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Chapter 2 — Scope

2.7 Guarantee Contracts

2.7 Guarantee Contracts

ASC 815-40
15-10 Topic 460 provides an exception from its initial recognition and initial measurement requirements, but not its disclosure provisions, for a guarantee for which the guarantor’s obligation would be reported as an equity item (rather than a liability) under generally accepted accounting principles (GAAP).
15-11 If a contract under this Subtopic is required to be accounted for as a liability under this Subtopic and also meets the definition of a guarantee under Topic 460 (for example, a physically settled written put option), both this Subtopic and that Topic are consistent with respect to requiring the issuer to account for the contract at fair value at the initial measurement date. In that situation, the guarantee would also be subject to the disclosure requirements of Topic 460.