ASU 2024-04 — Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments

Stakeholders noted that the current guidance is not clear on whether the induced conversion guidance can be applied to the settlement of a convertible debt instrument that does not require the issuance of equity securities upon conversion (for example, a convertible debt instrument with a cash conversion feature) or the early settlement of a convertible debt instrument that is not currently convertible. They also noted that current GAAP does not address how the incorporation, elimination, or modification of a volume-weighted average price (VWAP) formula interacts with the criterion in the existing induced conversion guidance.

The amendments in this Update improve the consistent application and relevance of the induced conversion guidance in Subtopic 470-20, Debt—Debt with Conversion and Other Options.

This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2023-ED600—Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments (a consensus of the Emerging Issues Task Force), which has been deleted.

For more information, see the following:

Issued: November 26, 2024