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That Subtopic provides the initial recognition and initial measurement requirements for assets and liabilities arising from contingencies recognizedmeasured at fair value and for assets arising from contingencies recognizedmeasured at an amount other than fair value as part of a business combination or an acquisition by a not-for-profit entity.


Amend paragraph 460-10-25-1, with a link to transition paragraph 958-805-

65-1, as follows:

460-10-25-1 The following types of guarantees are not subject to the recognition provisions of this Subsection:

    • a.

      A guarantee that is accounted for as a derivative instrument at fair value under Topic 815.

    • b.

      A product warranty or other guarantee for which the underlying is related to the performance (regarding function, not price) of nonfinancial assets that are owned by the guaranteed party (see paragraph 460-10- 15-9 for related guidance).

    • c.

      A guarantee issued in a business combination or an acquisition by a not-for-profit entity that represents contingent consideration (as addressed in SubtopicSubtopics 805-30 and 958-805).

    • d.

      A guarantee for which the guarantor’s obligation would be reported as an equity item rather than a liability under generally accepted accounting principles (GAAP) (see Topics 480 and 505).

    • e.

      A guarantee by an original lessee that has become secondarily liable under a new lease that relieved the original lessee from being the primary obligor (that is, principal debtor) under the original lease, as discussed in paragraph 840-30-40-5. This exception shall not be applied by analogy to secondary obligations that are not accounted for under that paragraph.

    • f.

      A guarantee issued either between parents and their subsidiaries or between corporations under common control.

    • g.

      A parent’s guarantee of its subsidiary’s debt to a third party (whether the parent is a corporation or an individual).

    • h.

      A subsidiary’s guarantee of the debt owed to a third party by either its parent or another subsidiary of that parent.

  • 50.

    Amend paragraph 730-10-15-4, with no change to transition, as follows:

730-10-15-4 The guidance in this Topic does not apply to the following transactions and activities:

a. Accounting for the costs of research and development activities conducted for others under a contractual arrangement, which is a part of accounting for contracts in general. Indirect costs, including indirect costs that are specifically reimbursable under the terms of a contract, are also excluded from the scope of this Topic.


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