5.1 Overview

The guidance in U.S. GAAP related to the issuer’s accounting for traditional convertible debt (see Chapter 4) contains an exception for convertible debt issued at a substantial premium to par. This chapter discusses the scope of this exception (see Section 5.2) as well as the initial and subsequent accounting for instruments within that scope (see Sections 5.3 and 5.4). Because there are no specific incremental derecognition or disclosure requirements for these instruments under GAAP, the related guidance for traditional convertible debt instruments applies (see Sections 4.5 and 4.6).