Summary of Statement No. 84
Summary of Statement No. 84
Induced Conversions of Convertible Debt--an amendment of APB Opinion No. 26 (Issued 3/85)
Summary
This Statement amends APB Opinion No. 26, Early Extinguishment
of Debt. This Statement specifies the method of accounting for
conversions of convertible debt to equity securities when the
debtor induces conversion of the debt by offering additional
securities or other consideration to convertible debt holders. Such
an offer has sometimes been called a convertible debt "sweetener."
This Statement requires recognition of an expense equal to the fair
value of the additional securities or other consideration
issued to induce conversion.
This Statement is effective for conversions of
convertible debt pursuant to inducements offered after March 31,
1985, with earlier application encouraged. Retroactive application
for transactions occurring during periods for which financial
statements have previously been issued is permitted.