Convertible debt can offer an issuer a lower-cost financing alternative, but the accounting can be complex depending on the instrument’s terms, settlement features, and related transactions. This episode discusses the key accounting models for convertible debt, including bifurcation under ASC 815, the own stock scope exception, substantial premium model, single instrument model, related features such as capped calls and contingent interest, and diluted EPS considerations.

For further guidance on the accounting for this topic, see chapter 6 of PwC’s Financing transactions guide.

This is the final episode in our debt-related miniseries. In case you missed any, listen to our previous episodes:

• Debt restructuring: Accounting for borrowers
• Beyond debt: Accounting for other liability-classified arrangements
• Current or noncurrent? Getting debt classification right

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About our guests

Bret Dooley is a PwC National Office Deputy Chief Accountant 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.

Chip Currie is a partner in PwC’s National office with 30 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.

About our guest host

Diana Stoltzfus is a partner in PwC’s National Office who helps to shape PwC’s perspectives on regulatory matters, responses to rulemakings and policy development, and implementation related to significant new rules and regulations. Prior to rejoining PwC, Diana was the Deputy Chief Accountant in the Office of the Chief Accountant (OCA) at the SEC where she led the activities of the OCA’s Professional Practices Group.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.

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Debt restructuring accounting remains top of mind for borrowers as companies refinance debt that may have been issued in a very different interest rate environment. This episode discusses the accounting models for debt restructurings, including lender-by-lender assessments, modification versus extinguishment outcomes, troubled debt restructurings, fee allocations, and syndicated debt transactions. We break down the key considerations and share insights on navigating common challenges in applying ASC 470 guidance.

For further guidance on the accounting for this topic, see chapter 3 of PwC’s Financing transactions guide. For cash flow presentation, see section 6.8 and for debt presentation and disclosure, see chapter 12 of PwC’s Financial statement presentation guide.

This episode is part of our debt-related miniseries. Stay tuned for our final episode next week, and in case you missed them, listen to our previous episodes:

• Beyond debt: Accounting for other liability-classified arrangements
• Current or noncurrent? Getting debt classification right

Follow this podcast on your favorite podcast app and subscribe to our weekly newsletter to stay in the loop.

About our guests

Suzanne Stephani is a director in PwC’s National Office specializing in the statement of cash flows as well as the application and interpretation of the accounting guidance related to financing, leasing, and foreign currency transactions.

Christopher Gerdau is a partner in PwC’s National Office specializing in accounting for financial instruments and banking-related topics. Chris also conducts technical reviews of SEC filings and provides technical support to PwC’s practice offices. Chris’s client service expertise includes the banking, capital markets, and insurance industries.

About our guest host

Diana Stoltzfus is a partner in PwC’s National Office who helps to shape PwC’s perspectives on regulatory matters, responses to rulemakings and policy development, and implementation related to significant new rules and regulations. Prior to rejoining PwC, Diana was the Deputy Chief Accountant in the Office of the Chief Accountant (OCA) at the SEC where she led the activities of the OCA’s Professional Practices Group.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com

Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

Liability classification under US GAAP extends well beyond traditional loans and bonds. In this episode, we discuss common arrangements that may be accounted for as liabilities, including preferred stock, warrants, noncontrolling interests, failed sale transactions, sales of future revenue, and supplier finance programs. We cover liability classification, measurement, and other accounting implications.

For further guidance on this topic, see our Financing transactions guide.

This episode is the second in our debt-related miniseries, so stay tuned for more. In case you missed it, check out our first episode, Current or noncurrent? Getting debt classification right.

Follow this podcast on your favorite podcast app and subscribe to our weekly newsletter to stay in the loop for the latest thought leadership on sustainability standards.

About our guests

Bret Dooley is a PwC National Office Deputy Chief Accountant 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.

Chip Currie is a partner in PwC’s National office with 30 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.

About our guest host

Diana Stoltzfus is a partner in PwC’s National Office who helps to shape PwC’s perspectives on regulatory matters, responses to rulemakings and policy development, and implementation related to significant new rules and regulations. Prior to rejoining PwC, Diana was the Deputy Chief Accountant in the Office of the Chief Accountant (OCA) at the SEC where she led the activities of the OCA’s Professional Practices Group.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.

Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.