# ASC 470-20: Debt — Debt with Conversion and Other Options

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/470/20/)

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Source downloaded (UTC): 2026-09-10T00:31:05.799Z to 2026-09-10T00:31:53.248Z

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## ASC 470-20: Debt — Debt with Conversion and Other Options

### Machine-generated study aids

```json
{
  "summary": "ASC 470-20 governs the issuer's accounting for debt with detachable warrants, convertible debt instruments, interest forfeited on conversion, induced conversions, conversions triggered by the issuer's call, and own-share lending arrangements entered into in contemplation of a convertible debt offering. After ASU 2020-06 eliminated the cash conversion and beneficial conversion feature models, the default rule is that convertible debt is accounted for in its entirety as a liability with no proceeds allocated to the conversion feature (470-20-25-12), unless the feature must be bifurcated as a derivative under 815-15 or the debt was issued at a substantial premium (470-20-25-13). Proceeds of debt issued with detachable warrants, by contrast, are allocated between the debt and the warrants based on relative fair values (470-20-25-2).",
  "key_points": [
    "Proceeds from debt sold with detachable stock purchase warrants are allocated between the debt and the warrants based on their relative fair values at issuance, with the warrant portion credited to paid-in capital and the resulting debt discount accounted for under Topic 835 (470-20-25-2; 470-20-30-1); nondetachable warrants requiring surrender of the debt are treated like convertible debt (470-20-25-3).",
    "A convertible debt instrument is accounted for in its entirety as a liability with no proceeds allocated to the conversion feature, unless the feature must be separated as an embedded derivative under Subtopic 815-15 or the instrument was issued at a substantial premium, which is presumed to be paid-in capital (470-20-25-12; 470-20-25-13).",
    "Scope is applied only after considering the fair value option in 825-10 and embedded derivative bifurcation in 815-15; debt with a conversion option that continuously resets to deliver a fixed value of stock is stock-settled debt under Subtopic 480-10 or other Subtopics (470-20-15-2A through 15-2B; 470-20-25-14; 470-20-55-19).",
    "On conversion under the instrument's own terms, the carrying amount (including unamortized premium, discount, and issuance costs) is reduced by any cash or other assets transferred and the remainder is credited to the capital accounts, with no gain or loss recognized (470-20-40-4); forfeited accrued interest is charged to interest expense and credited to capital (470-20-35-11; 470-20-40-11).",
    "When equity is issued to settle debt that became convertible only upon the issuer's exercise of a call option, the transaction is a contractual conversion if the instrument had a substantive conversion feature at issuance and a debt extinguishment if it did not; a feature is substantive only if exercise was at least reasonably possible as of issuance (470-20-40-5 through 40-9).",
    "An induced conversion (changed conversion privileges exercisable for a limited time that still deliver all consideration issuable under the existing conversion privileges) requires the issuer to recognize debt conversion expense equal to the fair value of consideration transferred in excess of that issuable under the existing terms, measured at the date the offer is accepted (470-20-40-13 through 40-17).",
    "A share-lending arrangement on an entity's own shares executed in contemplation of a convertible debt offering is measured at fair value under Topic 820 and recognized as an issuance cost with an offset to APIC; loaned shares are excluded from basic and diluted EPS unless default becomes probable, at which point an expense equal to the fair value of unreturned shares net of probable recoveries is recognized (470-20-25-20A; 470-20-35-11A; 470-20-45-2A)."
  ],
  "categories": [
    "Debt and equity",
    "Financial instruments",
    "Derecognition",
    "Disclosure"
  ],
  "audience_level": "intermediate",
  "student_note": "ASU 2020-06 gutted this Subtopic: the cash conversion and beneficial conversion feature separation models are gone, so most convertible debt is now a single liability — students who memorized the old bifurcation rules will get the answer wrong. Also remember the asymmetry: detachable warrants get proceeds allocated by relative fair value, while an embedded conversion option generally does not.",
  "related_topics": [
    "815-15",
    "815-40",
    "470-50",
    "480-10",
    "825-10",
    "260-10"
  ],
  "key_concepts": [
    "convertible debt instrument",
    "detachable warrants",
    "relative fair value allocation",
    "substantive conversion feature",
    "induced conversion",
    "debt conversion expense",
    "share-lending arrangement",
    "stock-settled debt"
  ]
}
```

Source downloaded (UTC): 2026-09-10T00:31:05.799Z to 2026-09-10T00:31:05.799Z

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## ASC 470-20-00: 00 Status

[Read section](https://asc.understandingaccounting.org/asc/470/20/#00-status)

SEC content: no

##### [470-20-00-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-00-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:05.799Z to 2026-09-10T00:31:05.799Z

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The following table identifies the changes made to this Subtopic.

<table class="asc-table" id="SL6757516-128565"><tbody><tr><td class="entry"><strong class="ph b">Paragraph</strong></td><td class="entry"><strong class="ph b">Action</strong></td><td class="entry"><strong class="ph b">Accounting Standards Update</strong></td><td class="entry"><strong class="ph b">Date</strong></td></tr><tr><td class="entry"></td><td class="entry"></td><td class="entry"></td><td class="entry"></td></tr><tr><td class="entry"><strong class="ph b">Beneficial Conversion Feature</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#contingently-convertible-instruments" class="term" title="Contingently convertible instruments are instruments that have embedded conversion features that are contingently convertible or exercisable based on either of the following: A market price trigger Multiple contingencies if one of the contingencies is a market price trigger and the instrument can be converted or share settled based on meeting the specified market condition. A market price trigger is a market condition that is based at least in part on the issuer's own share price. Examples of contingently convertible instruments include contingently convertible debt, contingently convertible preferred stock, and the instrument described by paragraph 260-10-45-43, all with embedded market price triggers."><span>Contingently Convertible Instruments</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#convertible-security" class="term" title="A security that is convertible into another security based on a conversion rate. For example, convertible preferred stock that is convertible into common stock on a two-for-one basis (two shares of common for each share of preferred)."><span>Convertible Security</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><strong class="ph b">Debt</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><strong class="ph b">Firm Commitment (2nd def.)</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><strong class="ph b">Issued, Issuance, or Issuing of an Equity Instrument</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity" class="term" title="An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans."><span>Not-for-Profit Entity</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#probable" class="term" title="The future event or events are likely to occur."><span>Probable</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#public-business-entity" class="term" title="A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC."><span>Public Business Entity</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><strong class="ph b">Public Entity (2nd def.)</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/s/#security" class="term" title="A share, participation, or other interest in property or in an entity of the issuer or an obligation of the issuer that has all of the following characteristics: It is either represented by an instrument issued in bearer or registered form or, if not represented by an instrument, is registered in books maintained to record transfers by or on behalf of the issuer. It is of a type commonly dealt in on securities exchanges or markets or, when represented by an instrument, is commonly recognized in any area in which it is issued or dealt in as a medium for investment. It either is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations."><span>Security (2nd def.)</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><strong class="ph b">Troubled Debt Restructuring</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"></td><td class="entry"></td><td class="entry"></td><td class="entry"></td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-1" class="xref">470-20-05-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-1" class="xref">470-20-05-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-1" class="xref">470-20-05-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-1A" class="xref">470-20-05-1A</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-4" class="xref">470-20-05-4 through 05-7</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-5" class="xref">470-20-05-5</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-6" class="xref">470-20-05-6</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-7A" class="xref">470-20-05-7A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-8" class="xref">470-20-05-8</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-8A" class="xref">470-20-05-8A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-9" class="xref">470-20-05-9</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-10" class="xref">470-20-05-10</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12" class="xref">470-20-05-12</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12A" class="xref">470-20-05-12A through 05-12C</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-05-13" class="xref">470-20-05-13</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-10-1" class="xref">470-20-10-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-10-2" class="xref">470-20-10-2</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2" class="xref">470-20-15-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2" class="xref">470-20-15-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2" class="xref">470-20-15-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2A" class="xref">470-20-15-2A through 2D</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-15-3" class="xref">470-20-15-3 through 15-6</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-1" class="xref">470-20-25-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-1" class="xref">470-20-25-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-2" class="xref">470-20-25-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-4" class="xref">470-20-25-4 through 25-11</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-4" class="xref">470-20-25-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-11" class="xref">470-20-25-11</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-11" class="xref">470-20-25-11</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-12" class="xref">470-20-25-12</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-13" class="xref">470-20-25-13</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-14" class="xref">470-20-25-14</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-15" class="xref">470-20-25-15</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-16" class="xref">470-20-25-16 through 25-20</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry">470-20-25-18</td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/asc-pdf/GUID-86B34FCD-7B0A-4349-8682-E212043FD47A.pdf" class="pdf-link" target="_blank" rel="noopener">Maintenance Update 2017-06 (PDF)</a></td><td class="entry">04/07/2017</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-20A" class="xref">470-20-25-20A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-25-21" class="xref">470-20-25-21 through 25-27</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-30-1" class="xref">470-20-30-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-30-2" class="xref">470-20-30-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-30-2" class="xref">470-20-30-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-30-3" class="xref">470-20-30-3 through 30-26</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry">470-20-30-22</td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2019-08/" class="xref">Accounting Standards Update No. 2019-08</a></td><td class="entry">11/11/2019</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-30-22" class="xref">470-20-30-22 through 30-25</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2018-07/" class="xref">Accounting Standards Update No. 2018-07</a></td><td class="entry">06/20/2018</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-30-26A" class="xref">470-20-30-26A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-30-27" class="xref">470-20-30-27 through 30-31</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-1" class="xref">470-20-35-1 through 35-5</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-4" class="xref">470-20-35-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-6" class="xref">470-20-35-6</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-7" class="xref">470-20-35-7 through 35-10</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-7" class="xref">470-20-35-7</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-7" class="xref">470-20-35-7</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-11" class="xref">470-20-35-11</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-11A" class="xref">470-20-35-11A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-35-12" class="xref">470-20-35-12 through 35-20</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-1" class="xref">470-20-40-1 through 40-3</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-4" class="xref">470-20-40-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-4" class="xref">470-20-40-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-4A" class="xref">470-20-40-4A</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-5" class="xref">470-20-40-5 through 40-7</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-11" class="xref">470-20-40-11</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13" class="xref">470-20-40-13 through 40-17</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13" class="xref">470-20-40-13</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A" class="xref">470-20-40-13A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16" class="xref">470-20-40-16</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-18" class="xref">470-20-40-18</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-40-19" class="xref">470-20-40-19 through 40-26</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1" class="xref">470-20-45-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2015-01/" class="xref">Accounting Standards Update No. 2015-01</a></td><td class="entry">01/09/2015</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1A" class="xref">470-20-45-1A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1B" class="xref">470-20-45-1B</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-45-2" class="xref">470-20-45-2</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2015-01/" class="xref">Accounting Standards Update No. 2015-01</a></td><td class="entry">01/09/2015</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-45-2A" class="xref">470-20-45-2A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-45-3" class="xref">470-20-45-3</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-45-3" class="xref">470-20-45-3</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1" class="xref">470-20-50-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1A" class="xref">470-20-50-1A through 50-1I</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2A" class="xref">470-20-50-2A through 50-2C</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2C" class="xref">470-20-50-2C</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2025-11/" class="xref">Accounting Standards Update No. 2025-11</a></td><td class="entry">12/08/2025</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2C" class="xref">470-20-50-2C</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-03/" class="xref">Accounting Standards Update No. 2024-03</a></td><td class="entry">11/04/2024</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-50-3" class="xref">470-20-50-3 through 50-6</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1" class="xref">470-20-55-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1" class="xref">470-20-55-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1A" class="xref">470-20-55-1A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1B" class="xref">470-20-55-1B</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1B" class="xref">470-20-55-1B</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1C" class="xref">470-20-55-1C</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-3" class="xref">470-20-55-3 through 55-8</a></div></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-3" class="xref">470-20-55-3</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-4" class="xref">470-20-55-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-5" class="xref">470-20-55-5</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-6" class="xref">470-20-55-6</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-7A" class="xref">470-20-55-7A</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A" class="xref">470-20-55-9A through 55-9J</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-10" class="xref">470-20-55-10 through 55-17</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-18" class="xref">470-20-55-18</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-19" class="xref">470-20-55-19</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-19A" class="xref">470-20-55-19A through 55-66</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-28" class="xref">470-20-55-28</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/asc-pdf/GUID-2C1F3EDB-71D2-450B-AFAB-85E2A86D8723.pdf" class="pdf-link" target="_blank" rel="noopener">Maintenance Update 2016-05 (PDF)</a></td><td class="entry">04/12/2016</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-30" class="xref">470-20-55-30</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2016-19/" class="xref">Accounting Standards Update No. 2016-19</a></td><td class="entry">12/14/2016</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69A" class="xref">470-20-55-69A through 55-69F</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69" class="xref">470-20-55-69 through 55-82</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2020-06/" class="xref">Accounting Standards Update No. 2020-06</a></td><td class="entry">08/05/2020</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-65-3" class="xref">470-20-65-3</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2009-15/" class="xref">Accounting Standards Update No. 2009-15</a></td><td class="entry">10/13/2009</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4" class="xref">470-20-65-4</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2024-04/" class="xref">Accounting Standards Update No. 2024-04</a></td><td class="entry">11/26/2024</td></tr></tbody></table>

