2.1 Entities

2.1.1 Issuers

ASC 480-10

10-1 The objective of this Subtopic is to require issuers to classify as liabilities (or assets in some circumstances) three classes of freestanding financial instruments that embody obligations for the issuer.

15-2 The guidance in the Distinguishing Liabilities from Equity Topic applies to all entities.

ASC 480-10 — Glossary

Issuer

The entity that issued a financial instrument or may be required under the terms of a financial instrument to issue its equity shares.

ASC 480 applies to both public business entities (including SEC registrants) and private companies that are issuers of financial instruments within its scope. Under ASC 480-10-20, an issuer is defined as an entity that either “issued a financial instrument” (e.g., an outstanding common or preferred share) or “may be required under the terms of a financial instrument to issue its equity shares” (e.g., certain obligations to deliver a variable number of equity shares). An entity that enters into an obligation to repurchase its equity shares by transferring assets (e.g., an entity that writes a put option or enters into a forward purchase contract on its equity shares) is also considered an “issuer” under ASC 480 because it issued the shares underlying the contract. Conversely, ASC 480 does not apply to investors in the entity’s equity shares or to the counterparty to a financial instrument on the entity’s equity shares.

2.1.2 Exempt Entities

Some of the requirements in ASC 480 do not apply to certain mandatorily redeemable financial instruments that either represent noncontrolling interests or are issued by nonpublic entities that are not SEC registrants. The following table provides an overview of these exceptions:

Affected Entities	Instruments for Which Some or All of the Guidance in ASC 480 Does Not Apply	Exempt Guidance	Scope Exception in ASC 480-10-15
Parents preparing consolidated financial statements (both public and nonpublic)	Mandatorily redeemable noncontrolling interests that do not have to be classified as liabilities by the subsidiary under the only-upon-liquidation exception in ASC 480-10- 25-4 and 25-6	The classification and measurement provisions (but not the disclosure provisions) in ASC 480	7E(a)
	Other mandatorily redeemable noncontrolling interests that were issued before November 5, 2003	The measurement provisions (but not the classification and disclosure provisions) in ASC 480	7E(b)
Subsidiaries (both public and nonpublic)	Mandatorily redeemable noncontrolling interests that were issued before November 5, 2003	The measurement provisions (but not the classification and disclosure provisions) in ASC 480	7E(b)
Nonpublic entities that are not SEC registrants	Mandatorily redeemable financial instruments other than those that are mandatorily redeemable on fixed dates for amounts that either are fixed or are determined by reference to an interest rate index, currency index, or another external index	The classification, measurement, and disclosure provisions in ASC 480	7A

These exceptions are described in more detail in Section 4.1.5.

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.