Warrant modifications and licensing revenue
Defining Issues | May 2021
FASB issues ASU clarifying accounting for equity-classified warrants; EITF refers licensing revenue issues back to FASB.
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ASU 2021-04 provides guidance on an issuer’s accounting for modifications of written call options that remain equity-classified after modification.
Applicability
- All companies that modify or exchange equity-classified written call options that remain equity-classified after the modification or exchange
Relevant dates
| Effective date | All entities |
|---|---|
Annual periods – Fiscal years beginning after | December 15, 2021 |
Interim periods – In fiscal years beginning after | December 15, 2021 |
Early adoption permitted? | Yes, including adoption in an interim period. |
Key Impacts:
- Limits the scope to freestanding equity-classified written call options
- Provides a recognition model that includes four categories of transactions, and corresponding accounting treatment for each category
- Requires entities to apply the guidance prospectively when it becomes effective
Report contents
- Applicability
- Key facts and impacts
- Scope
- Recognition
- Measurement
- Disclosures
- Effective date and transition
- Licensing revenue
Download the document:
EITF recached a consensus
Download PDFMeet our team
Kimber Bascom
Partner, Dept. of Professional Practice, KPMG US
Kimber Bascom
Partner, Dept. of Professional Practice, KPMG US
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