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ASC 470 — Debt

Below is an overview of FASB Accounting Standards Codification Topic 470, Debt, as well as a list of FASB Accounting Standards Updates (ASUs) and proposed ASUs related to this Topic.


ASC 470 comprises six Subtopics (Overall, Debt With Conversion and Other Options, Participating Mortgage Loans, Product Financing Arrangements, Modifications and Extinguishments, and Troubled Debt Restructurings by Debtors). Below is an overview of each Subtopic.


470-10 Overall

ASC 470-10 notes the following:


The Overall Subtopic addresses classification determination for specific obligations, such as the following:

  1. Short-term obligations expected to be refinanced on a long-term basis
  2. Due-on-demand loan arrangements
  3. Callable debt
  4. Sales of future revenue
  5. Increasing rate debt
  6. Debt that includes covenants
  7. Revolving credit agreements subject to lock-box arrangements and subjective acceleration clauses
  8. Indexed debt.

470-20 Debt With Conversion and Other Options

ASC 470-20 notes the following:


This Subtopic provides accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features and other options as follows:

  1. Debt instruments with detachable warrants
  2. Convertible securities—general
  3. Beneficial conversion features
  4. Interest forfeiture
  5. Induced conversions
  6. Conversion upon issuer's exercise of call option
  7. Convertible instruments issued to nonemployees for goods and services
  8. Own-share lending arrangements issued in contemplation of convertible debt issuance.

470-30 Participating Mortgage Loans

ASC 470-30 notes the following:


This Subtopic establishes the borrower's accounting for a participating mortgage loan if the lender is entitled to participate in any of the following:

  1. Appreciation in the fair value of the mortgaged real estate project
  2. The results of operations of the mortgaged real estate project.

470-40 Product Financing Arrangements

ASC 470-40 notes the following:


This Subtopic establishes guidance for determining whether an arrangement involving the sale of inventory is in substance a financing arrangement.

Product financing arrangements include agreements in which a sponsor (the entity seeking to finance product pending its future use or resale) does any of the following:

  1. Sells the product to another entity (the entity through which the financing flows), and in a related transaction agrees to repurchase the product (or a substantially identical product)
  2. Arranges for another entity to purchase the product on the sponsor's behalf and, in a related transaction, agrees to purchase the product from the other entity
  3. Controls the disposition of the product that has been purchased by another entity in accordance with the arrangements described in either (a) or (b).

470-50 Modifications and Extinguishments

ASC 470-50 notes the following:


This Subtopic discusses the accounting for all extinguishments of debt instruments, except debt that is extinguished through a troubled debt restructuring (see Subtopic 470-60) or a conversion of debt to equity securities of the debtor pursuant to conversion privileges provided in terms of the debt at issuance (see Subtopic 470-20).

This Subtopic also provides guidance on whether an exchange of debt instruments with the same creditor constitutes an extinguishment and whether a modification of a debt instrument should be accounted for in the same manner as an extinguishment.

In circumstances where an exchange of debt instruments or a modification of a debt instrument does not result in extinguishment accounting, this Subtopic provides guidance on the appropriate accounting treatment.

470-60 Troubled Debt Restructurings by Debtors

ASC 470-60 notes the following:


This Subtopic addresses measurement, derecognition, disclosure, and implementation guidance issues concerning troubled debt restructurings focused on the debtor's records. The creditor's accounting is discussed in Subtopic 310-40.

The full text of ASC 470 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

    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.