Initial measurement

ASC 310-20 governs how lenders and loan purchasers account for nonrefundable fees, origination costs, commitment fees, syndication fees, credit card fees, and purchase premiums/discounts. The core rule is that loan origination fees and direct loan origination costs are deferred, offset, and recognized only as a net amount over the life of the loan as a yield (interest income) adjustment using the interest method; all other lending-related costs (advertising, solicitation, servicing, unsuccessful efforts, occupancy, equipment) are expensed as incurred. It also prescribes when a refinancing/restructuring is treated as a new loan versus a carryover of unamortized net fees and costs.

This Subtopic gives industry guidance for depository and lending institutions on receivables, principally debt-equity swap programs in which a bank converts U.S.-dollar-denominated loans to financially troubled countries into approved local equity investments. A swap is measured at fair value at the date both parties agree to the transaction, considering both the secondary market price of the loan given up and the fair value of the equity or net assets received; a shortfall against the recorded investment in the loan is a loss charged to the allowance for loan losses. It also addresses nonaccrual loans to troubled countries, when interest may again be recognized as income, and gross presentation of customers' liabilities on acceptances.

ASC 310-944 tells insurance entities how to account for receivables: mortgage loans held as investments, reinsurance recoverables, and premium receivables on financial guarantee insurance contracts. Mortgage loans are recognized as assets at principal (or cost if bought at a discount/premium) and carried at amortized cost with an allowance for expected credit losses under Topic 326-20; reinsurance recoverables must be reported gross as assets (no netting against related liabilities absent a legal right of setoff). For financial guarantee contracts with installment premiums, the premium receivable is measured at the present value of premiums expected to be collected using a risk-free rate at inception, with the discount accreted to earnings.

ASC 310-954 governs how health care entities recognize, measure, present, and disclose receivables, principally amounts due from patients and third-party payors (Blue Cross, Medicare, Medicaid, HMOs, workers' compensation). Contractual adjustments and discounts are treated as variable consideration under ASC 606 (606-10-32-5 through 32-14 and 32-42 through 32-45), while an allowance for credit losses is measured under Topic 326. Charity care is never recognized as a receivable, and amounts due from third-party payors for retroactive adjustments such as final settlements or appeals must be reported separately.

This Subtopic governs how an investment company (a fund) accounts for its portfolio of debt and equity securities, with special attention to high-yield debt securities such as zero-coupon, step, and payment-in-kind (PIK) bonds. Core rules: record purchases and sales on trade date, initially measure at transaction price including commissions, subsequently measure at fair value, recognize interest on step and PIK bonds using the interest method (with reserves when income is not expected to be realized), and record dividends on the ex-dividend date. It also prescribes the treatment of capital infusions, workout expenditures, and writeoffs of purchased versus accrued interest.

This subtopic (codified as 958-321) sets the incremental rules for how not-for-profit entities account for investments in equity securities and other ownership interests, layering on top of the general guidance in Topic 321. Equity securities purchased are initially measured at acquisition cost excluding brokerage and transaction fees; those received as contributions or through agency transactions are initially measured at fair value, with subsequent measurement following Topic 321. Investments held by an NFP as agent with little or no discretion over use of the income and gains are reported as agency transactions—changes in assets and liabilities, not changes in net assets.

ASC 323-970 (also cited as 970-323) governs how an investor accounts for interests in real estate ventures—corporate joint ventures, general partnerships, limited partnerships, and undivided interests. The general rule is one-line equity method presentation for noncontrolling investors (pro rata consolidation is prohibited except under 810-10-45-14), consolidation principles if the investor controls the venture, and Topic 321 if the interest is so minor that the investor has virtually no influence. It also prescribes initial measurement of contributed cash or real estate (via Subtopic 610-20 / 360-10-40-3A through 40-3C), elimination of intra-entity profit, and rules for recognizing losses in excess of the investment.

ASC 325-30 governs investments in life insurance contracts held by entities that are the owner or beneficiary (e.g., corporate-owned or bank-owned life insurance), and, in separate Subsections, investments in life settlement contracts purchased from policy owners. The general rule is that a life insurance policy is reported as an asset measured at "the amount that could be realized under the insurance contract" at the balance sheet date, determined policy-by-policy (or certificate-by-certificate) and reflecting probable contractual limitations. For life settlement contracts, an investor makes an irrevocable, instrument-by-instrument election between the investment method (cost plus capitalized premiums and direct external costs, subject to impairment) and the fair value method (remeasured each period through earnings).

ASC 325-40 governs how a holder recognizes interest income on beneficial interests in securitized financial assets — both a transferor's retained interests in securitizations accounted for as sales under Topic 860 and purchased beneficial interests. The holder measures accretable yield at acquisition as the excess of cash flows expected to be collected (or contractual cash flows, for PCD beneficial interests) over the initial investment (or initial amortized cost basis), and accretes it into interest income using the effective yield method. Expected cash flows must be updated each period; favorable or adverse changes are run first through the credit loss guidance in Topic 326, with any residual change adjusting accretable yield prospectively.

