1.1 Introduction

This Roadmap discusses the application of the guidance in ASC 450 on contingencies and loss recoveries as well as the guidance in ASC 460 on guarantees.

The accounting for contingencies is derived from FASB Statement 5, which the FASB issued in 1975 and which was codified in ASC 450. That guidance has remained substantially unchanged. Questions about the guidance’s scope and how to apply its recognition, measurement, and disclosure requirements continue to arise given the inherent uncertainty related to the accounting for contingencies and loss recoveries.

The accounting for guarantees is derived from FASB Interpretation 45, which the FASB issued in 2002 and which was codified in ASC 460. Other than relatively minor FASB Staff Positions released between 2003 and 2005, the guidance that was originally issued as part of Interpretation 45 has remained substantially unchanged. Nevertheless, it can be challenging for an entity to apply ASC 460 when determining whether a guarantee is within the scope of the (1) initial recognition, measurement, and disclosure guidance; (2) only the disclosure guidance; or (3) neither. Further complexities arise because ASC 460 does not provide comprehensive guidance on measurement in periods after the guarantee’s initial recognition and measurement.

Throughout this Roadmap, “date of the financial statements” means the end of the most recent accounting period for which financial statements are being presented (i.e., December 31, 20X9, for an entity with a calendar year-end that presents annual comparative financial statements for periods ended December 31, 20X8, and 20X9).