbf0c75552939fbf87687838990a7440efa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20: Reorganizations — Quasi-Reorganizations ### Machine-generated study aids ```json { "summary": "ASC 852-20 governs quasi-reorganizations (\"readjustments\"), a corporate readjustment procedure in which a corporation—without forming a new entity or entering court proceedings—restates its balance sheet to fair value, eliminates an accumulated deficit, and relieves current or future income of charges by charging them to additional paid-in capital. This is an express exception to the general rule in 852-20-25-2 that additional paid-in capital may not be used to relieve the income account. The Subtopic prescribes the conditions for the readjustment (full disclosure to and formal consent of shareholders, fair asset carrying amounts), the ordering of write-offs (retained earnings first, then APIC), and the post-readjustment dating of a new retained earnings account.", "key_points": [ "General rule: additional paid-in capital, however created, shall not be used to relieve the income account of current or future years of charges that would otherwise be made to it; a readjustment is the permitted exception when the facts are fully revealed to and formally approved by the shareholders (852-20-25-2).", "The entity must make a clear report to shareholders of the proposed restatements, obtain their formal consent, and present a fair balance sheet at the readjustment date in which the adjustment of carrying amounts is reasonably complete (852-20-25-3).", "Amounts written off are charged first against retained earnings to their full extent, with any balance then charged to additional paid-in capital; for consolidated entities, no consolidated retained earnings may survive a readjustment in which any losses were charged to APIC (852-20-25-4).", "The effective date should be as near as practicable to the date of formal shareholder consent and ordinarily not before the close of the last completed fiscal year; afterward the accounting is substantially similar to that of a new entity, and APIC arising in the readjustment is restricted as that of a new corporation (852-20-25-5; 852-20-25-6).", "Assets are carried forward at fair, not unduly conservative, amounts; if fair value is not readily determinable a conservative estimate may be made and described as an estimate, and provision may be made for maximum probable losses or charges known to have arisen before the readjustment date but then indeterminate (852-20-30-2 through 30-4).", "Subsequent material differences in those estimates or provisions not attributable to later events shall not be carried to income or retained earnings, nor used to offset post-readjustment gains or losses, but shall be recorded as additional paid-in capital (852-20-35-2).", "A new retained earnings account must be established and dated from the effective date of the readjustment, with the dating disclosed until the date loses special significance—rarely, if ever, significant after 10 years (852-20-50-2)." ], "categories": [ "Debt and equity", "Subsequent measurement", "Disclosure", "Financial statement presentation" ], "audience_level": "advanced", "student_note": "Quasi-reorganizations are a rare but heavily tested exception: they let a corporation wipe out an accumulated deficit against APIC without bankruptcy, but only with full shareholder disclosure and consent. The classic misunderstanding is thinking assets should be written down aggressively—the guidance requires fair, not unduly conservative, amounts, and any later correction of an over- or under-estimate goes to APIC, never to income or retained earnings.", "related_topics": [ "852-740", "852-10", "505-10", "740-10", "820-10" ], "key_concepts": [ "quasi-reorganization", "readjustment", "accumulated deficit elimination", "additional paid-in capital", "fresh-start-like restatement to fair value", "dating of retained earnings", "shareholder consent", "asset carrying amounts" ] } ``` Source downloaded (UTC): 2026-09-10T02:03:26.455Z to 2026-09-10T02:03:26.455Z Record version: sha256:536245e11c009ab9879344f7fbcc6bee8a9729dc080041b6dd20de50c70f4990 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/852/20/#05-overview-and-background) SEC content: no ##### [852-20-05-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:26.455Z to 2026-09-10T02:03:26.455Z Record version: sha256:b5f0c66945c529ef543743e96baf48d03373cdf01ed288de1228e44cdf852cb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the accounting applicable to a corporate readjustment procedure in which, without the creation of a new corporate entity and without the intervention of formal court proceedings, an entity restates its balance sheet to fair value. This corporate readjustment procedure may eliminate an accumulated deficit and/or prevent future charges to its income