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## ASC 470-20-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/470/20/#05-overview-and-background)

SEC content: no

##### [470-20-05-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-1)

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This Subtopic provides accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features and other options as follows:

1.  a
    
    Debt instruments with detachable warrants
    
2.  b
    
    Convertible debt instruments
    
3.  c
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).
    
4.  d
    
    Interest forfeiture
    
5.  e
    
    Induced conversions
    
6.  f
    
    Conversion upon issuer's exercise of call option
    
7.  g
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).
    
8.  h
    
    Own-share lending arrangements issued in contemplation of convertible debt issuance or other financing.

##### [470-20-05-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-1A)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Debt Instruments with Detachable Warrants

##### [470-20-05-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-2)

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Unlike convertible debt, debt with detachable warrants (detachable call options) to purchase stock is usually issued with the expectation that the debt will be repaid when it matures. The provisions of the debt agreement are usually more restrictive on the issuer and more protective of the investor than those for convertible debt. The terms of the warrants are influenced by the desire for a successful debt financing. Detachable warrants often trade separately from the debt instrument. Thus, the two elements of the security exist independently and may be treated as separate securities.

##### [470-20-05-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-3)

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From the point of view of the issuer, the sale of a debt security with warrants results in a lower cash interest cost than would otherwise be possible or permits financing not otherwise practicable. The issuer usually cannot force the holders of the warrants to exercise them and purchase the stock. The issuer may, however, be required to issue shares of stock at some future date at a price lower than the market price existing at that time, as is true in the case of the conversion option of convertible debt. Under different conditions the warrants may expire without exercise. The outcome of the warrant feature thus cannot be determined at [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval."). In either case the debt must generally be paid at maturity or earlier redemption date whether or not the warrants are exercised.

#### Convertible Debt Instruments

##### [470-20-05-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-4)

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A convertible debt instrument is a complex hybrid instrument bearing an option, the alternative choices of which cannot exist independently of one another. The holder ordinarily does not sell one right and retain the other. Furthermore, the two choices are mutually exclusive; they cannot both be consummated. Thus, the instrument will either be converted or be redeemed. The holder cannot exercise the option to convert unless he forgoes the right to redemption, and vice versa.

##### [470-20-05-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-5)

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A convertible debt instrument may offer advantages to both the issuer and the purchaser. From the point of view of the issuer, convertible debt has a lower interest rate than does nonconvertible debt. Furthermore, the issuer of convertible debt instruments, in planning its long-range financing, may view convertible debt as essentially a means of raising equity capital. Thus, if the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the underlying common stock increases sufficiently in the future, the issuer can force conversion of the convertible debt into common stock by calling the issue for redemption. Under these market conditions, the issuer can effectively terminate the conversion option and eliminate the debt. If the fair value of the stock does not increase sufficiently to result in conversion of the debt, the issuer will have received the benefit of the cash proceeds to the scheduled maturity dates at a relatively low cash interest cost.

##### [470-20-05-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-6)

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On the other hand, the purchaser obtains an option to receive either the face or redemption amount of the instrument or the number of common shares into which the instrument is convertible. If the fair value of the underlying common stock increases above the conversion price, the purchaser (either through conversion or through holding the convertible debt containing the conversion option) benefits through appreciation. The purchaser may at that time require the issuance of the common stock at a price lower than the fair value. However, should the fair value of the underlying common stock not increase in the future, the purchaser has the protection of a debt security. Thus, in the absence of default by the issuer, the purchaser would receive the principal and interest if the conversion option is not exercised.

##### [470-20-05-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-7)

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Entities may issue convertible debt instruments that may be convertible into common stock at the lower of a conversion rate fixed at [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval.") and a fixed discount to the market price of the common stock at the date of conversion.

##### [470-20-05-7A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-7A)

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Entities also may issue convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement.

##### [470-20-05-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-8)

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Certain convertible debt instruments may have a contingently adjustable conversion ratio; that is, a conversion price that is variable based on future events such as any of the following:

1.  a
    
    A liquidation or a change in control of an entity
    
2.  b
    
    A subsequent round of financing at a price lower than the [convertible security's](https://asc.understandingaccounting.org/glossary/c/#convertible-security "A security that is convertible into another security based on a conversion rate. For example, convertible preferred stock that is convertible into common stock on a two-for-one basis (two shares of common for each share of preferred).")original conversion price
    
3.  c
    
    An initial public offering at a share price lower than an agreed-upon amount.

##### [470-20-05-8A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-8A)

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Certain convertible debt instruments may become convertible only upon the occurrence of a future event that is outside the control of the issuer or holder.

#### Interest Forfeiture

##### [470-20-05-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-9)

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When a convertible debt instrument is converted to equity securities, sometimes the terms of conversion provide that any accrued but unpaid interest at the date of conversion is forfeited by the former debt holder. This occurs either because the conversion date falls between interest payment dates or because there are no interest payment dates (a zero coupon convertible debt instrument).

#### Induced Conversions

##### [470-20-05-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-10)

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Some convertible debt instruments include provisions allowing the debtor to alter terms of the debt to the benefit of debt holders. In some circumstances, conversion privileges for a convertible debt instrument are changed or additional consideration is paid to debt holders for the purpose of inducing prompt conversion of the debt to equity securities (sometimes referred to as a convertible debt sweetener). Such provisions may be general in nature, permitting the debtor or trustee to take actions to protect the interests of the debt holders, or they may be specific, for example, specifically authorizing the debtor to temporarily reduce the conversion price for the purpose of inducing conversion.

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Some convertible debt instruments include provisions allowing the debtor to alter terms of the debt to the benefit of debt holders. In some circumstances, conversion privileges for a convertible debt instrument are changed or additional consideration is paid to debt holders for the purpose of inducing prompt conversion of the debt instrument (sometimes referred to as a convertible debt sweetener). Such provisions may be general in nature, permitting the debtor or trustee to take actions to protect the interests of the debt holders, or they may be specific, for example, specifically authorizing the debtor to temporarily reduce the conversion price for the purpose of inducing conversion.

#### Conversion Upon Issuer's Exercise of Call Option

##### [470-20-05-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-11)

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An entity may issue equity securities to settle a debt instrument that was not otherwise currently convertible but became convertible upon the issuer's exercise of a call option when the issuance of equity securities is pursuant to the instrument's original conversion terms. This Subtopic provides related guidance.

##### [470-20-05-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance or Other Financing

##### [470-20-05-12A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12A)

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An entity for which the cost to an investment banking firm (investment bank) or third-party investors (investors) of borrowing its shares is prohibitive (for example, due to a lack of liquidity or extensive open short positions in the shares) may enter into share-lending arrangements that are executed separately but in connection with a convertible debt offering. Although the convertible debt instrument is ultimately sold to investors, the share-lending arrangement is an agreement between the entity (share lender) and an investment bank (share borrower) and is intended to facilitate the ability of the investors to hedge the conversion option in the entity's convertible debt.

##### [470-20-05-12B](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12B)

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The terms of a share-lending arrangement require the entity to issue shares (loaned shares) to the investment bank in exchange for a nominal loan processing fee. Although the loaned shares are legally outstanding, the nominal loan processing fee is typically equal to the par value of the common stock, which is significantly less than the fair value of the loaned shares or the share-lending arrangement. Generally, upon maturity or conversion of the convertible debt, the investment bank is required to return the loaned shares to the entity for no additional consideration.

##### [470-20-05-12C](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-12C)

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Other terms of a share-lending arrangement typically require the investment bank to reimburse the entity for any dividends paid on the loaned shares. Typically, the arrangement precludes the investment bank from voting on any matters submitted to a vote of the entity's shareholders to the extent the investment bank is the owner of the shares.

### Cash Conversion

##### [470-20-05-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-13)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

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## ASC 470-20-10: 10 Objectives

[Read section](https://asc.understandingaccounting.org/asc/470/20/#10-objectives)

SEC content: no

### Cash Conversion

##### [470-20-10-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-10-1)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-10-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-10-2)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

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## ASC 470-20-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/470/20/#15-scope-and-scope-exceptions)

SEC content: no

#### Entities

##### [470-20-15-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-1)

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The guidance in this Subtopic applies to all entities.

#### Instruments

##### [470-20-15-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2)

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The guidance in this Subtopic applies to all debt instruments. The guidance on own-share lending arrangements applies to an equity-classified share-lending arrangement on an entity's own shares when executed in contemplation of a convertible debt offering or other financing.

