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Accounting for Convertible Debt: A Fundamental Financial Instrument Approach to Accounting for Convertible Debt as a Single Instrument

Author

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  • Casson, P.

Abstract

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.

Suggested Citation

  • Casson, P., 1996. "Accounting for Convertible Debt: A Fundamental Financial Instrument Approach to Accounting for Convertible Debt as a Single Instrument," Papers 96-116, University of Southampton - Department of Accounting and Management Science.
    • Handle: RePEc:fth:sotoam:96-116
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    More about this item

    Keywords

    FINANCIAL MARKET; ACCOUNTING;

    JEL classification:

    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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