physically settled forward purchase contract

Liabilities1

1. 480-10Overall480 Distinguishing Liabilities from Equity

   ASC 480-10 tells an issuer when a freestanding financial instrument with characteristics of both liabilities and equity must be classified as a liability (or, in some cases, an asset) rather than equity. It captures three classes of instruments: (1) mandatorily redeemable financial instruments (480-10-25-4); (2) obligations, other than outstanding shares, to repurchase the issuer's own equity shares by transferring assets (480-10-25-8); and (3) certain obligations settleable in a variable number of shares whose monetary value is fixed, indexed to something other than the issuer's shares, or varies inversely with the issuer's share price (480-10-25-14). Measurement is generally fair value, except that mandatorily redeemable instruments and physically settled fixed-share forward purchase contracts are accreted to the settlement amount with the change recognized as interest cost.