##### [470-20-15-2A](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2A)

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The guidance on convertible debt instruments in this Subtopic shall be considered after considering the guidance in the Fair Value Option Subsections of Subtopic 825-10 on financial instruments.

##### [470-20-15-2B](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2B)

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The guidance on convertible debt instruments in this Subtopic shall be considered after considering the guidance in Subtopic 815-15 on bifurcation of embedded derivatives for an embedded conversion option or other embedded feature (for example, an embedded prepayment option) as applicable (see paragraph [815-15-55-76A](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-76A)). The relevant guidance in this Subtopic does not affect an issuer's determination under Subtopic 815-15 of whether an embedded conversion option or other embedded feature shall be separately accounted for as a derivative instrument.

##### [470-20-15-2C](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2C)

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The guidance in this Subtopic does not apply to a convertible debt instrument award issued to a grantee that is subject to the guidance in Topic 718 on stock compensation unless the instrument is modified as described in and no longer subject to the guidance in that Topic. The guidance in this Subtopic does not apply to stock-settled debt that is subject to the guidance in Subtopic 480-10 on distinguishing liabilities from equity or other Subtopics (see paragraph [470-20-25-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-14)), unless the stock-settled debt also contains a substantive conversion feature (as discussed in paragraphs

[470-20-40-7 through 40-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-7)

) for which all relevant guidance in this Subtopic shall be considered in addition to the relevant guidance in other Subtopics.

##### [470-20-15-2D](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2D)

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For purposes of determining whether an instrument is within the scope of this Subtopic, a convertible preferred stock shall be considered a convertible debt instrument if it has both of the following characteristics:

1.  a
    
    It is a mandatorily redeemable financial instrument.
    
2.  b
    
    It is classified as a liability under Subtopic 480-10.
    

For related implementation guidance, see paragraph [470-20-55-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1A).

### Cash Conversion

##### [470-20-15-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-3)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-15-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-4)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-15-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-5)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-15-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-6)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

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## ASC 470-20-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/470/20/#25-recognition)

SEC content: no

#### Overall

##### [470-20-25-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-1)

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The guidance in this Section shall be considered after consideration of the guidance in the Fair Value Option Subsections of Subtopic 825-10 on financial instruments and the guidance in Subtopic 815-15 on bifurcation of embedded derivatives, as applicable. The guidance in this Section is organized as follows:

1.  a
    
    Debt instruments with detachable warrants
    
2.  b
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).
    
3.  c
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).
    
4.  d
    
    Convertible debt instruments
    
5.  e
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).
    
6.  f
    
    Own-share lending arrangements issued in contemplation of convertible debt issuance.

#### Debt Instruments with Detachable Warrants

##### [470-20-25-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-2)

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Proceeds from the sale of a debt instrument with stock purchase warrants (detachable call options) shall be allocated to the two elements based on the relative [fair values](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the debt instrument without the warrants and of the warrants themselves at [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval."). The portion of the proceeds so allocated to the warrants shall be accounted for as paid-in capital. The remainder of the proceeds shall be allocated to the debt instrument portion of the transaction. This usually results in a discount (or, occasionally, a reduced premium), which shall be accounted for under Topic 835.

##### [470-20-25-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-3)

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The same accounting treatment applies to issues of debt instruments (issued with detachable warrants) that may be surrendered in settlement of the exercise price of the warrant. However, if stock purchase warrants are not detachable from the debt instrument and the debt instrument must be surrendered to exercise the warrant, the two instruments taken together are substantially equivalent to a convertible debt instrument and the accounting specified in paragraph [470-20-25-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-12) shall apply.

##### [470-20-25-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-4)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-5)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-6)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-7)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-8)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-9)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Convertible Debt Instruments

##### [470-20-25-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-10)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-11)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-12)

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A debt with an embedded conversion feature shall be accounted for in its entirety as a liability and no portion of the proceeds from the issuance of the convertible debt instrument shall be accounted for as attributable to the conversion feature unless the conversion feature is required to be accounted for separately as an embedded derivative under Subtopic 815-15 or the conversion feature results in a premium that is subject to the guidance in paragraph [470-20-25-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-13).

##### [470-20-25-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-13)

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If a convertible debt instrument is issued at a substantial premium, there is a presumption that such premium represents paid-in capital.

##### [470-20-25-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-14)

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If a debt instrument has a conversion option that continuously resets as the underlying stock price increases or decreases so as to provide a fixed value of common stock to the holder at any conversion date, the instrument shall be considered stock-settled debt that is subject to the guidance in Subtopic 480-10 or other Subtopics (such as Subtopic 718-10, 815-15, or 825-10). Example 4 (see paragraph [470-20-55-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-18)) illustrates application of the guidance in this paragraph.

##### [470-20-25-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-15)

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If the issuance transaction for a convertible debt instrument within the scope of this Subtopic includes other unstated (or stated) rights or privileges in addition to the convertible debt instrument, a portion of the initial proceeds shall be attributed to those rights and privileges based on the guidance in other applicable U.S. generally accepted accounting principles (GAAP).

##### [470-20-25-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-16)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-17)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-18)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-19)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-20)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance

##### [470-20-25-20A](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-20A)

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At the date of issuance, a share-lending arrangement entered into on an entity's own shares in contemplation of a convertible debt offering or other financing shall be measured at fair value (in accordance with Topic 820) and recognized as an issuance cost, with an offset to additional paid-in capital in the financial statements of the entity.

### Cash Conversion

##### [470-20-25-21](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-21)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-22](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-22)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-23](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-23)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-24](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-24)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-25](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-25)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-25-26](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-26)

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##### [470-20-25-27](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-27)

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## ASC 470-20-30: 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/470/20/#30-initial-measurement)

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#### Debt Instruments with Detachable Warrants

##### [470-20-30-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-1)

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The allocation of proceeds under paragraph [470-20-25-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-2) shall be based on the relative [fair values](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the two instruments at [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval.").

##### [470-20-30-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-2)

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When detachable warrants (detachable call options) are issued in conjunction with a debt instrument as consideration in purchase transactions, the amounts attributable to each class of instrument issued shall be determined separately, based on values at time of issuance. The debt discount or premium shall be determined by comparing the value attributed to the debt instrument with the face amount thereof.

##### [470-20-30-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-3)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-4)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-5)

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##### [470-20-30-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-6)

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##### [470-20-30-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-7)

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##### [470-20-30-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-8)

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##### [470-20-30-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-9)

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##### [470-20-30-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-10)

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##### [470-20-30-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-11)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [470-20-30-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-12)

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##### [470-20-30-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-13)

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##### [470-20-30-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-14)

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##### [470-20-30-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-15)

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##### [470-20-30-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-16)

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##### [470-20-30-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-17)

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##### [470-20-30-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-18)

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##### [470-20-30-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-19)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-20)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-21](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-21)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-22](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-22)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-23](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-23)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-24](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-24)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-25](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-25)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-26](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-26)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance

##### [470-20-30-26A](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-26A)

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At the date of issuance, a share-lending arrangement entered into on an entity's own shares in contemplation of a convertible debt offering or other financing shall be measured at fair value in accordance with Topic 820.

### Cash Conversion

##### [470-20-30-27](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-27)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-28](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-28)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-29](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-29)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-30](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-30)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-30-31](https://asc.understandingaccounting.org/asc/470/20/#470-20-30-31)

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## ASC 470-20-35: 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/470/20/#35-subsequent-measurement)

SEC content: no

##### [470-20-35-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-1)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-2)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-3)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-4)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-5)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Interest Expense

##### [470-20-35-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-6)

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Subtopic 835-10 provides overall guidance on accretion and amortization of debt premium or discount and debt issuance costs. This guidance addresses the incremental matter related to interest forfeiture.

1.  a
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).
    
2.  b
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).
    
3.  c
    
    [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-7)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-8)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-9)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-10)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-11)

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If the terms of conversion of a convertible debt instrument provide that any accrued but unpaid interest at the date of conversion is forfeited by the former debt holder, that interest should be accrued or imputed to the date of conversion of the debt instrument.

#### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance

##### [470-20-35-11A](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-11A)

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If it becomes [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the counterparty to a share-lending arrangement will default, the issuer of the share-lending arrangement shall recognize an expense equal to the then fair value of the unreturned shares, net of the fair value of probable recoveries, with an offset to additional paid-in capital. The issuer of the share-lending arrangement shall remeasure the fair value of the unreturned shares each reporting period through earnings until the arrangement consideration payable by the counterparty becomes fixed. Subsequent changes in the amount of the probable recoveries should also be recognized in earnings.

### Cash Conversion

##### [470-20-35-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-12)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-13)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-14)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-15)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-16)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-17)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-18)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-19)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-35-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-35-20)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

Source downloaded (UTC): 2026-09-10T00:31:32.200Z to 2026-09-10T00:31:32.200Z

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## ASC 470-20-40: 40 Derecognition

[Read section](https://asc.understandingaccounting.org/asc/470/20/#40-derecognition)

SEC content: no

##### [470-20-40-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-1)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-2)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-3)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Contractual Conversion

##### [470-20-40-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-4)

Pending content: no

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If a convertible debt instrument accounted for in its entirety as a liability under paragraph [470-20-25-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-12) is converted into shares, cash (or other assets), or any combination of shares and cash (or other assets), in accordance with the conversion privileges provided in the terms of the instrument, upon conversion the carrying amount of the convertible debt instrument, including any unamortized premium, discount, or issuance costs, shall be reduced by, if any, the cash (or other assets) transferred and then shall be recognized in the capital accounts to reflect the shares issued and no gain or loss is recognized.

##### [470-20-40-4A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-4A)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Conversion upon Issuer's Exercise of Call Option

##### [470-20-40-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-5)

Pending content: no

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The following guidance addresses accounting for the issuance of equity securities to settle a debt instrument (pursuant to the instrument's original conversion terms) that became convertible upon the issuer's exercise of a call option:

1.  a
    
    [Substantive conversion feature](https://asc.understandingaccounting.org/glossary/s/#substantive-conversion-feature "A conversion feature that is at least reasonably possible of being exercisable in the future absent the issuer's exercise of a call option."). If the debt instrument contained a substantive conversion feature as of [time of issuance](https://asc.understandingaccounting.org/glossary/t/#time-of-issuance "The date when agreement as to terms has been reached and announced, even though the agreement is subject to certain further actions, such as directors' or stockholders' approval."), the issuance of equity securities shall be accounted for as a contractual conversion. That is, no gain or loss shall be recognized related to the equity securities issued to settle the instrument.
    
2.  b
    
    No substantive conversion feature. If the debt instrument did not contain a substantive conversion feature as of time of issuance, the issuance of equity securities shall be accounted for as a debt extinguishment. That is, the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the equity securities issued should be considered a component of the reacquisition price of the debt.

##### [470-20-40-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-6)

Pending content: no

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The assessment of whether the conversion feature is substantive may be performed after time of issuance but shall be based only on assumptions, considerations, and marketplace information available as of time of issuance.