statement that otherwise would be made. The accounting permitted through such a procedure is an exception to the general rule discussed in paragraph [852-20-25-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-2). ##### [852-20-05-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:26.455Z to 2026-09-10T02:03:26.455Z Record version: sha256:e31b30252c61202353a20c7aac398ef8bb4cbd53ce914a6583979e180259acc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Readjustments of this kind fall in the category of what are called quasi-reorganizations. This Subtopic does not deal with the general question of quasi-reorganizations, but only with cases in which the exception permitted in paragraph [852-20-25-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-2) is availed of by a corporation. Such cases are referred to as readjustments. The accounting and reporting issues that arise and are addressed in this Subtopic consist of what is permitted in a readjustment and what is permitted thereafter. ##### [852-20-05-3](https://asc.understandingaccounting.org/asc/852/20/#852-20-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:26.455Z to 2026-09-10T02:03:26.455Z Record version: sha256:38a4466bdf7f6d8be3e88725fe5a4ea8744d1454649259d3e4106ec90b4da695 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not address quasi-reorganizations involving only deficit reclassifications. Source downloaded (UTC): 2026-09-10T02:03:29.660Z to 2026-09-10T02:03:29.660Z Record version: sha256:3346cb6ad4135c80c4bd77abae4704a364eb43f0321544aeca7cd177a32274ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/852/20/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [852-20-15-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:29.660Z to 2026-09-10T02:03:29.660Z Record version: sha256:984034d31212ae0c865c33b2b8bac5670d7ae1a7218f681d459e56c722685e9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all public and nonpublic entities that are corporations. #### Transactions ##### [852-20-15-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:29.660Z to 2026-09-10T02:03:29.660Z Record version: sha256:32fbf3a907d58dbae07500fa232a96ce5f79d6eb1714dea588211c8d2cac8261 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies only to readjustments in which the current income, or retained earnings or accumulated deficit account, or the income account of future years is relieved of charges that would otherwise be made against it, and is therefore limited to readjustments of the type specified in paragraph [852-20-25-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-2). ##### [852-20-15-3](https://asc.understandingaccounting.org/asc/852/20/#852-20-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:29.660Z to 2026-09-10T02:03:29.660Z Record version: sha256:1521c11bbb45688e009ef1f1424971bd6b07a2534b2a36c6b85f35ff92542268 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 Quasi-reorganizations involving only deficit reclassifications 2. b Charges against additional paid-in capital in other types of readjustments such as readjustments for the purpose of correcting erroneous credits made to additional paid-in capital in the past 3. c Financial reporting for entities that enter and intend to emerge from [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, at the time of such reorganization. Source downloaded (UTC): 2026-09-10T02:03:36.577Z to 2026-09-10T02:03:36.577Z Record version: sha256:bbbbea6616923f3491311ab07a499dbb0baf4a5c3de00a79c7bc8e698acc3812 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/852/20/#25-recognition) SEC content: no ##### [852-20-25-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:36.577Z to 2026-09-10T02:03:36.577Z Record version: sha256:c31bf32174f081e6b916c741764974bcd8c57138ae051da64fef819f7f1a4db6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section addresses the conditions under which a corporation may recognize a readjustment of its retained earnings or accumulated deficit balance. ##### [852-20-25-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:36.577Z to 2026-09-10T02:03:36.577Z Record version: sha256:e9a06aa78ea4609203608577703fdc10695390ac7c36a4852b1e0e6b44d8dc59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The general requirement is that additional paid-in capital, however created, shall not be used to relieve the income account of the current or future years of charges that would otherwise be made to the income account. As an exception to this requirement, if a reorganized entity would be relieved of charges that would be required to be made against income if the existing corporation were continued, it may be permissible to accomplish the same result without reorganization provided the facts were as fully revealed to and the action as formally approved by the shareholders as in reorganization. ##### [852-20-25-3](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:36.577Z