The fundamental financial instrument approach of the FASB proposes that a compound instrument, such as a convertible bond, can be understook as being made up of fundamental financial instruments. Two methods of accounting for a convertible bond are seen as consistent with this approach: (a) recognise the fundamental components of a convertible bond separately in the accounts; and (b) analyse a convertible bond in terms of its fundamental components and account for it as a single instrument. There is currently disagreement amongst accounting regulators as which of thse methods should be used.
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Paper provided by University of Southampton - Department of Accounting and Management Science in its series Papers with number
96-116.
Length: 27 pages Date of creation: 1996 Date of revision: Handle: RePEc:fth:sotoam:96-116
Contact details of provider: Postal: University of Southampton, Department of Accounting & Mangement Science, Southampton S09 5NH UK. Phone: 44 0173 592537/592555 Fax: 44 0173 593858 Email: Web page: http://www.soton.ac.uk/~econweb/ More information through EDIRC
Find related papers by JEL classification: E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data) M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting M49 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Other