FASB Flash Report - November 2014

November 2014

The FASB recently issued a new ASU requiring both issuers and investors to apply the "whole instrument" approach to determine whether the host contract in a hybrid instrument in the form of a share is more like debt or equity. That assessment is part of a larger analysis to determine if an embedded derivative should be bifurcated. If so, the embedded derivative, such as a conversion feature in convertible preferred stock, should be accounted for as a liability and carried at fair value through earnings each period.