This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

ASC 405 — Liabilities

Below is an overview of FASB Accounting Standards Codification Topic 405, Liabilities, as well as a list of FASB Accounting Standards Updates (ASUs) and proposed ASUs related to this Topic.


ASC 405 comprises four Subtopics (Overall, Extinguishments of Liabilities, Insurance-Related Assessments, and Obligations Resulting from Joint and Several Liability Arrangements). Below is an overview of each Subtopic.


405-10 Overall

This Subtopic provides information on where in the Codification specific guidance is provided for accounting for various types of liabilities.


405-20 Extinguishments of Liabilities

ASC 405-20 notes the following:


An entity may settle a liability by transferring assets to the creditor or otherwise obtaining an unconditional release. Alternatively, an entity may enter into other arrangements designed to set aside assets dedicated to eventually settling a liability. Accounting for those arrangements has raised issues about when a liability should be considered extinguished. This Subtopic establishes standards for resolving those issues.

405-30 Insurance-Related Assessments

ASC 405-30 notes the following:


Insurance entities as well as noninsurance entities are subject to a variety of assessments related to insurance activities, including those by state guaranty funds and workers' compensation second-injury funds. Some entities may be subject to insurance-related assessments because they self-insure against loss or liability. This Subtopic provides guidance on accounting for insurance-related assessments.

405-40 Obligations Resulting from Joint and Several Liability Arrangements

ASC 405-40 was added by ASU 2013-04, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 (for nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2014, and interim periods and annual periods thereafter). ASC 405-40 "addresses the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements."

The full text of ASC 405 can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).

Content from the FASB Accounting Standards Codification® included at is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

    The following ASUs amended the guidance in this Topic:

    Proposed FASB Accounting Standards Updates

      No current proposals on Topic 405.

      Correction list for hyphenation

      These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.