to 2026-09-10T02:03:36.577Z Record version: sha256:996a60fded940af8fda8e5ae429ee797b386157c8d9671a46b4ce1ca9c4a1568 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a corporation elects to restate its assets, capital stock, additional paid-in capital, and retained earnings or accumulated deficit through a readjustment and therefore avail itself of permission to relieve its future income account or retained earnings account of charges that would otherwise be made against it, it shall make a clear report to its shareholders of the restatements proposed to be made, and obtain their formal consent. It shall present a fair balance sheet as at the date of the readjustment, in which the adjustment of carrying amounts is reasonably complete, in order that there may be no continuation of the circumstances that justify charges to additional paid-in capital. ##### [852-20-25-4](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:36.577Z to 2026-09-10T02:03:36.577Z Record version: sha256:a770d2b45b5e4d448dec6f1db3e13f9c6d5d98ddac6cab4ddddadaccebc477c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When the amounts to be written off in a readjustment have been determined, they shall be charged first against retained earnings to the full extent of such retained earnings; any balance may then be charged against additional paid-in capital. An entity that has subsidiaries shall apply this rule in such a way that no consolidated retained earnings survive a readjustment in which any part of losses has been charged to additional paid-in capital. If the retained earnings of any subsidiaries cannot be applied against the losses before application against additional paid-in capital, the parent entity's interest in such retained earnings shall be regarded as capitalized by the readjustment just as retained earnings at the date of acquisition is capitalized, so far as the parent is concerned. ##### [852-20-25-5](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:36.577Z to 2026-09-10T02:03:36.577Z Record version: sha256:f7dd090cdd7101abe47a4b0dbac501eadf6b008bc2a91af197ae9f309fe96e73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effective date of the readjustment, from which the income of the entity is subsequently determined, shall be as near as practicable to the date on which formal consent of the stockholders is given, and shall ordinarily not be before the close of the last completed fiscal year. When the readjustment has been completed, the entity's accounting shall be substantially similar to that appropriate for a new entity. ##### [852-20-25-6](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:36.577Z to 2026-09-10T02:03:36.577Z Record version: sha256:7949fee7146ebf8ed20462f824509791c6dd0f7024ed2a544d9dd24680e9993f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Additional paid-in capital originating in such a readjustment is restricted in the same manner as that of a new corporation; charges against it shall be only those which may properly be made against the additional paid-in capital of a new corporation. ##### [852-20-25-7](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:36.577Z to 2026-09-10T02:03:36.577Z Record version: sha256:4e500091b7546eee27d2d542d1e64fb7caafa84bcec415ed086fa035bc82e1d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting for tax benefits arising from deductible temporary differences and carryforwards related to a readjustment is addressed in Subtopic 852-740. Source downloaded (UTC): 2026-09-10T02:03:39.791Z to 2026-09-10T02:03:39.791Z Record version: sha256:e503954611a8431df461ada9cfaea297bf5f392cef18356c34e7ffcffe1b9389 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/852/20/#30-initial-measurement) SEC content: no ##### [852-20-30-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:39.791Z to 2026-09-10T02:03:39.791Z Record version: sha256:ee275d74c2869e1c042a72f5f0bc15c9a4273bd5a62512cf746894cfc82a1a6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides guidance on the adjustment of accounts required by paragraph [852-20-25-3](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-3) as of the readjustment date in connection with the readjustments addressed by this Subtopic. ##### [852-20-30-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:39.791Z to 2026-09-10T02:03:39.791Z Record version: sha256:a61349c101d1bcd9de729a33e1deff0fb627ea1f1e02ab60e618625857a13a24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A write-down of assets below amounts that are likely to be subsequently realized, though it may result in conservatism in the balance sheet at the readjustment date, may also result in overstatement of earnings or of retained earnings when the assets are subsequently realized. Therefore, in general, assets shall be carried forward as of the date of readjustment at fair and not unduly