A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
ASC 460 requires that the fair value of guarantees be recognized as a liability, and establishes the notion that a guarantee actually consists of two distinct components. These two components have quite different accounting implications: noncontingent obligation and contingent obligation. Upon implementation of ASU 2016‐13, at the inception of a guarantee on financial instruments measured at amortized costs, the guarantor should recognize as liabilities: the amount that satisfies the fair value obligation in ASC 460‐10‐30‐2 and the contingent liability related to the expected credit loss measured according to ASC 326‐20. ASC 460 does not prescribe the accounting for guarantees subsequent to initial recognition, and there is no requirement to reassess the fair value of the guarantee after inception. Fair value should only be used in subsequent accounting for the guarantee if the use of that method can be justified under other authoritative guidance.
ASC 460 requires that the fair value of guarantees be recognized as a liability, and establishes the notion that a guarantee actually consists of two distinct components. These two components have quite different accounting implications: noncontingent obligation and contingent obligation. Upon implementation of ASU 2016‐13, at the inception of a guarantee on financial instruments measured at amortized costs, the guarantor should recognize as liabilities: the amount that satisfies the fair value obligation in ASC 460‐10‐30‐2 and the contingent liability related to the expected credit loss measured according to ASC 326‐20. ASC 460 does not prescribe the accounting for guarantees subsequent to initial recognition, and there is no requirement to reassess the fair value of the guarantee after inception. Fair value should only be used in subsequent accounting for the guarantee if the use of that method can be justified under other authoritative guidance.
ASC 460 GUARANTEES
Flood, Joanne M. (author)
Wiley GAAP 2021 ; 515-526
2021-03-09
12 pages
Article/Chapter (Book)
Electronic Resource
English
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