FASB issues guidance on accounting for financial instruments with characteristics of both liabilities and equity

Abstract

The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards (SFAS) No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity," to establish standards for how an issuer should classify and measure in its statement of financial position certain freestanding financial instruments with characteristics of both liabilities and equity. Financial instruments are freestanding if they are entered into separately from other financial instruments or transactions or are legally detachable and separately exercisable.