conservative amounts, determined with due regard for the accounting to be subsequently employed by the entity. ##### [852-20-30-3](https://asc.understandingaccounting.org/asc/852/20/#852-20-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:39.791Z to 2026-09-10T02:03:39.791Z Record version: sha256:2a249c18d2f220178b63ae7811ca33604ba5175ecc97f7dca862926755e1175a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the fair value of any asset is not readily determinable a conservative estimate may be made, but in that case the amount shall be described as an estimate. Paragraph [852-20-35-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-35-2) describes the subsequent accounting for any material difference arising through realization or otherwise and not attributable to events occurring or circumstances arising after that date. ##### [852-20-30-4](https://asc.understandingaccounting.org/asc/852/20/#852-20-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:39.791Z to 2026-09-10T02:03:39.791Z Record version: sha256:b60027953b643d5508fdb5e0b87d8699ed9e35890602505edf66de608c401278 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, if potential losses or charges are known to have arisen before the date of readjustment but such amounts are then indeterminate, provision may properly be made to cover the maximum probable losses or charges. Source downloaded (UTC): 2026-09-10T02:03:43.142Z to 2026-09-10T02:03:43.142Z Record version: sha256:edc81a22547bb23fce8a8024b70187344b9b0850b89ab6706334d1d13ed860b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/852/20/#35-subsequent-measurement) SEC content: no ##### [852-20-35-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:43.142Z to 2026-09-10T02:03:43.142Z Record version: sha256:7ee7d0c7a1b9e8eb8f3c8e40a0e18cb5f0baabfb8f4dddc9a2956041da1eba5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 852-20-30 addresses the adjustments required to be made at the date of a readjustment addressed by this Subtopic. This Section addresses the subsequent accounting if the amounts determined as of the date of readjustment are found to have been excessive or insufficient. ##### [852-20-35-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:43.142Z to 2026-09-10T02:03:43.142Z Record version: sha256:6bc199627da14d6e86ec3bae965976697efdc29a1143198090ededec104defb8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the fair value of any asset was not readily determinable and a conservative estimate was made at the date of the readjustment, any material difference arising through realization or otherwise and not attributable to events occurring or circumstances arising after that date shall not be carried to income or retained earnings. Similarly, if provisions for losses or charges established at the date of readjustment are subsequently found to have been excessive or insufficient, the difference shall not be carried to retained earnings nor used to offset losses or gains originating after the readjustment, but shall be recorded as additional paid-in capital. Source downloaded (UTC): 2026-09-10T02:03:45.583Z to 2026-09-10T02:03:45.583Z Record version: sha256:09ad56bbe62a5328daeac184998217f1944b171bccbb95c8d7f10384a382e567 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/852/20/#50-disclosure) SEC content: no ##### [852-20-50-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:45.583Z to 2026-09-10T02:03:45.583Z Record version: sha256:998749251e83de5f3b306a5a3a542aa0c2df8e96f96015da12f6b4e5d465216f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section addresses an entity's disclosure requirements for periods following a readjustment within the scope of this Subtopic. ##### [852-20-50-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:45.583Z to 2026-09-10T02:03:45.583Z Record version: sha256:fd4ad73666fa5eb5a5167f5f4e4bd82a70ba8929b83121f2a8f39e423f598675 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After such a readjustment, retained earnings previously accumulated cannot properly be carried forward under that title. A new retained earnings account shall be established, dated to show that it runs from the effective date of the readjustment, and this dating shall be disclosed in financial statements until such time as the effective date is no longer deemed to possess any special significance. The dating of retained earnings following a quasi-reorganization would rarely, if ever, be of significance after a period of 10 years. There may be exceptional circumstances in which the discontinuance of the dating of retained earnings could be justified at the conclusion of a period less than 10 years. Source downloaded (UTC): 2026-09-10T02:03:51.877Z to 2026-09-10T02:03:51.877Z Record version: sha256:dab101fc64c0268efed8ba7751ec764dd653af46aa7e39939558150ef6da8390 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/852/20/#sec-00-status) SEC content: yes ##### [852-20-S00-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:51.877Z to 2026-09-10T02:03:51.877Z Record version: sha256:856e3aa3597f0d5e5f24ca376eb73b00c095c72f24746d2f5dc916418f93060e 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