##### [470-20-40-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-7)

Pending content: no

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By definition, a substantive conversion feature is at least [reasonably possible](https://asc.understandingaccounting.org/glossary/r/#reasonably-possible "The chance of the future event or events occurring is more than remote but less than likely.") of being exercised in the future. If the conversion price of an instrument at issuance is extremely high so that conversion of the instrument is not deemed at least reasonably possible as of time of issuance, then the conversion feature would not be considered substantive.

##### [470-20-40-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-8)

Pending content: no

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For purposes of determining whether a conversion feature is reasonably possible of being exercised, the assessment of the holder's intent is not necessary. Therefore, even if such an instrument included a conversion feature that provided for conversion due solely to the passage of time (for example, the instrument will become convertible at a date before its maturity date), it would be inappropriate to conclude that the conversion feature is substantive. Also, an instrument that became convertible only upon the issuer's exercise of its call option does not possess a substantive conversion feature.

##### [470-20-40-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-9)

Pending content: no

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Methods that may be helpful in assessing whether a conversion feature is substantive include the following:

1.  a
    
    The fair value of the conversion feature relative to the fair value of the debt instrument. Comparing the fair value of a conversion feature to the fair value of the debt instrument (that is, the complete instrument as issued) may provide evidence that the conversion feature is substantive.
    
2.  b
    
    The effective annual interest rate per the terms of the debt instrument relative to the estimated effective annual rate of a nonconvertible debt instrument with an equivalent expected term and credit risk. Comparing the effective annual interest rate of the debt instrument to the effective annual rate the issuer estimates it could obtain on a similar nonconvertible instrument may provide evidence that a conversion feature is substantive.
    
3.  c
    
    The fair value of the debt instrument relative to an instrument that is identical except for which the conversion option is not contingent. Comparing the fair value of the debt instrument to the fair value of an identical instrument for which conversion is not contingent isolates the effect of the contingencies and may provide evidence about the substance of a conversion feature. If the fair value of the debt instrument is similar to the fair value of an identical convertible debt instrument for which conversion is not contingent, then it may indicate that the conversion feature is substantive. However, this approach may not be appropriate unless it is clear that the conversion feature, not considering the contingencies, is substantive.
    
4.  d
    
    Qualitative evaluation of the conversion provisions. The nature of the conditions under which the instrument may become convertible may provide evidence that the conversion feature is substantive. For example, if an instrument may become convertible upon the occurrence of a specified contingent event, the likelihood that the contingent event will occur before the instrument's maturity date may indicate that the conversion feature is substantive. However, this approach may not be appropriate unless it is clear that the conversion feature, not considering the contingencies, is substantive.

##### [470-20-40-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-10)

Pending content: no

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Effective as of: not established by retrieval timestamps.


The guidance in paragraphs

[470-20-40-7 through 40-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-7)

does not address the treatment of an instrument for purposes of applying Subtopic 260-10.

#### Interest Forfeiture

##### [470-20-40-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-11)

Pending content: no

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If the terms of conversion of a convertible debt instrument provide that any accrued but unpaid interest at the date of conversion is forfeited by the former debt holder, accrued interest from the last interest payment date, if applicable, to the date of conversion, net of related income tax effects, if any, shall be charged to interest expense and credited to capital as part of the cost of securities issued. Thus, the accrued interest is accounted for in the same way as the principal amount of the debt converted and any unamortized premium, discount, or issuance costs; the net carrying amount of the debt, including any unamortized premium, discount, or issuance costs and the related accrual for interest to the date of conversion, net of any related income tax effects, is a credit to the entity's capital.

##### [470-20-40-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-12)

Pending content: no

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

#### Induced Conversions

##### [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13)

Pending content: yes

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The guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16) applies to conversions of convertible debt to equity securities pursuant to terms that reflect changes made by the debtor to the conversion privileges provided in the terms of the debt at issuance (including changes that involve the payment of consideration) for the purpose of inducing conversion. That guidance applies only to conversions that both:

1.  a
    
    Occur pursuant to changed conversion privileges that are exercisable only for a limited period of time (inducements offered without a restrictive time limit on their exercisability are not, by their structure, changes made to induce prompt conversion)
    
2.  b
    
    Include the issuance of all of the equity securities issuable pursuant to conversion privileges included in the terms of the debt at issuance for each debt instrument that is converted, regardless of the party that initiates the offer or whether the offer relates to all debt holders.
    

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16) applies to conversions of convertible debt instruments pursuant to terms that reflect changes made by the issuer to the conversion privileges provided in the terms of the existing debt instrument (including changes that involve the payment of consideration) for the purpose of inducing conversion. That guidance applies only to conversions for which all of the following criteria are satisfied:

1.  a
    
    The conversion occurs pursuant to changed conversion privileges that are exercisable only for a limited period of time (inducements offered without a restrictive time limit on their exercisability are not, by their structure, changes made to induce prompt conversion).
    
2.  b
    
    The conversion includes the issuance of all of the consideration (in form and amount) issuable pursuant to conversion privileges provided in the terms of the existing debt instrument for each debt instrument that is converted, regardless of the party that initiates the offer or whether the offer relates to all debt holders. See paragraph [470-20-40-13A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A) for additional guidance applicable to debt instruments whose conversion privileges permit the entity to issue cash (or other assets) or a combination of shares and cash (or other assets) upon conversion. The examples in paragraphs
    
    [470-20-55-9A through 55-9J](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A)
    
    illustrate the application of this guidance.
    
3.  c
    
    The existing debt instrument, regardless of whether it is currently convertible, contained a substantive conversion feature as of both the time of issuance and the date the inducement offer is accepted by the convertible debt holder. See paragraphs
    
    [470-20-40-6 through 40-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-6)
    
    for additional guidance on determining whether a conversion feature is substantive.

##### [470-20-40-13A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)In applying the guidance in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), an entity shall compare the amount of cash (or other assets) and number of shares issuable under the conversion privileges provided in the terms of the existing instrument with the amount of cash (or other assets) and number of shares issuable under the inducement offer. An entity shall consider the following:

1.  a
    
    For purposes of comparing the amount of cash (or other assets) and number of shares issuable, if the settlement terms under either the existing conversion privileges or the inducement offer are based on a future share price or average of future share prices (such as a volume-weighted average price), then an entity shall use the fair value of the shares as of the date the inducement offer is accepted. For example, the incorporation, elimination, or modification of a volume-weighted average price formula that is based on future share prices does not affect the determination of the amount of cash or number of shares issuable for the induced conversion assessment because the fair value of the shares as of the date the inducement offer is accepted would be used instead of the future volume-weighted average price. A future share price refers to a share price measured after the inducement offer is accepted.
    
2.  b
    
    Changes that result in the amount of cash (or other assets) and number of shares being indexed to something other than the future price of the issuer’s shares (for example, the fair value of a commodity) shall be considered a change in the form of settlement.
    
3.  c
    
    If within the one-year period preceding the date the inducement offer is accepted by the convertible debt holder the existing debt has been exchanged or modified (without being deemed to be substantially different in accordance with the guidance in Subtopic 470-50), then the conversion privileges provided in the debt terms that existed one year before the date the offer is accepted by the convertible debt holder shall be used in place of the conversion privileges provided in the terms of the existing debt instrument.

##### [470-20-40-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-14)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


A conversion includes an exchange of a convertible debt instrument for equity securities or a combination of equity securities and other consideration, whether or not the exchange involves legal exercise of the contractual conversion privileges included in terms of the debt. The preceding paragraph also includes conversions pursuant to amended or altered conversion privileges on such instruments, even though they are literally provided in the terms of the debt at issuance.

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)A conversion includes an exchange of a convertible debt instrument for equity securities or other consideration, whether or not the exchange involves legal exercise of the contractual conversion privileges included in terms of the debt. The guidance in paragraphs

[470-20-40-13 through 40-13A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13)

also applies to conversions pursuant to amended or altered conversion privileges on such instruments, even though the right to amend the terms is provided in the terms of the existing debt instrument.

##### [470-20-40-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-15)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


The changed terms may involve any of the following:

1.  a
    
    A reduction of the original conversion price thereby resulting in the issuance of additional shares of stock
    
2.  b
    
    An issuance of warrants or other securities not provided for in the original conversion terms
    
3.  c
    
    A payment of cash or other consideration to those debt holders that convert during the specified time period.
    

The guidance in the following paragraph does not apply to conversions pursuant to other changes in conversion privileges or to changes in terms of convertible debt instruments that are different from those described in this paragraph.

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The changed terms may involve any of the following:

1.  a
    
    A reduction of the conversion price thereby resulting in the issuance of additional shares of stock
    
2.  b
    
    An issuance of warrants or other securities not provided for in the conversion privileges in the terms of the existing instrument
    
3.  c
    
    A payment of cash or other consideration to those debt holders that convert during the specified time period.
    

The guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)does not apply to conversions pursuant to other changes in conversion privileges or to changes in terms of convertible debt instruments that are different from those described in this paragraph.

##### [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


If a convertible debt instrument is converted to equity securities of the debtor pursuant to an inducement offer (see paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13)), the debtor shall recognize an expense equal to the fair value of all securities and other consideration transferred in the transaction in excess of the fair value of securities issuable pursuant to the original conversion terms. The fair value of the securities or other consideration shall be measured as of the date the inducement offer is accepted by the convertible debt holder. That date normally will be the date the debt holder converts the convertible debt into equity securities or enters into a binding agreement to do so. Until the debt holder accepts the offer, no exchange has been made between the debtor and the debt holder. Example 1 (see paragraph [470-20-55-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1B)) illustrates the application of this guidance.

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)If a convertible debt instrument is converted pursuant to an inducement offer (see paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13)), the issuer shall recognize an expense equal to the fair value of all securities and other consideration transferred in the transaction in excess of the fair value of securities and other consideration issuable pursuant to the conversion privileges provided in the terms of the existing instrument. The fair value of the securities or other consideration shall be measured as of the date the inducement offer is accepted by the convertible debt holder. That date normally will be the date the debt holder converts the convertible debt or enters into a binding agreement to do so. Until the debt holder accepts the offer, no exchange has been made between the issuer and the debt holder. Example 1 (see paragraph [470-20-55-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1B)) illustrates the application of this guidance.

##### [470-20-40-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-17)

Pending content: yes

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The guidance in the preceding paragraph does not require recognition of gain or loss with respect to the shares issuable pursuant to the original conversion privileges of the convertible debt when additional securities or assets are transferred to a debt holder to induce prompt conversion of the debt to equity securities. In a conversion pursuant to original conversion terms, debt is extinguished in exchange for equity pursuant to a preexisting contract that is already recognized in the financial statements, and no gain or loss is recognized upon conversion.