ASC 325-905 governs how agricultural cooperatives account for investments in other cooperatives and how patrons (members) account for their investments in a cooperative. The core rule is that these nonmarketable long-term investments are carried at cost — including allocated equities and per-unit retains recorded at face value — rather than as equity securities, with the equity method of ASC 323-10 applied only in the infrequent case where the investor's share of the investee cooperative's unallocated retained earnings is material. Carrying amounts must be written down when the patron cannot recover full carrying value, and undistributed retains are classified as noncurrent.

This subtopic tells broker-dealers in securities how to account for equity investments or financing they provide to another entity as part of a financial-restructuring transaction, including investments made through a "bridge entity" formed to pool funds from several sources. Such investments (and related receivables and debt and equity securities) are measured initially at fair value (325-940-30-1) and subsequently at fair value (325-940-35-1). Consolidation of majority-owned investees is addressed by the broker-dealer consolidation guidance in 940-810-45-1.

This subtopic tells an investment company how to account for its "other investments" (investments other than debt and equity securities). Such investments are initially measured at transaction price, including commissions and other charges that are part of the purchase transaction, and are subsequently measured at fair value. Its scope mirrors the investment company Overall Subtopic scope in Section 946-10-15.

ASC 325-958 governs how not-for-profit entities account for "other investments"—those that are neither debt nor equity securities, derivatives, equity-method or consolidated investees, nor investments held by a financially interrelated entity—such as real estate, non-security mortgage notes, and oil and gas interests. Purchased other investments are initially measured at acquisition cost (including transaction fees) and contributed or agency-acquired ones at fair value. Subsequent measurement depends on the type of NFP: higher education institutions and voluntary health and welfare entities may elect carrying value or fair value, while other NFPs elect fair value or the lower of cost or fair value, applied consistently to all other investments.

ASC 330-10 governs the accounting for inventory: inventory is initially measured at cost (all expenditures and charges, direct and indirect, incurred to bring an article to its existing condition and location), with fixed production overhead allocated based on normal capacity and unallocated overhead, abnormal freight, handling, and spoilage expensed as incurred. Cost may be assigned using FIFO, average cost, LIFO, standard cost, or the retail inventory method, chosen to most clearly reflect periodic income and applied consistently. Subsequent measurement is bifurcated: inventory measured under LIFO or the retail inventory method uses lower of cost or market, while all other inventory (FIFO, average cost) uses lower of cost and net realizable value.

ASC 330-908 governs inventory accounting for airlines, where "inventory" consists of expendable spare parts, materials, and supplies held for internal consumption rather than sale. Expendable parts are recorded at cost in a current asset account akin to a prepaid expense, carry an allowance for obsolescence tied to the lives of the related fleets, and are charged to expense as used.

This subtopic governs how mining entities account for stripping costs — the costs of removing overburden and waste materials to access ore — incurred during the production phase of a mine. The core rule is that post-production-phase stripping costs are variable production costs that must be capitalized into the cost of the inventory (ore) extracted in the same period the stripping costs are incurred. Stripping costs incurred before the production phase (i.e., during development) are outside the scope of this subtopic.

ASC 340-30 tells you how to apply the deposit method of accounting to insurance and reinsurance contracts that fail to transfer insurance risk (which requires transfer of both timing risk and underwriting risk). At inception a deposit asset or liability is recognized at consideration paid or received less explicitly identified premiums or fees retained (340-30-25-1; 340-30-30-1). Subsequent measurement depends on which of four risk categories the contract falls into: effective-yield/interest-method accretion for timing-risk-only or no-risk contracts, unexpired-coverage plus present value of expected recoveries for underwriting-risk-only contracts, and the open-year method for indeterminate-risk contracts.

ASC 340-910 was the construction-contractor branch of the "Other Assets and Deferred Costs" topic, addressing precontract and other deferred costs incurred by construction contractors. Every substantive paragraph (05-1, 15-1, and 50-1) was superseded by ASU 2014-09 (the revenue recognition standard), so the subtopic is now an empty shell with no operative guidance. Costs to obtain and fulfill a contract with a customer are now accounted for under ASC 340-40.

ASC 340-940 governs two broker-dealer asset/deferred-cost items: exchange memberships and deferred underwriting expenses. Memberships are classified based on the rights conveyed — as an intangible asset (trading right only), an ownership interest in the exchange (cost less impairment), or a contributed interest (fair value with an equal, offsetting subordinated liability). Underwriting expenses incurred before securities are issued are deferred and recognized when the related underwriting revenues are recorded, or written off if the deal does not close.

This Subtopic governs the accounting for the cost of issuing certain Government National Mortgage Association (GNMA) securities by mortgage banking entities. Issuers electing the internal reserve method must capitalize the one month's interest cost required to be paid to a trustee (340-948-25-1), subject to a ceiling equal to the present value of net future servicing income (340-948-30-1). The capitalized amount is then amortized in proportion to, and over the period of, estimated net servicing income (340-948-35-1).

ASC 340-970 (the Real Estate Project Costs Subsections) governs when costs of real estate projects may be capitalized, how they are subsequently measured and amortized, and when they must be written off. Preacquisition costs are capitalized only if directly identifiable with a specific property, capitalizable if the property were owned, and acquisition is probable; option payments are always capitalized. Once a project is substantially completed and held available for occupancy, carrying and rental operating costs are expensed, depreciation begins, and capitalized rental costs are amortized.

