If the conversion feature is
settled entirely in cash upon conversion, APIC is debited or credited for the
difference between the amount of cash paid and the net carrying amount of the
debt. For example, if the amount of cash paid exceeds the debt’s net carrying
amount, the issuer may make the following accounting entry:
The FASB staff analyzed
three different scenarios related to the EITF’s Example 1 and indicated
whether they should be evaluated under the guidance that was subsequently
incorporated into ASC 470-20-40-5:
Confidential and Proprietary — for Use Solely by Authorized Personnel
This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.
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