4.1 Overview
Historically, the general approach to accounting for convertible debt has been not to recognize the equity conversion feature separately. Over time, however, numerous exceptions to this approach have been added to U.S. GAAP to better reflect the nature and characteristics of certain types of convertible debt (see Section 4.2).
Sections 4.3 and 4.4 describe the initial and subsequent accounting for traditional convertible debt that contains no separated equity conversion feature. Section 4.5 addresses derecognition issues associated with convertible debt instruments, including the accounting for conversions, extinguishments, modifications, and exchanges of such instruments. Finally, Section 4.6 discusses presentation and disclosure requirements applicable to convertible debt.