fair value measurement

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.

This subtopic governs how broker-dealers account for investments in debt and equity securities, covering both clearance/settlement activities (General) and proprietary trading (Proprietary Trading Securities). The core rules are that all regular-way trades are reflected on a trade-date basis (320-940-25-1), and proprietary security positions — both inventory and obligations for short inventory positions — are measured initially and subsequently at fair value with unrealized gains and losses included in profit or loss (320-940-30-2, 35-1, 35-2).

This Subtopic (codified as 958-320) governs how not-for-profit entities account for investments in debt securities and sets disclosure rules for most NFP investments. The core rule is simple and different from the business-entity model: all debt securities held by an NFP are carried at fair value in the statement of financial position, with no held-to-maturity, trading, or available-for-sale classification. Purchased securities are initially measured at acquisition cost (excluding brokerage and other transaction fees); contributed securities and those received in agency transactions are initially measured at fair value.

This subtopic tells investment companies how (and whether) to apply the equity method of Topic 323. The general rule is that an investment company does not use the equity method for its noncontrolling ownership interests; instead it measures those investments at fair value under Subtopic 946-320. The one exception is an investment in an operating entity that provides services to the investment company (e.g., an investment adviser or transfer agent), which is accounted for under the equity method if it otherwise qualifies.

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 350-60 governs the subsequent measurement, presentation, and disclosure of in-scope crypto assets (e.g., bitcoin-type fungible tokens). The core rule is that such assets are measured at fair value on the balance sheet with remeasurement gains and losses recognized in net income (350-60-35-1), replacing the old indefinite-lived intangible impairment-only model. Initial measurement, recognition, and derecognition remain governed by other GAAP (350-60-05-2).

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.

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 845-985 formerly provided industry guidance on nonmonetary (barter) exchanges involving software, principally software revenue recognition in exchanges of software products or licenses. Every paragraph in this subtopic — scope, recognition, and implementation guidance — was superseded by ASU 2014-09 (Revenue from Contracts with Customers). The subtopic therefore contains no operative guidance; nonmonetary consideration in software arrangements is now addressed under ASC 606 (noncash consideration) and general nonmonetary guidance in ASC 845-10.