Induced Conversions of Convertible Debt Instruments (EITF Issue No. 23-A)
Last updated on April 28, 2023. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
In April 2023, the Board decided to add a project to the EITF agenda. The project scope focuses on the applicability of the induced conversion guidance to the early settlement of convertible debt instruments.
Last updated on April 28, 2023. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
Project Objective:
The objective of the Induced Conversions of Convertible Debt Instruments (EITF Issue No. 23-A) project is to improve the relevance of the existing induced conversion guidance in Subtopic 470-20, Debt—Debt with Conversion and Other Options.Background:
In November 2022, an Agenda Request was submitted by the Big Four accounting firms requesting that the Emerging Issues Task Force (EITF) address whether certain convertible debt instruments settled using terms that differ from the stated contractual conversion provisions should be accounted for as an induced conversion or extinguishment. Following the issuance of Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, stakeholders have raised questions about the accounting for certain settlements of convertible debt instruments that do not occur in accordance with the contractual conversion provisions of such instruments. Those questions primarily relate to convertible debt instruments whose provisions permit the issuer to settle conversions partly or wholly in cash (that is, instruments with cash conversion features). In addition, stakeholders have raised other general questions about the application of the induced conversion model.In April 2023, the Board decided to add a project to the EITF agenda. The project scope focuses on the applicability of the induced conversion guidance to the early settlement of convertible debt instruments.
Exposure Draft(s):
There are no exposure documents at this time.
There are no media releases or educational materials at this time.
There are no EITF Decisions at this time.
Tentative Board Decisions:
On April 26, 2023 the Board discussed the Agenda Request on addressing whether certain convertible debt instruments settled using terms that differ from the stated contractual conversion provisions should be accounted for as induced conversion or extinguishment.
The Board decided to add a project to the Emerging Issues Task Force (EITF) agenda to improve the relevance of the existing induced conversion guidance in Subtopic 470-20. The project scope will focus on the applicability of the induced conversion guidance to the early settlement of convertible debt instruments.
Tentative Board Decisions:
On April 26, 2023 the Board discussed the Agenda Request on addressing whether certain convertible debt instruments settled using terms that differ from the stated contractual conversion provisions should be accounted for as induced conversion or extinguishment.
The Board decided to add a project to the Emerging Issues Task Force (EITF) agenda to improve the relevance of the existing induced conversion guidance in Subtopic 470-20. The project scope will focus on the applicability of the induced conversion guidance to the early settlement of convertible debt instruments.
The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
| April 26, 2023* | Board Meeting—The Board decided to add the project to the Emerging Issue Task Force agenda. |
The EITF will discuss the project at a future EITF meeting.
Mary Mazzella
Assistant Director
msmazzella@fasb.org
Lucy Cheng
Supervising Project Manager
lcheng@fasb.org
Chris Bohdan
Project Manager
cbohdan@fasb.org
Emma Gough
Postgraduate Technical Assistant
egough@fasb.org
Assistant Director
msmazzella@fasb.org
Lucy Cheng
Supervising Project Manager
lcheng@fasb.org
Chris Bohdan
Project Manager
cbohdan@fasb.org
Emma Gough
Postgraduate Technical Assistant
egough@fasb.org
The staff has prepared this summary for information purposes only. Any Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.