Handbook: Contingencies, commitments and guarantees
Handbooks | September 2025
Our new in-depth guide to accounting for contingencies, commitments and guarantees – with Q&As, interpretative guidance and examples.
We explain the accounting, presentation and disclosure requirements for loss contingencies, gain contingencies, guarantees, commitments and unconditional purchase obligations.
Applicability
- ASC 440, ASC 450 and ASC 460
- All companies
Relevant dates
- Effective immediately
Key impacts
Companies are frequently faced with contingencies. While the applicable guidance in the area has survived the test of time, the accounting often seems like a rule-of-thumb exercise guided by the virtues of prudence and transparency.
There are many accounting standards that address specific types of contingencies, and we explain one such standard in this Handbook (ASC 460 on guarantees). We also explain the residual standard used when no other standard applies (ASC 450). As a residual standard, ASC 450 is necessarily general in nature, but long-standing practices have filled in some of its gaps.
These standards require making probability assessments and using estimation methodologies. Fortunately, there is a science to the art of assessing and estimating contingencies, which we endeavor to demonstrate throughout this Handbook as we explain the accounting and disclosure models codified in these standards and developed through the years. We also explain the limited disclosure guidance in ASC 440 on commitments.
Report contents
- Contingencies: Key concepts and scope
- Loss contingencies: Recognition
- Loss contingencies: Measurement
- Loss contingencies: Presentation and disclosure
- Gain contingencies and loss recoveries
- Guarantees and product warranties
- Commitments
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