Instruments with aspects of both liabilities and equity. (FASB News).FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). recently issued Statement 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. Under previous guidance, certain financial instruments could be accounted for as equity, whereas now those instruments will be classified as liabilities. The statement affects accounting for three types of freestanding free·stand·ing adj. Standing or operating independently of anything else: a freestanding bell tower; a freestanding maternity clinic. financial instruments: * Mandatorily redeemable shares, where the issuing company is obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to buy back shares in exchange for cash or assets. * Instruments "that do or may require the issuer to buy back some of its shares in exchange for cash or other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. ." * Obligations that could be settled with shares, "the monetary value of which is fixed, tied solely or predominantly to a variable such as a market index, or varies inversely wit the value of the issuers' shares." To view Statement 150, go to www.fasb.org/FAS150.shtml. |
|
||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion