Handbooks | November 2017


Handbook: Distinguishing liabilities from equity

KPMG’s guidance on and interpretion of ASC 480. KPMG explains the accounting for certain instruments with characteristics of both liabilities and equity.


  • All companies

Relevant dates

  • Effective immediately

Key impacts

  • Provides interpretive guidance on ASC 480, including illustrative examples and Q&As, addresses accounting issues and explains the scope exception
  • Incorporates ASU 2017-11 Part II, Distinguishing Liabilities from Equity (Topic 480): Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

Report contents

  • Scope and initial classification
  • Mandatorily redeemable financial instruments
  • Obligations to repurchase the issuer’s equity shares by transferring assets
  • Certain obligations to issue a variable number of shares
  • Freestanding financial instruments and embedded features
  • Scope limitations
  • Presentation
  • Initial and subsequent measurement
  • Earnings per share
  • Disclosures
  • Scope exception for certain provisions of ASC 480
  • Analysis of complex financial instruments and transactions under ASC 480

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Spotlight on contributors

Louise Santacruz

Louise Santacruz

Executive Director, DPP, KPMG US

+1 212-909-5090
Patrick Garguilo

Patrick Garguilo

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-2852



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