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)does not require recognition of gain or loss with respect to the shares (or other consideration) issuable pursuant to the conversion privileges provided in the terms of the existing convertible debt instrument when additional securities, instruments, or assets are transferred to a debt holder to induce prompt conversion of the existing debt instrument. In a conversion pursuant to the conversion privileges provided in the terms of the existing instrument, debt is settled in exchange for shares, cash (or other assets), or any combination of shares and cash (or other assets) pursuant to a preexisting contract that is already recognized in the financial statements, and no gain or loss is recognized upon conversion.

#### Modifications and Extinguishments

##### [470-20-40-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-18)

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For additional guidance on modifications (or exchanges) and extinguishments of convertible debt instruments, see Subtopic 470-50.

### Cash Conversion

##### [470-20-40-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-19)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-20)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-21](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-21)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-22](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-22)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-23](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-23)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-24](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-24)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-25](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-25)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-40-26](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-26)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

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## ASC 470-20-45: 45 Other Presentation Matters

[Read section](https://asc.understandingaccounting.org/asc/470/20/#45-other-presentation-matters)

SEC content: no

##### [470-20-45-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1)

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[Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/).

##### [470-20-45-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1A)

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Transaction costs incurred with third parties other than the investor(s) and that directly relate to the issuance of convertible debt instruments within the scope of this Subtopic shall be reported in accordance with the guidance in Section 835-30-45.

##### [470-20-45-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-1B)

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The guidance on convertible debt instruments in this Subtopic does not affect an issuer's determination of whether the instruments should be classified as a current liability or a long-term liability. For purposes of applying other applicable U.S. generally accepted accounting principles (GAAP) to make that determination, all terms of the convertible debt instrument shall be considered.

##### [470-20-45-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-2)

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[Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/).

#### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance

##### [470-20-45-2A](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-2A)

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Loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the basic and diluted earnings-per-share calculation. If dividends on the loaned shares are not reimbursed to the entity, any amounts, including contractual (accumulated) dividends and participation rights in undistributed earnings, attributable to the loaned shares shall be deducted in computing income available to common shareholders, in a manner consistent with the two-class method in paragraph [260-10-45-60B](https://asc.understandingaccounting.org/asc/260/10/#260-10-45-60B).

### Cash Conversion

##### [470-20-45-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-45-3)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

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## ASC 470-20-50: 50 Disclosure

[Read section](https://asc.understandingaccounting.org/asc/470/20/#50-disclosure)

SEC content: no

##### [470-20-50-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Convertible Debt Instruments

##### [470-20-50-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1A)

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The objective of the disclosure about convertible debt instruments is to provide users of financial statements with:

1.  a
    
    Information about the terms and features of convertible debt instruments
    
2.  b
    
    An understanding of how those instruments have been reported in an entity's statement of financial position and statement of financial performance
    
3.  c
    
    Information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity's future cash flows related to those instruments.

##### [470-20-50-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1B)

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An entity shall explain the pertinent rights and privileges of each convertible debt instrument outstanding, including, but not limited to, the following information:

1.  a
    
    Principal amount
    
2.  b
    
    Coupon rate
    
3.  c
    
    Conversion or exercise prices or rates and number of shares into which the instrument is potentially convertible
    
4.  d
    
    Pertinent dates, such as conversion date(s) and maturity date
    
5.  e
    
    Parties that control the conversion rights
    
6.  f
    
    Manner of settlement upon conversion and any alternative settlement methods, such as cash, shares, or a combination of cash and shares
    
7.  g
    
    Terms that may change conversion or exercise prices, number of shares to be issued, or other conversion rights and the timing of those rights (excluding standard antidilution provisions)
    
8.  h
    
    Liquidation preference and unusual voting rights, if applicable
    
9.  i
    
    Other material terms and features of the instrument that are not listed above.

##### [470-20-50-1C](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1C)

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An entity shall provide the following incremental information for [contingently convertible instruments](https://asc.understandingaccounting.org/glossary/c/#contingently-convertible-instruments "Contingently convertible instruments are instruments that have embedded conversion features that are contingently convertible or exercisable based on either of the following: A market price trigger Multiple contingencies if one of the contingencies is a market price trigger and the instrument can be converted or share settled based on meeting the specified market condition. A market price trigger is a market condition that is based at least in part on the issuer's own share price. Examples of contingently convertible instruments include contingently convertible debt, contingently convertible preferred stock, and the instrument described by paragraph 260-10-45-43, all with embedded market price triggers.") or the instruments that are described in paragraphs [470-20-05-8 through 05-8A](https://asc.understandingaccounting.org/asc/470/20/#470-20-05-8):

1.  a
    
    Events or changes in circumstances that would adjust or change the contingency or would cause the contingency to be met
    
2.  b
    
    Information on whether the shares that would be issued if the contingently convertible securities were converted are included in the calculation of diluted earnings per share (EPS) and the reasons why or why not
    
3.  c
    
    Other information that is helpful in understanding both the nature of the contingencies and the potential impact of conversion.

##### [470-20-50-1D](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1D)

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An entity shall disclose the following information for each convertible debt instrument as of each date for which a statement of financial position is presented.

1.  a
    
    The unamortized premium, discount, or issuance costs and, if applicable, the premium amount recorded as paid-in capital in accordance with paragraph [470-20-25-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-13)
    
2.  b
    
    The net carrying amount
    
3.  c
    
    For [public business entities](https://asc.understandingaccounting.org/glossary/p/#public-business-entity "A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC."), the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the entire instrument and the level of the fair value hierarchy in accordance with paragraphs
    
    [825-10-50-10 through 50-15](https://asc.understandingaccounting.org/asc/825/10/#825-10-50-10)
    
    .
    

See Example 11 (paragraph [470-20-55-69A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69A)) for an illustration of this disclosure requirement.

##### [470-20-50-1E](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1E)

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An entity shall disclose the following information as of the date of the latest statement of financial position presented:

1.  a
    
    Changes to conversion or exercise prices that occur during the reporting period other than changes due to standard antidilution provisions
    
2.  b
    
    Events or changes in circumstances that occur during the reporting period that cause conversion contingencies to be met or conversion terms to be significantly changed
    
3.  c
    
    Number of shares issued upon conversion, exercise, or satisfaction of required conditions during the reporting period
    
4.  d
    
    Maturities and sinking fund requirements for convertible debt instruments for each of the five years following the date of most recent statement of financial position presented in accordance with paragraph [470-10-50-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-50-1).

##### [470-20-50-1F](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1F)

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An entity shall disclose the following information about interest recognized for each period for which a statement of financial performance is presented:

1.  a
    
    The effective interest rate for the period
    
2.  b
    
    The amount of interest recognized for the period disaggregated by both of the following (see Example 12 \[paragraph [470-20-55-69D](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69D)\] for an illustration of this disclosure requirement):
    
    1.  1
        
        The contractual interest expense
        
    2.  2
        
        The amortization of the premium, discount, or issuance costs.

##### [470-20-50-1G](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1G)

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If the conversion option of a convertible debt instrument is accounted for as a derivative in accordance with Subtopic 815-15, an entity shall provide disclosures in accordance with Topic 815 for the conversion option in addition to the disclosures required by this Section, if applicable.

##### [470-20-50-1H](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1H)

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If a convertible debt instrument is measured at fair value in accordance with the Fair Value Option Subsections of Subtopic 825-10, an entity shall provide disclosures in accordance with Subtopic 820-10 and Subtopic 825-10 in addition to the disclosures required by this Section, if applicable.

##### [470-20-50-1I](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1I)

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An entity shall disclose the following information about derivative transactions entered into in connection with the issuance of convertible debt instruments within the scope of this Subtopic regardless of whether such derivative transactions are accounted for as assets, liabilities, or equity instruments:

1.  a
    
    The terms of those derivative transactions (including the terms of settlement)
    
2.  b
    
    How those derivative transactions relate to the instruments within the scope of this Subtopic
    
3.  c
    
    The number of shares underlying the derivative transactions
    
4.  d
    
    The reasons for entering into those derivative transactions.
    

An example of a derivative transaction entered into in connection with the issuance of a convertible debt instrument within the scope of this Subtopic is the purchase of call options that are expected to substantially offset changes in the fair value or the potential dilutive effect of the conversion option. Derivative instruments also are subject to the disclosure guidance in Topic 815.

#### EPS

##### [470-20-50-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2)

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For disclosures about securities in relationship to earnings per share (EPS) disclosures, see paragraph [260-10-50-1(c)](https://asc.understandingaccounting.org/asc/260/10/#260-10-50-1).

#### Own-Share Lending Arrangements Issued in Contemplation of Convertible Debt Issuance

##### [470-20-50-2A](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2A)

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An entity that enters into a share-lending arrangement on its own shares in contemplation of a convertible debt offering or other financing shall disclose all of the following. The disclosures must be made on an annual and interim basis in any period in which a share-lending arrangement is outstanding.

1.  a
    
    A description of any outstanding share-lending arrangements on the entity's own stock
    
2.  b
    
    All significant terms of the share-lending arrangement including all of the following:
    
    1.  1
        
        The number of shares
        
    2.  2
        
        The term
        
    3.  3
        
        The circumstances under which cash settlement would be required
        
    4.  4
        
        Any requirements for the counterparty to provide collateral.
        
3.  c
    
    The entity's reason for entering into the share-lending arrangement
    
4.  d
    
    The fair value of the outstanding loaned shares as of the balance sheet date
    
5.  e
    
    The treatment of the share-lending arrangement for the purposes of calculating earnings per share
    
6.  f
    
    The unamortized amount of the issuance costs associated with the share-lending arrangement at the balance sheet date
    
7.  g
    
    The classification of the issuance costs associated with the share-lending arrangement at the balance sheet date
    
8.  h
    
    The amount of interest cost recognized relating to the amortization of the issuance cost associated with the share-lending arrangement for the reporting period
    
9.  i
    
    Any amounts of dividends paid related to the loaned shares that will not be reimbursed.

##### [470-20-50-2B](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2B)

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An entity that enters into a share-lending arrangement on its own shares in contemplation of a convertible debt offering or other financing shall also make the disclosures required by Topic 505.

##### [470-20-50-2C](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-2C)

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In the period in which an entity concludes that it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the counterparty to its share-lending arrangement will default, the entity shall disclose the amount of expense reported in the statement of earnings related to the default. The entity shall disclose in any subsequent period any material changes in the amount of expense as a result of changes in the fair value of the entity's shares or the probable recoveries. If default is probable but has not yet occurred, the entity shall disclose the number of shares related to the share-lending arrangement that will be reflected in basic and diluted earnings per share when the counterparty defaults.

Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:

[220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)In the period in which an entity concludes that it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the counterparty to its share-lending arrangement will default, the entity shall disclose the amount of expense reported in the statement of earnings related to the default. The entity shall disclose in any subsequent period any material changes in the amount of expense as a result of changes in the fair value of the entity's shares or the probable recoveries. If default is probable but has not yet occurred, the entity shall disclose the number of shares related to the share-lending arrangement that will be reflected in basic and diluted earnings per share when the counterparty defaults. See paragraphs

[220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21)

for additional disclosure requirements.

Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:

[270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)In the interim or annual reporting period in which an entity concludes that it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the counterparty to its share-lending arrangement will default, the entity shall disclose the amount of expense reported in the statement of earnings related to the default. The entity shall disclose in any subsequent interim and annual reporting periods any material changes in the amount of expense as a result of changes in the fair value of the entity's shares or the probable recoveries. If default is probable but has not yet occurred, the entity shall disclose the number of shares related to the share-lending arrangement that will be reflected in basic and diluted earnings per share when the counterparty defaults. See paragraphs

[220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21)

for additional disclosure requirements.

### Cash Conversion

##### [470-20-50-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-3)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-50-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-4)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-50-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-5)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-50-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-6)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

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## ASC 470-20-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/470/20/#55-implementation-guidance-and-illustrations)

SEC content: no

##### [470-20-55-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Implementation Guidance

##### [470-20-55-1A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1A)

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An example of a convertible preferred stock that paragraph [470-20-15-2D](https://asc.understandingaccounting.org/asc/470/20/#470-20-15-2D) requires an entity consider as a convertible debt instrument for purposes of the scope application of this Subtopic is a convertible preferred stock that has a stated redemption date and also would require the issuer to settle the face amount of the instrument in cash upon exercise of the conversion option.Such a convertible preferred stock is a mandatorily redeemable financial instrument and is classified as a liability under Subtopic 480-10 because it embodies an unconditional obligation to redeem the instrument by transferring assets at a specified or determinable date (or dates).

#### Illustrations

##### [470-20-55-1B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1B)

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The following Cases illustrate application of the guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16) to induced conversions of convertible securities:

1.  a
    
    Reduced conversion price for conversion before determination date, increase in bond [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") (Case A)
    
2.  b
    
    Reduced conversion price for conversion before determination date, decrease in bond fair value (Case B).
    

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The Cases in paragraphs

[470-20-55-3 through 55-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-3)

illustrate application of the guidance in paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)for measuring an expense when a convertible debt instrument is converted pursuant to an inducement offer:

1.  a
    
    Reduced conversion price for conversion, increase in bond [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") (Case A)
    
2.  b
    
    Reduced conversion price for conversion, decrease in bond fair value (Case B).

##### [470-20-55-1C](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-1C)

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Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The Cases in paragraphs

[470-20-55-9A through 55-9J](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A)

illustrate application of the guidance in paragraphs [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) and [470-20-40-13A](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A) for determining whether an inducement offer includes the issuance of all of the consideration (in form and amount) issuable pursuant to conversion privileges provided in the terms of the existing debt instrument:

1.  a
    
    Offer to settle convertible debt instrument in cash and warrants (Case C)
    
2.  b
    
    Offer to settle convertible debt instrument in cash and shares (Case D)
    
3.  c
    
    Offer to settle convertible debt instrument in shares and warrants (Case E).

##### [470-20-55-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-2)

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For simplicity, the face amount of each security is assumed to be equal to its carrying amount in the financial statements (that is, no original issue premium or discount exists).

##### [470-20-55-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-3)

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On January 1, 19X4, Entity A issues a $1,000 face amount 10 percent convertible bond maturing December 31, 20X3. The carrying amount of the bond in the financial statements of Entity A is $1,000, and it is convertible into common shares of Entity A at a conversion price of $25 per share. On January 1, 19X6, the convertible bond has a fair value of $1,700. To induce convertible bondholders to convert their bonds promptly, Entity A reduces the conversion price to $20 for bondholders that convert before February 29, 19X6 (within 60 days).

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)

<table class="asc-table" frame="top" id="SL123495225-112609"><tbody><tr><td class="entry"><em class="ph i"><strong class="ph b">Editor's Note</strong>: The heading that precedes paragraph 470-20-55-3 will be amended upon transition as shown below. The content of the paragraph will not change.</em></td></tr><tr><td class="entry">• • &gt; <strong class="ph b">Case A: Reduced Conversion Price, Increase in Bond Fair Value</strong></td></tr></tbody></table>

On January 1, 19X4, Entity A issues a $1,000 face amount 10 percent convertible bond maturing December 31, 20X3. The carrying amount of the bond in the financial statements of Entity A is $1,000, and it is convertible into common shares of Entity A at a conversion price of $25 per share. On January 1, 19X6, the convertible bond has a fair value of $1,700. To induce convertible bondholders to convert their bonds promptly, Entity A reduces the conversion price to $20 for bondholders that convert before February 29, 19X6 (within 60 days).

##### [470-20-55-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-4)

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Assuming the market price of Entity A's common stock on the date of conversion is $40 per share, the fair value of the incremental consideration paid by Entity A upon conversion is calculated as follows for each $1,000 bond that is converted before February 29, 19X6.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-F31E429A-9446-48B5-8D55-12C4450F03B3-low.gif)
    
    Value of securities issued (a) " $2,000 " Value of securities issuable pursuant to original conversion privileges (b) " 1,600 " Fair value of incremental consideration $400 (a) Value of securities issued to debt holders is computed as follows: Face amount " $1,000 " ÷ New conversion price ÷ $20 per share Number of common shares issued upon conversion 50 shares × Price per common share × $40 per share Value of securities issued " $2,000 " (b) Value of securities issuable pursuant to original conversion privileges is computed as follows: Face amount " $1,000 " ÷ Original conversion price ÷ $25 per share Number of common shares issuable pursuant to original conversion privileges 40 shares × Price per common share × $40 per share Value of securities issuable pursuant to original conversion privileges " $1,600 "
    

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assuming the market price of Entity A's common stock on the date the inducement offer was accepted is $40 per share, the fair value of the incremental consideration that will be paid by Entity A is calculated as follows for each $1,000 bond that is converted before February 29, 19X6.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-D6E3CC14-0373-4779-A51A-DA63DD5B67FF-low.gif)
    
    Value of securities issued (a) " $2,000 " Value of securities issuable pursuant to existing conversion privileges (b) " 1,600 " Fair value of incremental consideration $400 (a) Value of securities issued to debt holders is computed as follows: Face amount " $1,000 " ÷ New conversion price ÷ $20 per share Number of common shares issued upon conversion 50 shares × Price per common share × $40 per share Value of securities issued " $2,000 " (b) Value of securities issuable pursuant to existing conversion privileges is computed as follows: Face amount " $1,000 " ÷ Existing conversion price ÷ $25 per share Number of common shares issuable pursuant to existing conversion privileges 40 shares × Price per common share × $40 per share Value of securities issuable pursuant to existing conversion privileges " $1,600 "

##### [470-20-55-5](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-5)

Pending content: yes

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Therefore, Entity A records debt conversion expense equal to the fair value of the incremental consideration paid as follows.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-D1F33C6C-85DE-48DF-A9D2-38F28478130F-low.gif)
    
    Debit Credit Convertible debt " $1,000 " Debt conversion expense 400 Common stock " $1,400 "
    

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Entity A concludes that it meets all of the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13). Therefore, upon conversion, Entity A records debt conversion expense equal to the fair value of the incremental consideration paid as follows.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-D1F33C6C-85DE-48DF-A9D2-38F28478130F-low.gif)
    
    Debit Credit Convertible debt " $1,000 " Debt conversion expense 400 Common stock " $1,400 "

##### [470-20-55-6](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-6)

Pending content: yes

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On January 1, 19X1, Entity B issues a $1,000 face amount 4 percent convertible bond maturing December 31, 20X0. The carrying amount of the bond in the financial statements of Entity B is $1,000, and it is convertible into common shares of Entity B at a conversion price of $25. On June 1, 19X4, the convertible bond has a fair value of $500. To induce convertible bondholders to convert their bonds promptly, Entity B reduces the conversion price to $20 for bondholders that convert before July 1, 19X4 (within 30 days).

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)

<table class="asc-table" frame="top"><tbody><tr><td class="entry"><em class="ph i"><strong class="ph b">Editor's Note</strong>: The heading that precedes paragraph 470-20-55-6 will be amended upon transition as shown below. The content of the paragraph will not change.</em></td></tr><tr><td class="entry">• • &gt; <strong class="ph b">Case B: Reduced Conversion Price, Decrease in Bond Fair Value</strong></td></tr></tbody></table>

On January 1, 19X1, Entity B issues a $1,000 face amount 4 percent convertible bond maturing December 31, 20X0. The carrying amount of the bond in the financial statements of Entity B is $1,000, and it is convertible into common shares of Entity B at a conversion price of $25. On June 1, 19X4, the convertible bond has a fair value of $500. To induce convertible bondholders to convert their bonds promptly, Entity B reduces the conversion price to $20 for bondholders that convert before July 1, 19X4 (within 30 days).

##### [470-20-55-7](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-7)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


Assuming the market price of Entity B's common stock on the date of conversion is $12 per share, the fair value of the incremental consideration paid by Entity B upon conversion is calculated as follows for each $1,000 bond that is converted before July 1, 19X4.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-C7B2869B-40D4-4FD3-99A7-AEAFEE474EF0-low.gif)
    
    Value of securities issued (a) $600 Value of securities issuable pursuant to original conversion privileges (b) 480 Fair value of incremental consideration $120 (a) Value of securities issued to debt holders is computed as follows: Face amount " $1,000 " ÷ New conversion price ÷ $20 per share Number of common shares issued upon conversion 50 shares × Price per common share × $12 per share Value of securities issued $600 (b) Value of securities issuable pursuant to original conversion privileges is computed as follows: Face amount " $1,000 " ÷ Original conversion price ÷ $25 per share Number of common shares issuable pursuant to original conversion privileges 40 shares × Price per common share × $12 per share Value of securities issuable pursuant to original conversion privileges $480
    

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assuming the market price of Entity B's common stock on the date the inducement offer was accepted is $12 per share, the fair value of the incremental consideration that will be paid by Entity B is calculated as follows for each $1,000 bond that is converted before July 1, 19X4.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-C4016606-7A1F-49C1-8260-6AB5DEA4BA05-low.gif)
    
    Value of securities issued (a) $600 Value of securities issuable pursuant to existing conversion privileges (b) 480 Fair value of incremental consideration $120 (a) Value of securities issued to debt holders is computed as follows: Face amount " $1,000 " ÷ New conversion price ÷ $20 per share Number of common shares issued upon conversion 50 shares × Price per common share × $12 per share Value of securities issued $600 (b) Value of securities issuable pursuant to existing conversion privileges is computed as follows: Face amount " $1,000 " ÷ Existing conversion price ÷ $25 per share Number of common shares issuable pursuant to existing conversion privileges 40 shares × Price per common share × $12 per share Value of securities issuable pursuant to existing conversion privileges $480

##### [470-20-55-7A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-7A)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Entity B is required to assess whether the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) are met, including whether the conversion feature is substantive (in accordance with the guidance in paragraphs

[470-20-40-6 through 40-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-6)

) as of both the time of issuance and the date the inducement offer is accepted by the convertible debt holder. If Entity B concludes that, on the basis of its facts and circumstances, all of the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) are met, then it would account for the transaction as illustrated in paragraph [470-20-55-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-8). If Entity B determines that the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) are not met, it should not account for the settlement transaction as an induced conversion.

