United States

New edition of our guide on accounting for debt and equity

FINANCIAL REPORTING INSIGHTS  | 

We have published the fourth edition of our publication, A guide to accounting for debt and equity instruments in financing transactions. In this edition, we added or updated the following:

  • Discussion of the accounting for bridge notes settled in a variable number of shares upon the occurrence of a qualified financing, with the number of shares determined based on the price at which shares are issued in the financing event.
  • A flowchart illustrating the four-step decision sequence involved in determining whether put and call options are clearly and closely related to the debt host contract.
  • Spotlights on future standard setting that highlight the Financial Accounting Standards Board’s (FASB) project on “Distinguishing Liabilities from Equity (Including Convertible Debt)” and its related recently issued proposed ASU, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

Use this guide to help navigate the often complex accounting guidance pertinent to debt and equity instruments issued in financing transactions.