U.S. GAAP Codification of Accounting Standards Guide by AccountingINFO.com

U.S. GAAP Codification of Accounting Standards

U.S. GAAP Codification of Accounting Standards
Codification Topic 480: Distinguishing Liabilities from Equity

Principles of Accounting, Intermediate Accounting, Advanced Accounting

Codification Topic 480
Distinguishing Liabilities from Equity

Equity or Liabilities ?

   SFAS No. 150, May 2003
   "Accounting for Certain Financial Instruments with Characteristics of
   both Liabilities and Equity"

   FASB Staff Position FAS 150-3, November 2003
   "Effective date, disclosures, and transition for
    mandatorily redeemable financial instruments of certain nonpublic entities ..."

Rules of SFAS No. 150

   1. Mandatorily redeemable financial instruments
   --> classified as a liability
   --> asc 480-10-25-4

   2. Obligations to repurchase the issuer's equity shares
       by transferring assets
   --> classified as a liability
   --> asc 480-10-25-8

   Examples:
   (a) or (b) that are physically settled or net cash settled
   (a) forward purchase contracts on the issuer's equity shares
   (b) written put options on the issuer's equity shares

   3. Certain obligations to issue a variable number of shares
   --> classified as a liability
   --> asc 480-10-25-14

   Example:
   An obligation that the issuer must or may settle
   --> by issuing a "variable number" of its equity shares

Open effective date:
   FASB Staff Position FAS 150-3, November 2003

   1. Grouping of mandatorily redeemable financial instruments

   Group 1: mandatorily "redeemable on fixed dates",
                for fixed or determinable amounts
   Group 2: mandatorily redeemable financial instruments other than Group 1

   2. Certain nonpublic entities
   --> Nonpublic entities that are not SEC registrants

   3. Rules of SFAS No. 150 are
   --> deferred indefinitely, pending further FASB action

   --> for "Group 2" mandatorily redeemable financial instruments
   --> issued by nonpublic entities that are not SEC registrants
   --> asc 480-10-65-1

Codification Topic 480
Distinguishing Liabilities from Equity

Subtopics of Codification Topic 480

480-10 Overall

Accounting Terms of Codification Topic 480-10

   Employee stock ownership plan
   Equity shares
   Fair value
   Financial instrument
   Freestanding financial instrument
   Issuer
   Issuer's equity shares
   Mandatorily redeemable financial instrument
   Monetary value
   Net cash settlement
   Net share settlement
   Noncontrolling interest
   Obligation
   Parent
   Physical settlement
   Securities and exchange commission registrant
   Shares
   Subsidiary
   Transfer
   Variable-rate forward contracts