ASU 2020-06 reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification.
Applicability
- Entities that issue convertible instruments or contracts in an entity’s own equity.
Relevant dates
| Effective date | Public business entities that are SEC filers and not eligible for smaller company reporting | All other entities |
|---|---|---|
Annual periods – Fiscal years beginning after |
Dec. 15, 2021 |
Dec. 15, 2023 |
Interim periods – In fiscal years beginning after |
Dec. 15, 2021 |
Dec. 15, 2023 |
Early adoption allowed in fiscal years beginning after |
Dec, 15, 2020 |
Dec. 15, 2020 |
Key impacts
- Reduces the number of models used to account for convertible instruments
- Amends diluted EPS calculations for convertible instruments
- Amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity’s own shares to be classified in equity
Report contents
- Applicability
- Simplifying the accounting for convertible instruments
- Simplifying the accounting for contracts in an entity’s own equity
- Amendments to diluted EPS guidance
- Effective date and transition
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