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Distinguishing Liabilities From Equity

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Distinguishing Liabilities From Equity (March 2022)

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This Roadmap provides an overview of the guidance in ASC 480-10 as well as insights into and interpretations of how to apply it in practice. ASC 480-10 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 2022 edition of the Roadmap includes updated and expanded guidance that reflects, among other changes, amendments made by ASU 2020-06 to ASC 260 under which an entity, when calculating diluted earnings per share, may no longer overcome the presumption of share settlement for a contract that may be settled in stock or cash.
Note that this Roadmap replaces the Deloitte Q&As that were contained in ASC 480. To find the text in the Roadmap that corresponds to a former Q&A, select the “Liabilities From Equity” tab at the bottom of the Q&A to Roadmap Quick Reference Guide and search for the Q&A’s number or title.
Also available is the latest edition of On the Radar, a high-level summary of emerging issues and trends related to the accounting and financial reporting topics addressed in the Roadmap.
Be sure to check out other titles in Deloitte’s Roadmap series, our comprehensive, easy-to-understand collection of accounting guides on selected topics of broad interest to the financial reporting community.