ASC 350-40 governs the accounting for costs of computer software acquired, developed, or modified solely for an entity's internal needs (with no substantive plan to market it externally), and for implementation costs of hosting arrangements that are service contracts. Under current guidance, preliminary project stage costs and training/data conversion costs are expensed, while internal and external direct costs incurred during the application development stage are capitalized (350-40-25-1 through 25-6) once management authorizes and commits funding and completion is probable (350-40-25-12). Capitalized amounts are amortized straight-line beginning when the software is ready for its intended use (350-40-35-4 through 35-6) and tested for impairment under Section 360-10-35.

ASC 350-950 governs accounting for title plants — the indexed historical records of land ownership, encumbrances, maps, and prior title reports used by title insurers, abstract entities, and title agents. Costs directly identifiable with constructing a title plant (and purchased title plants, recorded at cost/fair value of consideration given) are capitalized, while maintenance and title search costs are expensed as incurred. Capitalized title plant is not amortized or depreciated; it is carried indefinitely unless impaired under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

ASC 360-905 governs how agricultural producers account for property, plant, and equipment — land development, orchards/groves/vineyards, intermediate-life plants, and animals. The core rule is that development costs (permanent and limited-life land development, cultural costs of trees and vines, and direct and indirect costs of developing animals) are capitalized during the development period; permanent land development is never depreciated because it has an indefinite life, while limited-life development, plantings, and mature breeding/production animals are depreciated over estimated useful or productive lives beginning when commercial production or maturity is reached.

This subtopic governs how cable television entities account for plant and installation costs during the "prematurity period" — the span between the start of construction/marketing and the point at which the system is substantially complete and serving subscribers. Management must fix the prematurity period before revenue from the first subscriber is recognized (presumed not to exceed two years), capitalize cable plant costs and initial subscriber installation costs in full during that period, and record depreciation using a subscriber-based fraction rather than full depreciation. Distinguishable portions of a system in the prematurity period are accounted for and tested for recoverability separately.

ASC 360-970 gathers the real estate–specific property, plant, and equipment guidance in two sets of subsections: Real Estate Syndication and Real Estate Project Costs. It requires costs clearly associated with the acquisition, development, and construction of a real estate project to be capitalized and then allocated to project components (by specific identification, then relative fair value/sales value, then area methods), addresses donated and abandoned real estate and changes in use, and applies the Subtopic 360-10 impairment model project by project. For syndications, fees paid to and rentals received from a developer-seller under a master leaseback are adjustments to the basis of the property.

This Subtopic tells common interest realty associations (CIRAs) — cooperatives, condominium associations, and homeowners associations — when to recognize common real and personal property as assets, how to measure it, and what to disclose. Cooperatives recognize all common real property because they hold title and can dispose of it and keep the proceeds; other CIRAs generally do not recognize real property directly associated with the units, and recognize property not directly associated with the units only if they have title or other evidence of ownership plus disposal discretion or significant cash-flow generation. Recognized property is measured at cost (or fair value if acquired in a nonmonetary transaction such as a developer transfer) and depreciated over estimated useful lives.

ASC 405-40 governs how an entity recognizes, measures, and discloses obligations arising from joint and several liability arrangements when the total amount of the obligation is fixed at the reporting date (e.g., debt with co-obligors, settled litigation shared with other defendants). The core measurement rule is that the reporting entity records the amount it agreed to pay under its arrangement with co-obligors plus any additional amount it expects to pay on behalf of those co-obligors. Scope excludes obligations already covered by Topics 410, 450, 460, 715, and 740.

ASC 405-905 governs liabilities of agricultural entities, with Cooperatives Subsections addressing how agricultural cooperatives account for product deliveries from patrons. When a pooling marketing cooperative's board assigns amounts to unprocessed products received from patrons, those assigned amounts must approximate estimated net realizable value and are credited to amounts due patrons, creating a short-term liability. Excess of pool revenues over assigned amounts and operating costs is paid or allocated to patrons pro rata, and retained allocated equities may be mandatorily redeemable instruments requiring liability classification under Subtopic 480-10.

This Subtopic governs how broadcasters account for the liabilities they incur under license agreements for program material. A broadcaster recognizes both an asset (the program rights) and a liability when the license period begins and the conditions in 920-350-25-2 are met, measuring both at either the fair value or the gross amount of the liability, with any discount accreted as interest under Topic 835. The liability is then split between current and noncurrent on the balance sheet according to the payment terms.

ASC 410-20 governs legal obligations associated with the retirement of tangible long-lived assets that arise from acquisition, construction, development, and/or normal operation of the asset, including environmental remediation resulting from normal operations. An entity recognizes the fair value of the ARO liability in the period incurred if fair value can be reasonably estimated, and simultaneously capitalizes an equal asset retirement cost in the carrying amount of the related long-lived asset (410-20-25-4; 410-20-25-5). Fair value is normally measured with an expected present value technique discounted at a credit-adjusted risk-free rate, with later changes recognized as accretion expense and as revisions to estimated cash flows (410-20-30-1; 410-20-35-3).

