Confusion over convertibles
Article Abstract:
The Institute of Chartered Accountants of England and Wales has developed Technical Release 677, Accounting for complex capital issues, which deals with issues such as convertible bonds. Convertible bonds pay lower interest rates than standard bonds, but they can be traded for equity shares at favorable rates. Another development in convertible bonds are puttable convertible bonds which can also be redeemed for cash at a multiple of their par value. The TR 677 suggests that the potential redemption premiums on puttable convertible bonds should be accrued over the period from the bond issue date to the date when the put may be exercised. Other companies, which believe that they will covert their bonds to equity, need to determine if their convertible bonds meet the ED 42 standards for special purpose transactions and if they can be placed on their balance sheets.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1989
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SSAP 24: two years on
Article Abstract:
Statement of Standard Accounting Practice (SSAP) 24, Accounting for Pension Costs, was promulgated to increase the transparency of assumptions and valuation methods used by companies by creating comprehensive disclosure requirements and by reducing diversity in accounting treatment for pension trusts. SSAP 24 permits a choice in accounting treatment on implementation of the standard which will affect the cumulative adjustment, which can either be accounted for as a prior year adjustment or over the average of the remaining service lives of the employees currently vested in the trust. The choice will have a significant effect on pension costs in the future. Auditors can no longer be passive but must liaison with actuaries to make sure that their assumptions and valuation methods are consistent with their accounting objectives.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1990
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The Woolwich: a place in tax history
Article Abstract:
The Woolwich Equitable Building Society case has brought forth the issue of whether or not the new Building Society Regulations conform to the principles of UK tax law. They assess double and excess taxation, they defy Parliament's intentions and should be held illegal and void for the tax year 1985-1986. The case is interesting because it reinforces the traditional notion of income tax as an annual tax. Also important is that the regulations can be challenged because they were made by the Commissioners of Inland Revenue under delegated power.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1987
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