852-20-S99-2AmendedAccounting Standards Update No. 2012-0308/27/2012
Source downloaded (UTC): 2026-09-10T02:03:53.801Z to 2026-09-10T02:03:53.801Z Record version: sha256:5a275acb903850039e3a35b33cd463a45b1263c0880e544026a77a5228512f48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/852/20/#sec-25-recognition) SEC content: yes #### Quasi-Reorganization ##### [852-20-S25-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:53.801Z to 2026-09-10T02:03:53.801Z Record version: sha256:80b8fbee3141ac156c8128f6f4acc54ba9ea661a64e36a0cbcb692631e20ceb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [852-20-S99-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-S99-1), CFRR 210, for conditions necessary to effect a quasi-reorganization. Source downloaded (UTC): 2026-09-10T02:03:55.642Z to 2026-09-10T02:03:55.642Z Record version: sha256:795113ad37028fb12008178d3874416d149a8ec68cbd01cd79db02106b98eb5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-S55: SEC 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/852/20/#sec-55-implementation-guidance-and-illustrations) SEC content: yes #### Quasi-Reorganization ##### [852-20-S55-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-S55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:55.642Z to 2026-09-10T02:03:55.642Z Record version: sha256:b0bde430bd6f5bd5567d31615bddee75bff199e254dd19037b108dfa1bd58ff1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [852-20-S99-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-S99-2), SAB Topic 5.S, Question 1, for SEC Staff views on reclassifying accumulated deficit without satisfying the conditions in CFRR 210 for reorganization. #### Implementing a Change in Accounting Principle in Conjunction with a Quasi-Reorganization ##### [852-20-S55-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-S55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:55.642Z to 2026-09-10T02:03:55.642Z Record version: sha256:9b81edb5ef6c99d8c06f33b540623eafbdfd08438d5c29790baceed24871532d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [852-20-S99-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-S99-2), SAB Topic 5.S, Question 2, for SEC Staff views on implementing an accounting change in conjunction with a quasi-reorganization. #### Write-Up of Net Assets in Conjunction with a Quasi-Reorganization ##### [852-20-S55-3](https://asc.understandingaccounting.org/asc/852/20/#852-20-S55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:55.642Z to 2026-09-10T02:03:55.642Z Record version: sha256:b5bce5ee4841946b2bea9eb7e0353e7e0767ff03d0abd1f0c24cdfac8f0144f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [852-20-S99-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-S99-2), SAB Topic 5.S, Question 3, for SEC Staff views on writing up assets in conjunction with a quasi-reorganization. #### Accounting for the Subsequent Recognition of Tax Benefits that Existed at the Date of a Quasi-Reorganization ##### [852-20-S55-4](https://asc.understandingaccounting.org/asc/852/20/#852-20-S55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:55.642Z to 2026-09-10T02:03:55.642Z Record version: sha256:7807a0f9e5c4ec8a711cb27f6c46fb2a8b52e7e2a0d0ec51f02aa9187c50ebf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [852-20-S99-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-S99-2), SAB Topic 5.S, Question 4, for SEC Staff views on accounting for the subsequent recognition of tax benefits that existed at the date of a quasi-reorganization. #### "Undoing" a Quasi-Reorganization ##### [852-20-S55-5](https://asc.understandingaccounting.org/asc/852/20/#852-20-S55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:55.642Z to 2026-09-10T02:03:55.642Z Record version: sha256:dff484374f2e108a960e1b6049a76456d39c82f12b9343366a500e28a438279b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [852-20-S99-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-S99-2), SAB Topic 5.S, Question 5, for SEC Staff views on undoing a previous quasi-reorganization. Source downloaded (UTC): 2026-09-10T02:03:59.595Z to 2026-09-10T02:03:59.595Z Record version: sha256:786d254420f9fcb14eec8a100fbab2c00aa17bd9d6179702019fd7ab694c8cf6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 852-20-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/852/20/#sec-99-sec-materials) SEC content: yes #### SEC Rules, Regulations, and Interpretations ##### [852-20-S99-1](https://asc.understandingaccounting.org/asc/852/20/#852-20-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:59.595Z to 2026-09-10T02:03:59.595Z Record version: