Companies issuing convertible debt and equity instruments appear set to get accounting relief by the Financial Accounting Standards Board. The FASB is proposing an accounting standard that would simplify (improve) guidance on these financial instruments. As these companies and their auditors are aware, wading through the current accounting literature in this area is a challenge, and often the accounting result is just as confusing as finding the answer. Users of financial statements have also expressed that the accounting results aren’t useful. The new standard will likely result in less bifurcation of instruments into their debt and equity components. Disclosures would be enhanced so users still have the necessary information to make decisions.
For more information, please contact Audit Director, Nathan Hartman.