Shares, debt, preferreds and hybrids
Article Abstract:
Hybrid instruments with the characteristics of shares and debt have become increasingly important to corporate finance. The accounting treatment of off balance sheet finance is moving in the direction of substance as a guiding principle, but the legal form generally governs the treatment of complex financial instruments. A major question is whether the legal form of analysis gives useful information to account users. There are alternative ways of analyzing how to structure the presentation including liability to repay finds; rank of instruments in a winding up; current status of instruments; and future status of instruments. Exposure Draft 42 advises that greater weight be given to those aspects that a have a commercial effect in practice. However, accepting that future events affect current accounting leads to many difficulties in determining the presentation of conversions.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1990
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Reserve the place for a premium?
Article Abstract:
The Companies Act 1985, S-130(2), defines the uses to which a share premium account (SPA) may be used, but the odd combination of expenses charged to SPA is not logical; these would logically be assigned to the income statement. Treatment of premiums, discounts, and issue expenses could be improved by either repealing S-130(2) or by permitting specific expenses to be assigned to any reserve.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1987
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What is a share option worth?
Article Abstract:
The US Financial Accounting Standards Board is attempting to develop a procedure for determining the worth of stock options. US companies must base calculations on fair value without charging it in the profit and loss account, while many UK firms prefer charging the amount the employee makes when exercising the options.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1999
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