ASC 420-10 governs when and how an entity recognizes and measures liabilities for costs of exit or disposal activities (restructurings), including one-time involuntary employee termination benefits, costs to terminate non-lease contracts, and other associated costs such as facility closures and employee relocation. The core rule is that a liability is recognized only when it is incurred — i.e., when a present obligation exists — and measured initially at fair value; a mere commitment to an exit or disposal plan is not the requisite past event (420-10-25-1 through 25-2, 420-10-30-1). Ongoing termination-benefit arrangements, pension/OPEB special termination benefits, deferred compensation, stock compensation, and asset retirement obligations are excluded and handled under other Topics (420-10-15-5 through 15-6).

ASC 450-20 governs when a loss contingency must be accrued as a charge to income and when it must instead be disclosed. A loss is accrued only if, based on information available before the financial statements are issued, it is probable that an asset was impaired or a liability incurred at the balance sheet date and the amount of loss is reasonably estimable (450-20-25-2). If the estimate is a range, the best estimate in the range is accrued, or the minimum of the range if no amount is better than any other (450-20-30-1); if accrual criteria are not met but a loss is at least reasonably possible, disclosure of the nature of the contingency and an estimate of possible loss (or a statement that none can be made) is required (450-20-50-3 through 50-4).

ASC 460-10 requires a guarantor to recognize a liability at the inception of a guarantee for the noncontingent "stand-ready" obligation it undertakes, generally measured at the fair value of the guarantee (with the premium received as a practical expedient), even if payment under the guarantee is not probable. It also imposes extensive disclosures about each guarantee (nature, term, triggering events, maximum potential undiscounted future payments, carrying amount, recourse and collateral) even when the likelihood of payment is remote. Separate Product Warranties Subsections apply ASC 450-20 loss-accrual conditions to warranty obligations and require a tabular rollforward of the aggregate product warranty liability.

ASC 505-20 governs how corporations (issuers) and shareholders (recipients) account for stock dividends and stock splits. The core rule is substance over form: a small issuance (generally less than 20–25% of previously outstanding shares) is a stock dividend requiring capitalization of retained earnings at the fair value of the shares issued, while a larger issuance that materially reduces the unit market price is a stock split in substance, requiring capitalization only to the extent of legal requirements. Recipients recognize no income; they simply reallocate the cost of previously held shares over the larger number of shares.

ASC 505-30 governs how an entity accounts for repurchases of its own outstanding common stock (treasury stock) and the later constructive or actual retirement or resale of those shares. The core rule is that treasury stock transactions are capital transactions: no gain or loss may be recognized in income or charged directly to retained earnings as profit, and differences between repurchase and resale/par amounts are allocated among additional paid-in capital and retained earnings. When shares are bought at a price differing from open-market price (e.g., from a specific shareholder), only the fair value of the shares is treasury stock cost and the excess is allocated to the other rights or privileges obtained and accounted for by their substance.

ASC 505-60 governs the pro rata distribution of nonmonetary assets that constitute a business to an entity's owners (a spinoff). Such distributions are recorded at the carrying (recorded) amount of the distributed business, reduced for any indicated impairment, and are never accounted for as a sale of the spinnee followed by a distribution of proceeds — even if the spun-off operations are sold immediately afterward. When the substance of the transaction differs from its legal form, the legal spinnee is treated as the accounting spinnor (reverse spinoff accounting).

ASC 705-976 addresses the measurement of costs related to retail land sales, using the same scope as the Real Estate—Retail Land Overall Subtopic (976-10-15). Its substantive initial measurement guidance was superseded by ASU 2014-09, so the Subtopic now simply directs preparers to Subtopic 340-40 for incremental costs of obtaining a contract with a customer and costs to fulfill a contract.

ASC 712-10 governs employer accounting for nonretirement postemployment benefits — special and contractual termination benefits and other postemployment benefits (severance, salary continuation, disability, continued health coverage) paid to former or inactive employees after employment but before retirement and not paid through a pension or other postretirement plan. Special termination benefits are accrued when employees accept the offer and the amount is reasonably estimable; contractual termination benefits are accrued when it is probable employees will be entitled to them and the amount is reasonably estimable. Other postemployment benefits are accrued under Subtopic 710-10 if they accumulate or vest, and otherwise under the loss contingency model of paragraph 450-20-25-2.

ASC 718-10 is the "Overall" subtopic for share-based payment arrangements, setting the pervasive scope, recognition, measurement, classification, and disclosure principles that apply to both equity- and liability-classified awards granted to employees and nonemployees (and, by cross-reference, to customers). Its core rule is that cost must be recognized for all share-based payment transactions using a fair-value-based measurement method, generally grant-date fair value of the equity instruments issued (or fair value of liabilities incurred), recognized as the goods are obtained or services are received (718-10-10-2; 718-10-25-2; 718-10-30-3). Classification as liability or equity follows Topic 480 criteria as modified by 718-10-25-8 through 25-19A, and performance conditions are accrued based on the probable outcome while market conditions are reflected in grant-date fair value.

ASC 718-50 governs employee share purchase plans (ESPPs), including Section 423-style plans. Its core rule is a three-part test in 718-50-25-1: a plan is noncompensatory only if (a) its terms are no more favorable than those available to all holders of the same class of shares or the discount does not exceed the per-share cost of raising capital publicly (a 5% or smaller discount is automatically acceptable), (b) substantially all employees meeting limited employment qualifications may participate on an equitable basis, and (c) the plan has no option features other than two narrow exceptions. If the plan is compensatory (e.g., it has a look-back feature), grant-date fair value is measured by valuing the award as the sum of its separate components, and the requisite service period is the period over which the employee participates and pays for the shares.

