20 Debt with Conversion and Other Options

Deloitte's Roadmap: Convertible Debt (Before Adoption of ASU 2020-06)

Convertible Debt (Before Adoption of ASU 2020-06)

This Roadmap provides an overview of the requirements in ASC 470-20 related to convertible debt and our insights into and interpretations of how to apply them in practice.

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Preface On the Radar Contacts Chapter 1 — Overview Chapter 2 — Scope Chapter 3 — Contract Analysis Chapter 4 — Traditional Convertible Debt Chapter 5 — Convertible Debt Issued at a Substantial Premium Chapter 6 — Cash Conversion Features Chapter 7 — Beneficial Conversion Features Chapter 8 — Own-Share Lending Arrangements in Connection With Convertible Debt Issuance Chapter 9 — Comparison of U.S. GAAP and IFRS Accounting Standards Appendix A — Embedded Derivative Analysis Appendix B — Accounting for Conversion of Convertible Debt Instrument With a Bifurcated Embedded Conversion Option Appendix C — Original Pronouncements Codified in ASC 470-20 Appendix D — Selected ASC Glossary Terms Appendix E — Titles of Standards and Other Literature Appendix F — Abbreviations Appendix G — Roadmap Updates for 2022

This Roadmap provides an overview of the requirements in ASC 470-20 related to convertible debt before the amendments made by ASU 2020-06. It includes our insights into and interpretations of how this accounting guidance should be applied by entities that have not adopted ASU 2020-06.

This Roadmap is intended to help an issuer navigate the guidance, organize its analysis, and arrive at appropriate accounting conclusions.

Note that in August 2020, the FASB issued ASU 2020-06, which significantly affects the issuer’s accounting for convertible debt instruments. Because this Roadmap is based on GAAP before the amendments made by ASU 2020-06, it should not be used by entities that have adopted that ASU. The 2022 edition of Deloitte’s Roadmap Issuer's Accounting for Debt addresses an issuer’s accounting for convertible debt after adoption of ASU 2020-06.