Industry Insights

Clarifications Proposed on Contingent Call (Put) Option Bifurcation

September 2015

On August 6, 2015, the Financial Accounting Standards Board (FASB) issued a proposed update to eliminate diversity in practice in determining whether an embedded call (put) option is clearly and closely related to its debt host. The various interpretations of current guidance may lead to different conclusions about bifurcation of an embedded derivative. The proposal wouldn’t change the criteria for determining when bifurcation of an embedded call (put) option in a debt instrument is required; it would merely clarify the steps required when assessing the clearly and closely related criteria. Comments are due October 5, 2015.

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