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Contentious Part of Convertible Debt Accounting Plan Stripped Out

Feb. 5, 2020, 9:12 PM

A plan by the U.S. accounting rulemaker to simplify complex guidance for fundraising tools like convertible bonds just got pared down.

The Financial Accounting Standards Board agreed Wednesday to spin off a narrow but contentious part of its project—a clarification to what’s called the derivatives scope exception in ASC 815-40, Derivatives and Hedging.

The guidance outlines what types of contracts don’t need to be accounted for as derivatives as long as they meet certain requirements. The part of FASB’s plan would have let companies avoid automatically labeling contracts as liabilities if they had cash settlement features but there was ...