Industry Insights

Simplifications Proposed for Debt/Equity Features

January 2017

Executive Summary

The Financial Accounting Standards Board (FASB) recently released a proposal simplifying the classification and measurement of financial instruments with a down-round feature. Under current generally accepted accounting principles, a down-round feature precludes an equity classification. Under the proposal, this restriction would be eliminated. A down-round feature would result in an accounting effect only if it is triggered and the accounting treatment would be in line with the related instrument’s classification.

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