Debt, equity or something else? The Accounting Standards Board's latest FRED tackles capital instruments

Article Abstract:

The Accounting Standard Board's Financial Reporting Exposure Draft No 3, 'Accounting for Capital Instruments,' recommends accounting principles for capital instruments. This is in response to the growing confusion regarding appropriate accounting treatment for the numerous emerging instruments, including auction market preferred shares, convertible capital bonds and convertible debt with premium put options. Some of the proposals contained in FRED 3 referred to the definition of liabilities, the recognition of debt and non-equity instruments, the disclosure of the analysis of the total funds of shareholders, the restriction of the uses of the share premium account, and the separate accounting of the debt and equity components of convertible debt.

Accounting and auditing

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Accounting stripped down to the core

Article Abstract:

The Accounting Standards Board has just made available to the public two chapters that will make up most of its Statement of Principles. The first of these chapters gives the definitions of the financial statement's seven elements. These elements are assets, liabilities, gains, losses, equity, owners' contributions and distributions to owners. The chapter, likewise, discusses the relationship between assets and liabilities. The second chapter deals with the recognition of credit or debit items in the financial statement. It enumerates three conditions that must be met for the appropriate recognition of such items. In addition, it offers specific criteria for the recognition of gains in the profit and loss account.

Professional organizations, Financial statements

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Accounting for capital instruments

Article Abstract:

The Accounting Standards Board has released a paper entitled 'Accounting for Capital Instruments' which is intended to improve the accounting of the liability and equity aspects of capital instruments. The paper provides an assessment of the equity and non-equity positions of stockholders' interests, as well as subsidiaries' minority holdings. The accounting of costs related to the issue of capital instruments is also discussed. The paper's proposals are generally consistent with those published in the E40 Financial Instruments exposure draft of the International Accounting Standards Committee.

Usage, Reports

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