In August, 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, resulting in the most substantial changes to this accounting standard in many years. Our in-depth guide has been updated to reflect those changes.
- All entities
- Entities that issue convertible instruments or contracts in an entity’s own equity.
ASU 2020-06 impacts the following areas:
- Reduces the number of models used to account for convertible instruments.
- Amends diluted EPS calculations for certain convertible instruments, which will generally result in more dilutive EPS results.
- Amends the requirements for a conversion option to be classified in equity, which will likely result in more conversion features meeting a scope exception from embedded derivative accounting.
- Identifying relevant accounting guidance for debt and equity instruments
- Troubled debt restructurings, other debt modifications and extinguishments
- Distinguishing liabilities from equity
- SEC guidance on redeemable equity-classified instruments
- Contracts in an entity’s own equity
- Hybrid instruments with embedded features
- Convertible instruments
- Effective dates and transition of ASU 2020-06
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