The new convertible debt standard, explained

The FASB recently issued guidance that simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. Heather Horn is joined by a panel of guests to summarize what’s changed and the impacted areas.   Topics include:1:05 - Overview of convertible instruments. Before discussing the new model, we set the stage by providing background on the reason companies may issue convertible instruments, especially in the current market environment.5:53 - Background on the FASB’s project. Distinguishing between liability and equity is one of the more complex areas in GAAP. Here we provide the genesis of  the FASB’s project and highlight the areas that the Board worked to amend.9:42 - Specific impacts. In simplifying the accounting framework, the FASB addressed a handful of areas, including:9:49 - Convertible instruments13:31 - Contracts in own equity19:21 - Earnings per share29:24 - Disclosure and effective dates. We close by highlighting some of the new disclosure requirements as well as sharing the effective dates to be aware of.   Chip Currie is a Partner in PwC’s National Office with over 20 years of experience assisting companies in resolving complex business and accounting issues. He concentrates on the accounting for financial instruments for both current and emerging standards and works with many of the firm's largest financial services clients and a number of non-financial service clients on treasury-related matters. John Horan is a managing director in PwC’s National office where he assists clients with complex accounting issues in the areas of foreign currency, liabilities and equity, earnings per share, and derivatives and hedging. John specializes in large capital transactions and initial public offerings. Brian Zenk is a partner with PwC’s Deals practice advising clients on complex accounting and valuation matters, including mergers and acquisitions, joint ventures and alliances, debt and equity financings, financial risk management, and structured transactions. Leveraging his experience, he works with clients to develop creative and innovative solutions to address client needs and business, legal, accounting, tax, and regulatory challenges. Heather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 25 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.

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