FASB Holds July 17 Meeting

At its July 17, 2024, meeting, the FASB discussed its project on induced conversions of convertible debt instruments, including feedback the Board has received on its proposed Accounting Standards Update (ASU) on this topic. Specifically, the Board affirmed its previous tentative decisions related to:

• The form and amount of consideration in an inducement offer.
• The date as of which the form and amount of consideration should be assessed.
• The one-year look-back period related to the induced conversion assessment.
• The convertible debt instruments to which induced conversion accounting would be applied.
• The proposed ASU’s effective date as well as transition requirements and early adoption.

The Board also determined that the proposal’s benefits outweigh its costs and directed the staff to draft a final ASU for a vote by written ballot.

In addition, the Board added to its agenda a project on clarifying the business combinations guidance in ASC 805 and consolidation guidance in ASC 810 with respect to “whether the primary beneficiary should always be the accounting acquirer of a variable interest entity (VIE) that meets the definition of a business.” The Board has directed the staff to draft a proposed ASU related to this project for a vote by written ballot.

For more information, see the tentative Board decisions on the FASB’s Web site.