##### [470-20-55-8](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-8)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


Therefore, Entity B records debt conversion expense equal to the fair value of the incremental consideration paid as follows.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-64AA99F2-6D0D-4B0E-9191-736F8BB2D9F1-low.gif)
    
    Debit Credit Convertible debt " $1,000 " Debt conversion expense 120 Common stock " $1,120 "
    

Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)If Entity B determines that the criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) are met, upon conversion, Entity B would record debt conversion expense equal to the fair value of the incremental consideration paid as follows.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-64AA99F2-6D0D-4B0E-9191-736F8BB2D9F1-low.gif)
    
    Debit Credit Convertible debt " $1,000 " Debt conversion expense 120 Common stock " $1,120 "

##### [470-20-55-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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The same accounting would apply if, instead of reducing the conversion price, Entity B issued shares pursuant to a tender offer of 50 shares of its common stock for each $1,000 bond surrendered to the entity before July 1, 19X4. See paragraph [470-20-40-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-14).

##### [470-20-55-9A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)On January 1, 2X24, Entity A issues a $1,000 face amount 10 percent convertible bond maturing December 31, 2X33. The bond has a conversion price of $25 per share. The terms of the existing instrument require that, upon conversion, the issuer settle the principal in cash and the conversion premium in any combination of cash and shares. Under the existing conversion privileges, the total amount of cash (or the total value of the cash and shares) required to be issued upon conversion equals the product of 40 shares per $1,000 bond and a volume-weighted average price of Entity A’s common stock. The volume-weighted average price is calculated over a period of 40 days beginning the day after the holder notifies the issuer that it will convert the debt instrument. On May 15, 2X27, to induce convertible bondholders to convert their bonds promptly, Entity A offers the following consideration in exchange for each $1,000 bond that is converted within 60 days (for purposes of this Example, assume the offer meets the other criteria in paragraph [470-20-40-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) and that the offer is accepted by bondholders on June 1, 2X27):

1.  a
    
    A cash payment equal to 40 shares multiplied by the volume-weighted average price of Entity A’s common stock calculated over a period of 15 days (beginning the day after the holder accepts the inducement offer)
    
2.  b
    
    Five warrants (offered as a sweetener). Each warrant enables the holder to acquire a share of Entity A’s common stock at a fixed exercise price of $40. The warrants are exercisable upon issuance and expire five years after issuance.

##### [470-20-55-9B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9B)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assume that the fair value of Entity A’s common stock on the date the inducement offer was accepted (June 1, 2X27) is $40 per share. To evaluate whether the inducement offer meets the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), Entity A would compare the form and amount of consideration offered with the form and amount of consideration that would be issued upon conversion pursuant to the terms of the existing instrument. The conversion privileges in the existing instrument require Entity A to settle the principal in cash and permit Entity A to settle the conversion premium in any combination of cash and shares.

##### [470-20-55-9C](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9C)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)In this Case, the inducement offer includes the form (entirely cash) and amount ($1,600) of consideration required to settle both the principal ($1,000) and the conversion premium ($600) pursuant to the conversion privileges provided in the terms of the existing debt instrument. The amount of $1,600 is the product of 40 shares and the fair value of Entity A’s shares at the offer acceptance date ($40).

##### [470-20-55-9D](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9D)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)The offer of warrants to induce conversion does not affect the assessment of whether the inducement offer includes the form and amount of consideration issuable under the existing conversion privileges because the existing conversion privileges did not provide for the issuance of warrants (however, the offer of warrants as a sweetener affects the measurement of the debt conversion expense recognized in accordance with paragraph [470-20-40-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-16)). Similarly, the fact that the inducement offer changes the number of days over which the volume-weighted average price of Entity A’s shares is measured does not affect whether the inducement offer includes the amount of consideration issuable under the existing conversion privileges because Entity A would use the fair value of its common stock as of the offer acceptance date to calculate the amount of cash payable under both the conversion privileges in the existing instrument and the inducement offer in accordance with paragraph [470-20-40-13A(a)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A). Therefore, the inducement offer satisfies the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13).

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-5697D545-6CE4-4431-8579-C024AE25B181-low.gif)
    
    Consideration Issuable Pursuant to Existing Conversion Privileges Principal Cash " $1,000 " Conversion premium "Any combination of cash and shares with a total value of $600. If $600 of the conversion premium is settled in cash, then the conversion premium would be settled as follows:" Cash and $600 Shares (a) 0 shares Consideration Issuable Pursuant to Inducement Offer Cash and " $1,600 " Warrants 5 warrants (a) Number of shares issuable pursuant to existing conversion privileges is computed as follows: Value of 40 shares (40 shares × $40 per share as of the offer acceptance date) " $1,600 " − Face amount − " $1,000 " Value of conversion premium $600 Value of conversion premium $600 Amount of conversion premium settled in cash − $600 Value of conversion premium to be settled in shares $0

##### [470-20-55-9E](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9E)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assume the same facts as in Case C, except that Entity A offers the following consideration (instead of the consideration listed in paragraph [470-20-55-9A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A)):

1.  a
    
    A cash payment of $1,400
    
2.  b
    
    Ten shares of Entity A’s common stock.

##### [470-20-55-9F](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9F)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)To evaluate whether the inducement offer meets the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), Entity A would compare the form and amount of consideration offered with the form and amount of consideration that would be issued upon conversion pursuant to the terms of the existing instrument. The conversion privileges in the terms of the existing instrument require Entity A to settle the principal in cash and permit Entity A to settle the conversion premium in any combination of cash and shares.

##### [470-20-55-9G](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9G)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)In this Case, the inducement offer includes the form (cash) and amount ($1,000) of consideration required to settle the principal pursuant to the conversion privileges provided in the terms of the existing debt instrument. Under the existing conversion privileges, the remaining settlement value of $600 can be settled in any combination of cash and shares. If $400 ($1,400 total cash payment − $1,000 principal) of the conversion premium is settled in cash, then the inducement offer must provide for at least 5 shares ($200 remaining conversion premium ÷ $40 share price) of Entity A’s common stock to provide the same form (cash and shares) and at least the same amount of cash and shares that would have been provided under the conversion privileges of the existing instrument. Because the inducement offer illustrated in Case D includes 10 shares, it would satisfy the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13). The fact that the inducement offer eliminates the volume-weighted average price formula contained in the existing conversion privileges and instead offers a specified amount of cash and shares does not affect whether the inducement offer includes the amount of consideration issuable under the existing conversion privileges because Entity A would use the fair value of its common stock as of the offer acceptance date to calculate the amount of cash payable and shares issuable under the conversion privileges in the existing instrument in accordance with paragraph [470-20-40-13A(a)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13A).

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-4035D57C-F631-4721-A2BB-8AE6D9BCAF51-low.gif)
    
    Consideration Issuable Pursuant to Existing Conversion Privileges Principal Cash " $1,000 " Conversion premium "Any combination of cash and shares with a total value of $600. If $400 of the conversion premium is settled in cash, then the conversion premium would be settled as follows:" Cash and $400 Shares (a) 5 shares Consideration Issuable Pursuant to Inducement Offer Cash and " $1,400 " Shares 10 shares (a) Number of shares issuable pursuant to existing conversion privileges is computed as follows: Value of 40 shares (40 shares × $40 per share as of the offer acceptance date) " $1,600 " − Face amount − " $1,000 " Value of conversion premium $600 Value of conversion premium $600 Amount of conversion premium settled in cash − $400 Value of conversion premium to be settled in shares $200 Value of conversion premium to be settled in shares $200 ÷ Price per share (as of the offer acceptance date) ÷ $40 Number of shares issued to satisfy conversion premium 5 shares

##### [470-20-55-9H](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9H)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)Assume the same facts as in Case C, except that Entity A offers the following consideration (instead of the consideration listed in paragraph [470-20-55-9A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9A)):

1.  a
    
    Forty shares of Entity A’s common stock
    
2.  b
    
    Five warrants (offered as a sweetener). Each warrant enables the holder to acquire a share of Entity A’s common stock at a fixed exercise price of $40. The warrants are exercisable upon issuance and expire five years after issuance.

##### [470-20-55-9I](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9I)

Pending content: yes

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)To evaluate whether the inducement offer meets the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13), Entity A would compare the form and amount of consideration offered with the form and amount of consideration that would be issued upon conversion pursuant to the terms of the existing instrument. The conversion privileges in the terms of the existing instrument require Entity A to settle the principal in cash and permit Entity A to settle the conversion premium in any combination of cash and shares.

##### [470-20-55-9J](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-9J)

Pending content: yes

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:

[470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)In contrast to Case C and Case D, the inducement offer does not include the issuance of all the consideration (in form and amount) issuable pursuant to the conversion privileges included in the terms of the existing instrument. The terms of the existing instrument require settlement of the principal amount in cash, but Entity A did not offer cash consideration in the inducement offer. Therefore, Entity A would conclude that the criterion in paragraph [470-20-40-13(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-13) is not satisfied.

##### [470-20-55-10](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-10)

Pending content: no

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Effective as of: not established by retrieval timestamps.


[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-11](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-11)

Pending content: no

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Effective as of: not established by retrieval timestamps.


[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-12](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-12)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-13](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-13)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-14)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-15](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-15)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-16](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-16)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-17](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-17)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-18](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-18)

Pending content: no

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This Example illustrates the guidance in paragraph [470-20-25-14](https://asc.understandingaccounting.org/asc/470/20/#470-20-25-14).

##### [470-20-55-19](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-19)

Pending content: no

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If the conversion price was described as $1 million divided by the market price of the common stock on the date of the conversion, that is, resetting at the date of conversion, the holder is guaranteed to receive $1 million in value upon conversion and, therefore, the debt instrument would be considered stock-settled debt.

##### [470-20-55-19A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-19A)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-20](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-20)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-21](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-21)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-22](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-22)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-23](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-23)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-24](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-24)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-25](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-25)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-26](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-26)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-27](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-27)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-28](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-28)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-29](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-29)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-30](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-30)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-31](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-31)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-32](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-32)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-33](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-33)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-34](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-34)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-35](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-35)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-36](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-36)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-37](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-37)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-38](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-38)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-39](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-39)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [470-20-55-40](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-40)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [470-20-55-41](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-41)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [470-20-55-42](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-42)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [470-20-55-43](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-43)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [470-20-55-44](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-44)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-45](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-45)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-46](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-46)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-47](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-47)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:43.124Z to 2026-09-10T00:31:43.124Z

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Effective as of: not established by retrieval timestamps.


