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Chapter 4 — Recognizing and Measuring the Identifiable Assets Acquired and Liabilities Assumed

4.15 Instruments Indexed to or Settled in Shares and Classified as Liabilities

4.15 Instruments Indexed to or Settled in Shares and Classified as Liabilities

An acquiree may have issued securities that are equity in legal form but classified and accounted for as a liability under ASC 480 or ASC 715. Regardless of their legal form or accounting classification, if the instruments remain outstanding after the business combination, an acquirer must recognize them on the acquisition date as part of the business combination and measure them at their fair value. Equity instruments classified as liabilities are not considered noncontrolling interests.