sha256:9afd20b6275da430c1f41703c95c0d98363077e2ce8f39d9f6297af6d6814add Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of FRR 210. Quasi-reorganization. - ASR 25: (5/29/41) - Inquiry has been made from time to time as to the conditions under which a quasi-reorganization has come to be applied in accounting to the corporate procedures in the course of which a company, without the creation of a new corporate entity and without the intervention of formal court proceedings, is enabled to eliminate a deficit whether resulting from operations of the recognition of other losses or both and to establish a new earned surplus account for the accumulation of earnings subsequent to the date selected as the effective date of the quasi-reorganization. - It has been the Commission's view for some time that a quasi-reorganization may not be considered to have been effected unless at least all the following conditions exist: - (1) Earned surplus, as of the date selected, is exhausted; - (2) Upon consummation of the quasi-reorganization, no deficit exists in any surplus account; - (3) The entire procedure is made known to all persons entitled to vote on matters of general corporate policy and the appropriate consents to the particular transactions are obtained in advance in accordance with the applicable law and charter provisions; - (4) The procedure accomplishes, with respect to the accounts, substantially what might be accomplished in a reorganization by legal proceedings—namely, the restatement of assets in terms of present conditions as well as appropriate modifications of capital and capital surplus, in order to obviate so far as possible necessity of future reorganizations of like nature. - It is implicit in such a procedure that reductions in the carrying value of assets at the effective date may not be made beyond a point which gives appropriate recognition to conditions which appear to have resulted in relatively permanent reductions in asset values; as for example, complete or partial obsolescence, lessened utility value, reduction in investment value due to changed economic conditions, or, in the case of current assets, declines in indicated realization value. It is also implicit in a procedure of this kind that it is not to be employed recurrently but only under circumstances which would justify an actual reorganization of formation of a new corporation, particularly if the sole or principle purpose of the quasi-reorganization is the elimination of a deficit in earned surplus resulting from operating losses. - In the case of the quasi-reorganization of a parent company, it is an implicit result of such procedure that the effective date should be recognized as having the significance of a date of acquisition of control of subsidiaries. Likewise, in consolidated statements, earned surplus of subsidiaries at the effective date should be excluded from earned surplus on the consolidated balance sheet. #### SEC Staff Guidance ##### [852-20-S99-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:03:59.595Z to 2026-09-10T02:03:59.595Z Record version: sha256:97ef928591e484e53768749b9617685c63d623fb955901e52a97de0e8500d4be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.S, Quasi-Reorganization. - Facts: As a consequence of significant operating losses and/or recent write-downs of property, plant and equipment, a company's financial statements reflect an accumulated deficit. The company desires to eliminate the deficit by reclassifying amounts from paid-in-capital. In addition, the company anticipates adopting a discretionary change in accounting principles FN21 that will be recorded as a cumulative-effect type of accounting change. The recording of the cumulative effect will have the result of increasing the company's retained earnings. - FN21 Discretionary accounting changes require the filing of a preferability letter by the registrant's independent accountant pursuant to Item 601 of Regulation S-K and Rule 10-01(b)(6) of Regulation S-X, respectively. - Question 1: May the company reclassify its capital accounts to eliminate the accumulated deficit without satisfying all of the conditions enumerated in Section 210 FN22 of the Codification of Financial Reporting Policies for a quasi-reorganization? - FN22 ASR 25. - Interpretive Response: No. The staff believes a deficit reclassification of any nature is considered to be a quasi-reorganization. As such, a company may not reclassify or eliminate a deficit in retained earnings unless all requisite conditions set forth in Section 210 FN23 for a quasi-reorganization are satisfied. FN24 - FN23 Section 210 (ASR 25) indicates the following conditions under which a quasi-reorganization can be effected without the creation of a new corporate entity and without the intervention of formal court proceedings: 1. Earned surplus, as of the date selected, is exhausted; 2. Upon consummation of the quasi-reorganization, no deficit exists in any surplus account; 3. The entire procedure is made known to all persons entitled to vote on matters of general corporate policy and the appropriate consents to the particular transactions are obtained in advance in accordance with the applicable laws and charter provisions; 4. The procedure accomplishes, with respect to the accounts, substantially what might be accomplished in a reorganization by legal proceedings - namely, the restatement of assets in terms of present considerations as well as appropriate modifications of capital and capital surplus, in order to obviate, so far as possible, the necessity of future reorganization of like nature. - FN24 In addition, FASB ASC Subtopic 852-20, Reorganizations—Quasi-Reorganizations, outlines procedures that must be followed in connection with and after a quasi-reorganization. - Question 2: Must the company implement the discretionary change in accounting principle simultaneously with the quasi-reorganization or may it adopt the change after the quasi-reorganization has been effected? - Interpretive Response: The staff has taken the position that the company should adopt the anticipated accounting change prior to or as an integral part of the quasi-reorganization. Any such accounting change should be effected by following GAAP with respect to the change. FN25 - FN25 FASB ASC Topic 250 provides accounting principles to be followed when adopting accounting changes. In addition, many newly-issued accounting pronouncements provide specific guidance to be followed when adopting the accounting specified in such pronouncements. - FASB ASC paragraph [852-20-25-5](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-5) (Reorganizations Topic) indicates that, following a quasi-reorganization, an "entity's accounting shall be substantially similar to that appropriate for a new entity." The staff believes that implicit in this "fresh-start" concept is the need for the company's accounting principles in place at the time of the quasi-reorganization to be those planned to be used following the reorganization to avoid a misstatement of earnings and retained earnings after the reorganization. FN26 FASB ASC paragraph [852-20-30-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-30-2) states, in part, "... in general, assets should be carried forward as of the date of the readjustment at fair and not unduly conservative amounts, _determined with due regard for the accounting to be subsequently employed by the entity_." (emphasis added) - FN26 Certain newly-issued accounting standards do not require adoption until some future date. The staff believes, however, that if the registrant intends or is required to adopt those standards within 12 months following the quasi-reorganization, the registrant should adopt those standards prior to or as an integral part of the quasi-reorganization. Further, registrants should consider early adoption of standards with effective dates more than 12 months subsequent to a quasi-reorganization. - In addition, the staff believes that adopting a discretionary change in accounting principle that will be reflected in the financial statements within 12 months following the consummation of a quasi-reorganization leads to a presumption that the accounting change was contemplated at the time of the quasi-reorganization. FN27 - FN27 Certain accounting changes require restatement of prior financial statements. The staff believes that if a quasi-reorganization had been recorded in a restated period, the effects of the accounting change on quasi-reorganization adjustments should also be restated to properly reflect the quasi-reorganization in the restated financial statements. - Question 3: In connection with a quasi-reorganization, may there be a write-up of net assets? - Interpretive Response: No. The staff believes that increases in the recorded values of specific assets (or reductions in liabilities) to fair value are appropriate providing such adjustments are factually supportable, however, the amount of such increases are limited to offsetting adjustments to reflect decreases in other assets (or increases in liabilities) to reflect their new fair value. In other words, a quasi-reorganization should not result in a write-up of net assets of the registrant. - Question 4: The interpretive response to question 1 indicates that the staff believes that a deficit reclassification of any nature is considered to be a quasi-reorganization, and accordingly, must satisfy all the conditions of Section 210. FN28 Assume a company has satisfied all the requisite conditions of Section 210, and has eliminated a deficit in retained earnings by a concurrent reduction in paid-in capital, but did not need to restate assets and liabilities by a charge to capital because assets and liabilities were