FASB Issues Final Standard on Induced Conversions of Convertible Debt Instruments

The FASB has released Accounting Standards Update (ASU) No. 2024-04, Induced Conversions of Convertible Debt Instruments. The ASU, which is based on an EITF consensus-for-exposure, amends ASC 470-20 to clarify the circumstances in which an entity is required to account for a settlement of a debt instrument as an induced conversion. The FASB’s objective in issuing the new standard is to “improve the relevance and consistency in the application of the induced conversion guidance . . . for convertible debt instruments with cash conversion features [and] debt instruments that are not currently convertible.”

For more information, see the press release on the FASB’s Web site.