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Certain types of guarantees are exempt from applying the recognition and measurement criteria of ASC 460. These guarantees are, however, still subject to the disclosure requirements of ASC 460. ASC 460-10-25-1 provides a list of contract types that are exempt from the recognition criteria.

ASC 460-10-25-1 [edits applicable upon adoption of ASC 842]

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 Subtopics 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 […in paragraph 842-20-40-3]. This exception shall not be applied by analogy to secondary obligations that are not accounted for under that paragraph […to other secondary obligations].
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.

If a reporting entity issues a guarantee within the scope of ASC 460-10-25-1 to an entity under common control, it is exempt from recording a guarantee liability in both the consolidated and its separate financial statements. However, the reporting entity should provide disclosure related to the intercompany guarantee in its separate financial statements.
For more information on the application and effective dates of ASC 842, see PwC’s Leases guide.
Example FG 2-4 discusses whether an arrangement contains a guarantee within the scope of ASC 460 or a warranty when an unrelated third-party’s actions cause a monetary loss.
EXAMPLE FG 2-4
Guarantee in a service arrangement to identify inappropriate transactions
Identify Corp provides services to XYZ, Inc. using technology designed to identify transactions where XYZ Inc.’s customer potentially acted inappropriately causing a monetary loss to XYZ, Inc. The service arrangement includes a guarantee that if a transaction is not flagged by Identify Corp, but ultimately results in a monetary loss to XYZ, Inc., Identify Corp will pay XYZ, Inc. the amount of that loss.
Does the service agreement contain a guarantee within the scope of ASC 460?
Analysis
Yes, Identify Corp accounts for the guarantee under ASC 460. This example includes a guarantee as described in ASC 460-10-15-4, and it is not subject to any of the exceptions described in ASC 460-10-15-7 or ASC 460-10-25-1. Although Identify Corp’s technology is designed to identify potentially inappropriate transactions and Identify Corp pays upon the failure of its services to do so, the amount of the payment is due to the actions of another party (i.e., customers of XYZ, Inc.); therefore, the guarantee is not a warranty of Identify Corp’s service.
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