ASC 720-15 governs the accounting for start-up activities — including one-time activities to open a new facility, introduce a new product or service, conduct business in a new territory or with a new class of customer, initiate a new process in an existing facility, or organize a new entity (organization costs). The single core rule is that costs of start-up activities, including organization costs, must be expensed as incurred (720-15-25-1). The Subtopic defines start-up activities by their nature rather than by the time period in which they occur, and carves out numerous costs governed by other GAAP.

ASC 720-25 governs how a resource provider (any entity) accounts for contributions it makes, including unconditional promises to give. Contributions made are recognized as expenses in the period made, with a corresponding decrease in assets or increase in liabilities, and are measured at the fair value of the assets given (or of the donee liabilities cancelled). Conditional promises are not recognized until the barrier is overcome, using the same conditionality analysis as the contributions received guidance in 958-605.

ASC 720-45 governs the accounting for costs of business process reengineering (BPR) activities, including those bundled into information technology transformation projects (e.g., enterprise software installations). The core rule is that BPR costs—whether performed internally or by third parties—must be expensed as incurred, even when they are part of a project to acquire, develop, or implement internal-use software. When a bundled third-party consulting contract covers multiple activities, the contract price must be allocated among activities based on objective evidence of relative fair values.

ASC 720-50 governs how pharmaceutical manufacturers and health insurers account for the annual, non-tax-deductible fees payable to the U.S. Treasury under the Affordable Care Act (as amended by the Health Care and Education Reconciliation Act). The entire estimated annual fee liability is recognized in full upon the first qualifying event in the calendar year (first branded prescription drug sale, or first provision of U.S. health risk insurance), with an offsetting deferred cost amortized to expense — normally straight-line — over that calendar year. The fee is presented as an operating expense.

This Subtopic identifies costs unique to oil- and gas-producing activities that do not result in acquisition of an asset and therefore must be charged to expense as incurred. Under the successful efforts framework, geological and geophysical (G&G) costs, costs of carrying and retaining undeveloped properties, dry hole and bottom hole contributions, and the costs of exploratory wells (and exploratory-type stratigraphic test wells) that do not find proved reserves are expensed immediately. It also notes the customary practice of accumulating an in-house exploration department's costs and allocating them to exploration activities using standardized charges.

ASC 944-720 tells insurance entities which costs must be expensed as incurred rather than capitalized as deferred acquisition costs. Because 944-30-25-1A permits capitalization only of incremental direct acquisition costs relating to successful contract acquisitions or renewals, everything else — non-qualifying acquisition-related costs and all indirect costs — is charged to expense as incurred (944-720-25-2).

ASC 720-970 addresses when real estate project costs must be expensed rather than capitalized. Its core rules: internal costs of preacquisition activities for a property that will be an operating property at acquisition date are expensed as incurred (720-970-25-1), and indirect costs not clearly related to projects under development or construction — including general and administrative expenses — are charged to expense as incurred (720-970-25-3). The Subtopic defines "operating" property as one where major construction is substantially complete and the property is either available for occupancy upon tenant improvements or already income-producing (720-970-25-2).

ASC 740-805 (codified as 805-740) gives the income tax rules that apply when an acquirer accounts for a business combination or a not-for-profit acquisition. It requires recognizing deferred tax assets and liabilities (and valuation allowances) at the acquisition date for the differences between the tax bases and the recognized values of assets acquired and liabilities assumed, measured under Subtopic 740-10 with no discounting. It also specifies exceptions (nondeductible goodwill, leveraged leases) and how post-acquisition changes in valuation allowances and acquired tax positions are recognized — through goodwill only within the measurement period, otherwise in income tax expense.

ASC 805-10 is the Overall subtopic of Business Combinations: it sets the scope of the Topic and governs two of the four steps of the acquisition method — identifying the acquirer and determining the acquisition date — plus the definition of a business, the measurement period, and deciding what is (and is not) part of the business combination exchange. Every transaction meeting the definition of a business combination must be accounted for by the acquisition method (805-10-25-1); if the acquired set is not a business, it is an asset acquisition. It also sets the disclosure objectives and requirements enabling users to evaluate the nature and financial effects of a combination.

ASC 805-20 governs one piece of the acquisition method: recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest (NCI) in the acquiree. The core rules are that at the acquisition date the acquirer recognizes these items separately from goodwill (if they meet the asset/liability definitions and are part of the exchange, not a separate transaction) and measures them at acquisition-date fair value, subject to a closed list of recognition and measurement exceptions (income taxes, employee benefits, indemnification assets, reacquired rights, share-based payments, held-for-sale assets, certain contingencies, leases, PCD assets, contract assets/liabilities). Private companies and NFPs may elect an accounting alternative that subsumes most customer-related intangibles and all noncompetition agreements into goodwill.

ASC 805-30 covers the piece of the acquisition method that produces goodwill or a bargain purchase gain. Goodwill equals the excess of (a) consideration transferred at acquisition-date fair value plus the fair value of any noncontrolling interest plus the acquisition-date fair value of any previously held equity interest, over (b) the net of the acquisition-date amounts of identifiable assets acquired and liabilities assumed (805-30-30-1); if (b) exceeds (a), the acquirer must first reassess its identification and measurement of all items and then recognize the remaining excess as a gain in earnings. It also governs measurement of consideration transferred, including contingent consideration and share-based payment replacement awards.

ASC 805-50 collects the transactions that fall outside the acquisition method of Topic 805: asset acquisitions that are not businesses, transfers between entities under common control, formation of master limited partnerships, and pushdown accounting. Asset acquisitions are recorded at cost (including transaction costs) and allocated to the individual assets on a relative fair value basis with no goodwill; common-control transfers are recorded by the receiving entity at the transferor's (or parent's) carrying amounts with retrospective presentation for periods under common control. Pushdown accounting is an optional, irrevocable election by an acquiree to reflect the acquirer's new basis in its separate financial statements.

ASC 805-60 governs how a newly formed joint venture (or corporate joint venture) accounts for its own formation in its separate financial statements. The joint venture must establish a new basis of accounting at the formation date, recognizing and measuring identifiable assets, liabilities, and any noncontrolling interest under Subtopic 805-20, but without identifying an acquirer. Goodwill, if any, is the excess of the formation-date fair value of the joint venture as a whole over the net of the identifiable assets and liabilities recognized; any excess of net assets over that fair value is credited to additional paid-in capital rather than recognized as a bargain purchase gain.

This Subtopic gives industry-specific guidance on how a mining entity measures mineral rights and other mining assets in a business combination purchase price allocation. It requires that value beyond proven and probable reserves (VBPP) be included in the value allocated to mining assets to the extent a market participant would include it, and that anticipated future mineral price fluctuations be reflected consistently with marketplace participant expectations.

ASC 810-30 tells a sponsor how to account for a research and development arrangement in which the sponsor funds 100% of the R&D activities — typically by capitalizing a new entity (Newco) with cash and technology rights, spinning off Newco's Class A common stock to the sponsor's shareholders, and retaining a purchase option and nominal Class B shares. The sponsor reclassifies the contributed cash as restricted cash, recognizes R&D expense as the activities are performed, and records the Class A distribution as a dividend at the fair value of that stock. The Class A stock is presented as noncontrolling interest classified in equity but separate from the parent's equity, and exercise of the purchase option is accounted for like an acquisition of a noncontrolling interest.

This narrow Subtopic deals with measurement issues for noncontrolling interests in certain real estate investment trusts (REITs). It contains almost no substantive guidance of its own: its scope simply mirrors Section 974-10-15, and its initial and subsequent measurement sections are essentially unused, with a single cross-reference pointing to Section 974-323-25 for how a REIT accounts for an investment in a service corporation.

ASC 815-45 governs the accounting for weather derivatives that are not exchange-traded (exchange-traded weather derivatives fall under ASC 815-10), and excludes insurance contracts that pay only upon an insurable event causing a liability or adverse change in value of a specific asset or liability. If entered into for nontrading purposes, forward-based weather derivatives are accounted for under the intrinsic value method, purchased options are recorded as a premium asset amortized to expense plus intrinsic value measurement, and written options are recorded as a premium liability remeasured to fair value through earnings. All weather derivatives entered into for trading or speculative activities are recognized as assets or liabilities at fair value with subsequent changes in fair value in earnings.

ASC 818-20 governs the accounting for environmental credits (e.g., emissions allowances, carbon offsets, renewable energy certificates, RINs). An environmental credit is recognized as an asset only if it is probable it will be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer; otherwise the cost is expensed as incurred and can never later be capitalized. Credits recognized as assets are classified as compliance credits (not remeasured) or noncompliance credits (tested for impairment each reporting date, with an optional fair value policy election by class for eligible credits).

ASC 818-30 governs when and how an entity recognizes, measures, presents, and discloses an environmental credit obligation — a liability to remit environmental credits (e.g., emissions allowances, renewable energy certificates) under a regulatory compliance program. A liability is recognized when events on or before the reporting date would require remitting credits assuming the reporting date were the end of the compliance period (818-30-25-1). The liability is split into a funded portion, measured at the carrying amount of compliance environmental credits on hand under Subtopic 818-20 costing methods (818-30-30-2), and an unfunded portion, measured at fair value of the needed credits unless the entity intends to settle in cash or with credits from an unconditional commitment or right (818-30-30-3).

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price), and provides a single framework for measuring it plus related disclosures. Fair value is a market-based, not entity-specific, measurement, determined in the principal (or, absent one, most advantageous) market using assumptions market participants would use, maximizing observable and minimizing unobservable inputs. Inputs are categorized in a three-level hierarchy (Level 1 quoted prices, Level 2 other observable inputs, Level 3 unobservable inputs), with the whole measurement classified at the lowest level input significant to it.