already stated at fair values. How should the company reflect the tax benefits of operating loss or tax credit carryforwards for financial reporting purposes that existed as of the date of the quasi-reorganization when such tax benefits are subsequently recognized for financial reporting purposes? - FN28 See footnote 23. - Interpretive Response: The staff believes FASB ASC Subtopic 852-740, Reorganizations—Income Taxes, requires that any subsequently recognized tax benefits of operating loss or tax credit carryforwards that existed as of the date of a quasi-reorganization be reported as a direct addition to paid-in capital. The staff believes that this position is consistent with the "new company" or "fresh-start" concept embodied in Section 210, FN29 and in existing accounting literature regarding quasi-reorganizations, and with the FASB staff's justification for such a position when they stated that a "new enterprise would not have tax benefits attributable to operating losses or tax credits that arose prior to its organization date. FN30 - FN29 Section 210 (ASR 25) discusses the "conditions under which a quasi-reorganization has come to be applied in accounting to the corporate procedures in the course of which a company, without creation of new corporate entity and without intervention of formal court proceedings, is enabled to eliminate a deficit whether resulting from operations or recognition of other losses or both and to establish a new earned surplus account for the accumulation of earnings subsequent to the date selected as the effective date of the quasi-reorganization." It further indicates that "it is implicit in a procedure of this kind that it is not to be employed recurrently, _but only under circumstances which would justify an actual reorganization or formation of a new corporation_, particularly if the sole purpose of the quasi-reorganization is the elimination of a deficit in earned surplus resulting from operating losses." (emphasis added) - FN30 FASB ASC paragraph [852-740-55-4](https://asc.understandingaccounting.org/asc/740/852/#740-852-55-4) states in part: "As indicated in paragraph [852-20-25-5](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-5), after a quasi-reorganization, the entity's accounting shall be substantially similar to that appropriate for a new entity. As such, any subsequently recognized tax benefit of an operating loss or tax credit carryforward that existed at the date of a quasi-reorganization shall not be included in the determination of income of the "new" entity, regardless of whether losses that gave rise to an operating loss carryforward were charged to income prior to the quasi-reorganization or directly to contributed capital as part of the quasi-reorganization. A new entity would not have tax benefits attributable to operating losses or tax credits that arose prior to its organization date." - The staff believes that all registrants that comply with the requirements of Section 210 in effecting a quasi-reorganization should apply the accounting required by FASB ASC paragraph [852-740-45-3](https://asc.understandingaccounting.org/asc/740/852/#740-852-45-3) for the tax benefits of tax carryforward items. FN31 FN32 Therefore, even though the only effect of a quasi-reorganization is the elimination of a deficit in retained earnings because assets and liabilities are already stated at fair values and the revaluation of assets and liabilities is unnecessary (or a write-up of net assets is prohibited as indicated in the interpretive response to question 3 above), subsequently recognized tax benefits of operating loss or tax credit carryforward items should be recorded as a direct addition to paid-in capital. - FN31 \[Original footnote removed by SAB 114.\] - FN32 FASB ASC paragraph [852-740-45-3](https://asc.understandingaccounting.org/asc/740/852/#740-852-45-3) states: "\[t\]he tax benefit of deductible temporary differences and carryforwards as of the date of a quasi reorganization as defined and contemplated in FASB ASC Subtopic 852-20, ordinarily are reported as a direct addition to contributed capital if the tax benefits are recognized in subsequent years." - Question 5: If a company had previously recorded a quasi-reorganization that only resulted in the elimination of a deficit in retained earnings, may the company reverse such entry and "undo" its quasi-reorganization? - Interpretive Response: No. The staff believes FASB ASC 250, Accounting Changes and Error Corrections, would preclude such a change in accounting. It states: "a method of accounting that was previously adopted for a type of transaction or event that is being terminated _or that was a single, nonrecurring event in the past shall not be changed_." (emphasis added.) FN33 - FN33 FASB ASC paragraph [250-10-45-12](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-12).