At its September 14, 2023, meeting, the EITF discussed Issue No. 23-A, “Induced
Conversions of Convertible Debt Instruments,” and reached a consensus-for-exposure.
Specifically, the Task Force decided to pursue amendments aligned with the preexisting
contract approach, rather than the incremental fair value approach, as an inducement
conversion approach, provided that certain clarifications are made. In addition, the
Task Force decided that induced conversion accounting may apply, as of the time of
issuance, to all convertible debt instruments, including conversions of convertible debt
instruments that are not currently convertible, that are within the scope of ASC 470-20
and have a substantive conversion feature.
The FASB staff expects to draft a proposed ASU related to this Issue and present it to
the Board for ratification in October 2023.