ASC 825-20 governs registration payment arrangements — agreements in which an issuer must file/obtain effectiveness of a registration statement (or obtain/maintain a stock exchange listing) for financial instruments and must transfer cash or shares to the counterparty if it fails. The core rule is that the arrangement is a separate unit of account: the underlying financial instruments are recognized and measured under other GAAP (e.g., 815-10, 815-40, 835-30) ignoring the contingent obligation, while the contingent obligation itself is recognized and measured under the loss-contingency model in Subtopic 450-20. Extensive disclosures are required even if payment is remote.

ASC 830-20 governs how an entity accounts for transactions denominated in a currency other than its functional currency (foreign currency transactions). At the transaction date, each asset, liability, revenue, expense, gain, or loss is recorded and measured in the functional currency using the exchange rate in effect at that date (830-20-25-1; 830-20-30-1); thereafter, balances denominated in a foreign currency are remeasured at each balance sheet date at the current rate (830-20-35-2), with the resulting transaction gains and losses generally included in net income. Narrow exceptions—economic hedges of a net investment in a foreign entity and long-term-investment-nature intra-entity balances—are reported like translation adjustments in other comprehensive income (830-20-35-3).

ASC 835-20 requires interest cost incurred while a qualifying asset is being readied for its intended use to be capitalized as part of the asset's historical cost, on the theory that such interest is an avoidable cost caused by the acquisition. Qualifying assets include assets constructed for an entity's own use, discrete projects built for sale or lease, and equity-method investments in investees that have not yet begun planned principal operations; routinely mass-produced inventory, assets already in use or idle, and gift/grant-funded assets are excluded. The amount capitalized equals the capitalization rate (rate on specific new borrowing, then weighted average of other borrowings) applied to average accumulated expenditures, capped at total interest cost incurred in the period.

ASC 835-30 governs when and how interest must be "imputed" on notes receivable and payable whose face amount does not reasonably represent the present value of the consideration exchanged — typically non-interest-bearing notes or notes with an unreasonable stated rate. In those cases the note and the related sales price/cost are recorded at the fair value of the property, goods, or service or at an amount approximating the fair value of the note (whichever is more clearly determinable), and any resulting discount or premium is amortized to interest income or expense using the interest method. Discount, premium, and debt issuance costs are presented as direct deductions from or additions to the face amount of the note, not as deferred charges or credits.

This Subtopic tells federal government contractors when interest cost may (and may not) be capitalized. Because assets built under contracts where revenue is recognized over time are "employed in the earnings activities" of the contractor (and often involve routinely produced inventories), interest capitalization is prohibited for those long-term contracts. Only when revenue is recognized at a point in time and fulfillment costs are capitalized as an asset under Subtopic 340-40 can those costs be qualifying assets for interest capitalization, and then the investment is limited to uncollected receivables net of related non-interest-bearing liabilities.

This Subtopic tells cable television entities how much interest cost to capitalize while a cable system is under construction during the "prematurity period." Interest is capitalized under Topic 835 by applying the capitalization rate from 835-20-30-3 through 30-4 to the average qualifying assets, capped at total interest incurred for that system in the period. Because part of the system is already in service earning revenue, only the accumulated expenditures exceeding the fraction in 922-360-35-3 of total estimated system cost qualify.

This short subtopic tells film producers and distributors how to handle interest costs incurred while a film is being produced. The rule is simple: interest costs related to film production are accounted for under the general interest-capitalization guidance in Subtopic 835-20 (835-926-25-1). Its scope follows the Entertainment—Films overall scope in Section 926-10-15.

This subtopic applies the general interest capitalization rules of Subtopic 835-20 to oil- and gas-producing operations that use the full cost method. Costs already being depreciated, depleted, or amortized are treated as assets in use and do not qualify for interest capitalization, while unusually significant unproved properties and major development projects not yet being amortized and on which exploration or development is in progress do qualify. It also addresses pipeline advances made to encourage exploration, which fall within the imputation-of-interest exclusion in 835-30-15-3(b) unless the advance is in a Topic 606 contract with a customer.

This Subtopic governs how entities with regulated operations account for the financing cost of construction — the allowance for funds used during construction (AFUDC), which includes both a computed interest component and a designated cost of equity funds. When a regulator requires such capitalization, the rate-making amount (not the amount computed under Subtopic 835-20) is capitalized for financial reporting purposes, but only if subsequent inclusion in allowable costs for rate-making purposes is probable. The credit is reported in the income statement as other income, a reduction of interest expense, or both.

ASC 842-10 sets the scope and core mechanics common to all leases: how to decide whether a contract is or contains a lease, how to identify and separate lease and nonlease components and allocate consideration, how to classify the lease (finance/sales-type, direct financing, or operating), and how to determine lease term and lease payments. A contract contains a lease if it conveys the right to control the use of an identified item of property, plant, or equipment for a period of time in exchange for consideration — meaning the customer has both the right to obtain substantially all the economic benefits from use and the right to direct the use of that asset (842-10-15-3, 15-4). Classification is made once at the commencement date and is reassessed only on a modification not accounted for as a separate contract (or, for lessees, a change in lease term or purchase option assessment) (842-10-25-1).

ASC 842-20 governs how a lessee accounts for leases already classified as finance or operating leases under 842-10. At commencement the lessee recognizes a right-of-use asset and lease liability measured at the present value of unpaid lease payments (842-20-25-1; 30-1); thereafter finance leases produce separate amortization and interest (842-20-25-5), while operating leases produce a single straight-line lease cost (842-20-25-6). It also covers short-term lease policy elections, remeasurement, ROU asset impairment, leasehold improvements, subleases, terminations, and extensive presentation and disclosure requirements.

