Preface
We are pleased to present the
2025 edition of Distinguishing Liabilities From Equity. This Roadmap provides an
overview of the guidance in ASC 4801 as well as insights into and interpretations of how to apply it in practice. ASC 480
requires (1) issuers to classify certain types of shares of stock and certain share-settled
contracts as liabilities or, in some circumstances, as assets and (2) SEC registrants to
classify certain types of redeemable equity instruments as temporary equity.
The 2025 edition of the Roadmap
includes updated and expanded guidance on certain topics and a new chapter on the accounting
for and disclosure of certain transactions involving equity instruments. Appendix F highlights substantive
changes made to the Roadmap since issuance of the 2024 edition.
Be sure to check out On the Radar (also
available as a stand-alone publication),
which briefly summarizes emerging issues and trends related to the accounting
and financial reporting topics addressed in the Roadmap.
We hope you will find this
Roadmap to be a useful resource in determining the appropriate accounting for contracts
within the scope of ASC 480, and we welcome your suggestions for future improvements to it.
If you have questions about the guidance or would like assistance applying it, we encourage
you to consider consulting our technical specialists and other professional advisers.
Footnotes
1
For a list of abbreviations used in this publication, see Appendix E. For the full titles of
standards, topics, and regulations used in this publication, see Appendix D.