Читать книгу Annual Accounting and Auditing Workshop - Kurt Oestriecher - Страница 79

This update has two parts and was undertaken to address narrow issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of both liabilities and equities.

Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance has created cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option.

Part II of this update addresses the difficulty of navigating FASB ASC 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB ASC. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests.