Accounting for convertible debt: a fundamental financial instrument approach to accounting for convertible debt as a single instrument , Southampton, UK University of Southampton 27pp.
(Discussion Papers in Accounting and Management Science, 96-116).
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The fundamental financial instrument approach of the FASB proposes that a compound instrument, such as a convertible bond, can be understookd 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
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