FASB Issues Warrant Modification Guidance

Thoughtware Alert Published: May 06, 2021
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On May 3, 2021, FASB issued Accounting Standards Update 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which fills a current hole in accounting guidance that has resulted in diversity in practice. FASB’s new guidance was issued to clarify whether a modification or an exchange should result in (a) an adjustment to equity and, if so, the related earnings per share effects, if any, or (b) an expense and, if so, the manner and pattern of recognition.  

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