Preface

We are pleased to present the 2024 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 2024 edition of the Roadmap includes updated and expanded guidance on the classification of certain types of contracts, the application of the deemed liquidation exception in ASC 480-10-S99-3A, and other topics. We have also removed from the Roadmap discussions of the accounting before the amendments made by ASU 2020-06 since it is assumed that all entities have adopted the ASU’s guidance. Appendix F highlights substantive changes made to the Roadmap since issuance of the 2023 edition.

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.