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Chapter 5 — Guarantees

5.2 Guarantees — Scope

5.2 Guarantees — Scope

This section discusses the types of arrangements that, in the absence of a scope exception, are subject to ASC 460. The guidance in ASC 460 is organized into two subsections: (1) general and (2) product warranties. The guidance on product warranties is discussed in Section 5.6; accordingly, the remainder of this section addresses the scope of all guarantees other than product warranties.
It may prove challenging to assess the scope of ASC 460 because there are several exceptions related to applying the recognition, measurement, or disclosure guidance therein. In some instances, the guidance in ASC 460 results in the recognition and disclosure of a liability for a guarantee obligation. However, other types of guarantees are outside the scope of ASC 460’s recognition and measurement guidance (e.g., derivatives accounted for in accordance with ASC 815) but are still subject to its disclosure requirements. The figure below presents a framework for evaluating whether a guarantee is within the scope of ASC 460 and indicates that there are three possible conclusions for guarantees within the scope of ASC 460-10-15-4.
The figure below illustrates the decisions made to determine whether a guarantee is within the scope of any portion of ASC 460.

Footnotes

1
As discussed in Section 2.2.2, certain postemployment benefits are within the scope of ASC 450.