This narrow subtopic tells a real estate investment trust (REIT) how much it may capitalize when a related service corporation performs leasing services for it. The service corporation is never treated as an independent third party, no matter how the REIT accounts for its investment in it (equity method, consolidation, etc.). Capitalized amounts are capped at the initial direct costs the REIT could have capitalized under 842-10-30-9 through 30-10 had it incurred the leasing costs directly.

ASC 845-10 governs nonmonetary transactions — reciprocal exchanges of nonmonetary assets and nonreciprocal transfers of nonmonetary assets to owners or others. The default rule is that such transactions are measured at the fair value of the asset surrendered (or received, if more clearly evident) with gain or loss recognized (845-10-30-1), subject to three exceptions requiring carryover (recorded amount) accounting: fair value not determinable within reasonable limits, an exchange of product held for sale to facilitate sales to customers, or a transaction lacking commercial substance (845-10-30-3). Special subsections address purchases and sales of inventory with the same counterparty, barter credits, and exchanges involving boot.

This Subtopic addresses how airlines account for exchanges of take-off and landing slots. Slots received in an exchange with another airline are nonmonetary assets and must be recorded under the general nonmonetary transaction guidance in Topic 845 (845-908-25-1), with related intangible asset guidance in Subtopic 908-350. Its scope is the same as the airline industry Overall Subtopic scope in Section 908-10-15.

ASC 845-920 formerly provided nonmonetary-transaction guidance for broadcasters, principally barter transactions in which broadcasters exchanged advertising time for goods, services, or program material. Every substantive paragraph in the subtopic (Sections 05, 15, 25, and 30) was superseded by ASU 2014-09 (the revenue standard). As a result, the subtopic contains no remaining guidance, and barter/nonmonetary exchanges involving broadcasters are now analyzed under ASC 606 (with noncash consideration measured at fair value) and the general nonmonetary guidance in ASC 845-10.

ASC 860-20 tells a transferor what to record once a transfer of financial assets qualifies as a sale under 860-10-40-5, and what happens if the transferor later regains control. For a sale of entire financial assets, the transferor derecognizes the assets, recognizes at fair value all assets obtained and liabilities incurred (cash, servicing assets/liabilities, beneficial interests, options, forwards, swaps), and books the gain or loss in earnings; for a participating interest, the prior carrying amount is allocated between the interest sold and the interest retained on relative fair values. If a change in law or circumstance causes the transferor to regain control, it rerecognizes the assets and related liabilities at fair value as if it purchased them, with no gain or loss on its beneficial interests.

ASC 860-50 governs when a servicer must separately recognize a servicing asset or servicing liability and how to measure it. A servicing contract is recognized separately each time an entity undertakes an obligation to service financial assets through a qualifying sale of an entire financial asset, group of entire financial assets, or participating interest, or through an acquisition/assumption of servicing for others' assets (860-50-25-1); it is initially measured at fair value (860-50-30-1) whether or not explicit consideration is exchanged. Subsequently, each class of servicing assets and liabilities is measured using either the amortization method (with impairment tested by stratum via a valuation allowance) or the irrevocable fair value measurement method (860-50-35-1).

ASC 910-20 governs how construction contractors account for contract costs, focusing on charging equipment and small tool costs to specific contracts. Equipment cost is allocated to contracts on a reasonable basis (time, hours of use, or mileage) using a "use rate" that considers equipment cost less salvage/rental, probable life, average idle time, and operating costs. It also requires disclosure of unapproved change orders and claims included in contract costs and of progress payments netted against contract costs.

ASC 944-30 governs how insurance entities capitalize, amortize, present, and disclose acquisition costs (DAC) for short-duration contracts, long-duration contracts, investment contracts, and reinsurance, plus deferred sales inducements. Only costs "related directly to the successful acquisition" of new or renewal contracts may be capitalized (944-30-25-1A) — incremental direct costs, directly related compensation/fringe benefits for underwriting, policy issuance and processing, medical and inspection, and sales force contract selling, plus certain other direct costs and qualifying direct-response advertising. Post-ASU 2018-12, long-duration DAC is amortized on a constant level basis over the expected contract term (944-30-35-3A), and the Internal Replacement Transactions Subsections determine whether a modified/replaced contract is "substantially unchanged" (continuation, DAC carried forward) or "substantially changed" (extinguishment, DAC written off).

ASC 970-10 is the Overall subtopic of the Real Estate—General Topic; it maps the industry's guidance (statement of cash flows, equity method/joint ventures, other assets and deferred costs, PP&E, debt, other expenses, consolidation, interest) and sets the pervasive scope. The Topic supplies only incremental industry-specific guidance and applies to all entities with productive activities relating to real property, excluding property used primarily in the entity's non-real estate operations (970-10-15-3). Its guidance runs in three Subsections: General (real estate ventures, partnerships, joint ventures, tax increment financing entities), Real Estate Syndication (income recognition from syndication activities), and Real Estate Project Costs (acquisition, development, construction, selling and rental costs).