Simplifications Proposed for Debt/Equity Features
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.