Generally Accepted Accounting Principles
in the United States

U.S. GAAP Codification Accounting Topics

Convertible Debt
 and Debt Issued with
Stock Purchase Warrants
(APB Opinion No. 12)

Principles of AccountingU.S. GAAP Financial Reporting Guide
Accounting by TopicAccounting Terms Dictionary

APB Opinion No. 14

Accounting Principles Board (APB) Opinion No. 14
        a.  Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants
        b.  Issued in March 1969

Convertible debt securities
           --> Debt securities that can be converted into common stock (of the issuer)

Convertible debt securities
           --> should be treated solely as debt
           --> no separate recognition for conversion option.

           --> because conversion option is
                 not separable from convertible debt.

Convertible debt securities are
           --> either converted (into common stock) or
           --> redeemed for cash.

           --> conversion right cannot be sold separate from debt.

 Proceeds of convertible debt
           --> No proceeds of convertible debt
                 are attributable to the conversion option.

Debt with detachable stock purchase warrants
           --> Proceeds are allocated to two components.
                 a.  debt security
                 b.  warrants

Allocation is based on
           --> a.  fair value of debt securities without warrants
                 b.  fair value of warrants

Portion of proceeds allocated to debt security
           --> recorded as liability.

Portion of proceeds allocated to warrants
           --> recorded as additional paid-in capital.

U.S. GAAP Codification
Accounting Topics
Inventory Valuation Methods
Depreciation Methods
Revenue Recognition Principle
Accrual Basis vs. Cash Basis Accounting
Basics of Journal Entries
Ratios for Financial Statement Analysis
Overview of Financial Statements

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