[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-48](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-48)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-49](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-49)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-50](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-50)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-51](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-51)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-52](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-52)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-53](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-53)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [470-20-55-54](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-54)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-54A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-54A)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-55](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-55)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-56](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-56)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-57](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-57)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-58](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-58)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-59](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-59)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [470-20-55-60](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-60)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-60A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-60A)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-61](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-61)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-62](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-62)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-63](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-63)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-64](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-64)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-65](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-65)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-66](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-66)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Example 9: Illustration of a Conversion of an Instrument that Becomes Convertible Upon the Issuer's Exercise of a Call Option

##### [470-20-55-67](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-67)

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This Example illustrates an instrument subject to the guidance in paragraphs

[470-20-40-5 through 40-9](https://asc.understandingaccounting.org/asc/470/20/#470-20-40-5)

.

##### [470-20-55-68](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-68)

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An entity issues a contingently convertible instrument on January 1, 2006, with a market price trigger, a $1,000 par amount, and a maturity date of December 31, 2020. The debt instrument is convertible at the option of the holder if the share price of the issuer exceeds a specified amount. The issuer can call the debt at any time between 2009 and the maturity date of the debt. If the issuer calls the debt, the holder has the option to receive cash for the call amount or a fixed number of shares as specified in the terms of the instrument upon issuance, regardless of whether the market price trigger has been met. In 2010, the issuer calls the debt before the market price trigger being met and the holder elects to receive a fixed number of shares (as specified in the terms of the instrument).

##### [470-20-55-69](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

#### Example 11: Disclosure of the Information in the Statement of Financial Position

##### [470-20-55-69A](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69A)

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This Example provides an illustration of the guidance in paragraph [470-20-50-1D](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1D) based on the assumption that Entity A is a public business entity and has two convertible debt instruments outstanding as of December 31, 20X7, and 20X6.

##### [470-20-55-69B](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69B)

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The following illustrates the disclosures in a tabular format.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-E72B7729-8AD9-49CE-B7FF-34B242E75ED4-low.gif)
    
    "The following is a summary of Entity A's convertible debt instruments as of December 31, 20X7 (in thousands)." Unamortized Debt Principal Discount and Net Carrying Fair Value Amount Issuance Costs Amount Amount Leveling Leveling "1.2% convertible debt due on December 31, 20X8" " $1,000 " $(18) $982 " $1,100 " Level 2 "Zero-coupon convertible debt due on December 31, 20X9" 500 (9) 491 462 Level 3 "The following is a summary of Entity A's convertible debt instruments as of December 31, 20X6 (in thousands)." Unamortized Debt Principal Discount and Net Carrying Fair Value Amount Issuance Costs Amount Amount Leveling Leveling "1.2% convertible debt due on December 31, 20X8" " $1,000 " $(35) $965 " $1,015 " Level 2 "Zero-coupon convertible debt due on December 31, 20X9" 500 (14) 486 450 Level 3

##### [470-20-55-69C](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69C)

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The disclosures may be provided alternatively in narrative descriptions.

-   **1.2 Percent Convertible Debt Instrument Due on December 31, 20X8**
    
-   As of December 31, 20X7, and 20X6, the net carrying amount of the convertible debt instrument was $982,000 and $965,000, respectively, with unamortized debt discount and issuance costs of $18,000 and $35,000. The estimated fair value (Level 2) of the convertible debt instrument was $1,100,000 and $1,015,000, respectively, as of December 31, 20X7, and 20X6.
    
-   **Zero-Coupon Convertible Debt Instrument Due on December 31, 20X9**
    
-   As of December 31, 20X7, and 20X6, the net carrying amount of the convertible debt instrument was $491,000 and $486,000, respectively, with unamortized debt discount and issuance costs of $9,000 and $14,000. The estimated fair value (Level 3) of the convertible debt instrument was $462,000 and $450,000, respectively, as of December 31, 20X7, and 20X6.

#### Example 12: Disclosure of the Information in the Statement of Financial Performance

##### [470-20-55-69D](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69D)

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This Example provides an illustration of the guidance in paragraph [470-20-50-1F(b)](https://asc.understandingaccounting.org/asc/470/20/#470-20-50-1F) based on the assumption that Entity A has two convertible debt instruments issued before January 1, 20X5, and still outstanding as of December 31, 20X7.

##### [470-20-55-69E](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69E)

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The following illustrates the disclosures in a tabular format.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-B6DCDEFB-584A-4CCD-8A37-DD1156CEB944-low.gif)
    
    The following provides a summary of the interest expense of Entity A's convertible debt instruments (in thousands). "Year Ended December 31, " 20X7 20X6 20X5 Coupon interest $12 $12 $12 Amortization of debt discount and issuance costs 22 22 21 Total $34 $34 $33

##### [470-20-55-69F](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-69F)

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The disclosures may be provided alternatively in narrative descriptions.

-   For the years ended December 31, 20X7, 20X6, and 20X5, the total interest expense was $34,000, $34,000, and $33,000 with coupon interest expense of $12,000 for each year and the amortization of debt discount and issuance costs of $22,000, $22,000, and $21,000, respectively.

### Cash Conversion

##### [470-20-55-70](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-70)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-71](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-71)

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-72](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-72)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-73](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-73)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-74](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-74)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-75](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-75)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-76](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-76)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-77](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-77)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-78](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-78)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-79](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-79)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-80](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-80)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-81](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-81)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

##### [470-20-55-82](https://asc.understandingaccounting.org/asc/470/20/#470-20-55-82)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/).

Source downloaded (UTC): 2026-09-10T00:31:45.764Z to 2026-09-10T00:31:45.764Z

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## ASC 470-20-65: 65 Transition and Open Effective Date Information

[Read section](https://asc.understandingaccounting.org/asc/470/20/#65-transition-and-open-effective-date-information)

SEC content: no

##### [470-20-65-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:31:45.764Z to 2026-09-10T00:31:45.764Z

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Paragraph superseded on 07/01/2010 after the end of the transition period stated in FASB Staff Position APB 14-1, _Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)_.

##### [470-20-65-2](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-2)

Pending content: no

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Paragraph superseded on 03/23/2010 after the end of the transition period stated in FASB Staff Position APB 14-1, _Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)_.

##### [470-20-65-3](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-3)

Pending content: no

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Paragraph superseded on 06/20/2011 after the end of the transition period stated in Accounting Standards Update No. 2009-15, _Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing_.

#### Transition Related to Accounting Standards Update No. 2024-04, <em class="ph i">Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments</em>

##### [470-20-65-4](https://asc.understandingaccounting.org/asc/470/20/#470-20-65-4)

Pending content: no

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[Accounting Standards Update No. 2024-04](https://asc.understandingaccounting.org/updates/asu-2024-04/)

2027-06-14

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

2025-12-16

The following represents the transition and effective date information related to Accounting Standards Update No. 2024-04, _Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments_:

**Effective date and early adoption**

1.  a
    
    All entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.
    
2.  b
    
    Early adoption of the pending content that links to this paragraph is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance), but no earlier than the adoption of the pending content that links to paragraph [815-40-65-1](https://asc.understandingaccounting.org/asc/815/40/#815-40-65-1). If an entity adopts the pending content that links to this paragraph in an interim reporting period, it shall adopt the pending content as of the beginning of the annual reporting period that includes that interim reporting period.
    

**Transition method**

1.  c
    
    An entity shall apply the pending content that links to this paragraph prospectively to settlements of convertible debt instruments that occur during annual reporting periods (and interim reporting periods within those annual reporting periods) beginning after the effective date of the pending content.
    
2.  d
    
    An entity may elect to apply the pending content that links to this paragraph retrospectively as of the beginning of the first comparative reporting period in accordance with the guidance on accounting changes in paragraphs
    
    [250-10-45-5 through 45-10](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-5)
    
    . This transition method shall be applied only to convertible debt instruments settled after the adoption of the pending content that links to paragraph [815-40-65-1](https://asc.understandingaccounting.org/asc/815/40/#815-40-65-1).
    

**Transition disclosures**

1.  e
    
    An entity that applies the pending content that links to this paragraph prospectively in accordance with (c) shall disclose the nature of and reason for the change in accounting principle in the financial statements of both the interim reporting period (if applicable) and the annual reporting period of the change.
    
2.  f
    
    An entity applying the pending content that links to this paragraph retrospectively in accordance with (d) shall provide the following transition disclosures in the financial statements of both the interim reporting period (if applicable) and the annual reporting period of the change:
    
    1.  1
        
        The nature of the change in accounting principle, including an explanation of the newly adopted accounting principle
        
    2.  2
        
        The method of applying the change
        
    3.  3
        
        The cumulative effect of the change on retained earnings or other components of equity in the statement of financial position as of the beginning of the first period for which the pending content that links to this paragraph is initially applied
        
    4.  4
        
        The effect of the change on income from continuing operations, net income (or other appropriate captions of changes in the applicable net assets or performance indicator), any other affected financial statement line item, and any affected per-share amounts for any prior periods retrospectively adjusted.

Source downloaded (UTC): 2026-09-10T00:31:51.126Z to 2026-09-10T00:31:51.126Z

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## ASC 470-20-S25: SEC 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/470/20/#sec-25-recognition)

SEC content: yes

#### Debt Exchangeable for the Stock of Another Entity

##### [470-20-S25-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-S25-1)

Pending content: no

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Effective as of: not established by retrieval timestamps.


See paragraph [470-20-S99-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-S99-1), SEC Observer Comment: Debt Exchangeable for the Stock of Another Entity, for SEC Staff views on accounting for debt that is exchangeable for the stock of another entity

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Effective as of: not established by retrieval timestamps.


## ASC 470-20-S99: SEC 99 SEC Materials

[Read section](https://asc.understandingaccounting.org/asc/470/20/#sec-99-sec-materials)

SEC content: yes

#### SEC Staff Guidance

##### [470-20-S99-1](https://asc.understandingaccounting.org/asc/470/20/#470-20-S99-1)

Pending content: no

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The following is the text of the SEC Observer Comment: Debt Exchangeable for the Stock of Another Entity.

-   An issue has been discussed involving an enterprise that holds investments in common stock of other enterprises and issues debt securities that permit the holder to acquire a fixed number of shares of such common stock. These types of transactions are commonly affected through the sale of either debt with detachable warrants that can be exchanged for the stock investment or debt without detachable warrants (the debt itself must be exchanged for the stock investment - also referred to as "exchangeable" debt). Those debt issues differ from traditional warrants or convertible instruments because the traditional instruments involve exchanges for the equity securities of the issuer. There have been questions as to whether the exchangeable debt should be treated similar to traditional convertibles as specified in Subtopic 470-20 or whether the transaction requires separate accounting for the exchangeability feature. The SEC staff believes that Subtopic 470-20 does not apply to the accounting for debt that is exchangeable for the stock of another entity and therefore separation of the debt element and exchangeability feature is required