10.1 Scope

05-1 The Equity Topic includes the following Subtopics:

1. Overall
2. Stock Dividends and Stock Splits
3. Treasury Stock
4. Subparagraph superseded by Accounting Standards Update No. 2018-07.
5. Spinoffs and Reverse Spinoffs.

05-2 The Overall Subtopic addresses financial accounting and reporting for equity-related matters not specifically addressed in the other Subtopics of the Equity Topic or other Topics that also address equity matters.

05-3 Equity, sometimes referred to as net assets, is the residual interest in the assets of an entity that remains after deducting its liabilities. The Subtopics of the Equity Topic provide guidance on several specific elements of transactions, accounts and financial instruments that are classified as components of equity as well as overall general guidance related to equity. Issues that relate to whether a specific financial instrument shall be classified as equity or outside of the equity classification are addressed in Topic 480 as well as other Topics (such as Topic 815 on derivatives and hedging) that address these classification matters.

05-4 Other Topics, including industry-specific Topics, also contain guidance related to specific equity matters associated with those Topics. Equity guidance in those Topics is intended to be incremental to the guidance otherwise established in this Topic.

15-1 The guidance in this Subtopic applies to all entities, unless more specific guidance is provided in other Topics.

15-2 The guidance in this Subtopic applies to all of the following instruments and activities:

1. Transactions in an entity’s own common stock
2. Receivables related to the issuance of equity interests and the appropriation of retained earnings
3. Subparagraph superseded by Accounting Standards Update No. 2020-06.
4. Convertible preferred stock, unless the guidance in other Subtopics (such as Subtopic 470-20 on debt with conversion and other options or 480-10 on distinguishing liabilities from equity) requires that the convertible preferred stock be classified as a liability. The relevant guidance in this Subtopic shall be considered after an issuer’s determination under Subtopic 815-15 on embedded derivatives of whether an embedded conversion option or other embedded feature in convertible preferred stock should be accounted for separately as a derivative instrument (see paragraph 815-15-55-76B). The guidance in this Subtopic does not apply to convertible preferred stock that is issued as awards to a grantee in exchange for goods or services received (or to be received) that are within the scope of Topic 718 on stock compensation unless the instrument is modified in accordance with and no longer subject to the guidance in that Topic.