Convertible instruments: 5 things you need to know

PwC's accounting podcast

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Every Tuesday in August, Bret Dooley, Deputy Chief Accountant in PwC’s National office, is taking over the podcast to share insights on financial instruments hot topics. In each 25-minute episode, Bret will discuss 5 things you need to know.

In this episode, Bret is joined by Chip Currie, another partner in PwC’s National office with a focus on financial instruments, to discuss convertible instruments and the impacts of updated accounting guidance in this area.
In this episode, you’ll hear discussion of:

• 1:38 - Why companies use convertible instruments and the complex financial decisions accompanying their use
• 6:38 - The impact of new accounting guidance for convertible instruments in ASU 2020-06
• 9:49 - Key information when accounting for induced conversions
• 12:10 - Down round provisions in equity-linked instruments
• 19:27 - Judgments involved in determining whether to separate the conversion option and account for it as an embedded derivative

For more information, read chapter 6 of our Financing transactions guide and chapter 3 of our Derivatives and hedging guide. Additionally, check out a prior podcast in this mini series.

Chip Currie is a partner in PwC’s National office with over 25 years of experience assisting companies in resolving complex business and accounting issues. He concentrates on the accounting for financial instruments under both current and emerging standards and works with many of the firm's largest financial services clients and a number of non-financial services clients on treasury-related matters.

Bret Dooley is a Deputy Chief Accountant in PwC’s National office who leads teams focused on the financial services sectors and accounting for financial instruments. He has over 25 years of experience in the financial services, banking, and capital markets industries. Bret focuses on emerging financial reporting issues related to financial instruments, developing interpretive guidance, and assisting clients in resolving complex accounting matters.

Heather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [e-mail].

Розділи

1. Convertible instruments: 5 things you need to know (00:00:00)

2. Why companies use convertible instruments and the complex financial decisions accompanying their use (00:01:38)

3. The impact of new accounting guidance for convertible instruments in ASU 2020-06 (00:06:38)

4. Key information when accounting for induced conversions (00:09:49)

5. Down round provisions in equity-linked instruments (00:12:10)

6. Judgments involved in determining whether to separate the conversion option and account for it as an embedded derivative (00:19:27)