Accounting for call options
Tax & AccountingMay 03, 2021

FASB Issues Standard Clarifying the Accounting for Call Options

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FASB Issues Standard Clarifying the Accounting for Call Options

The FASB issued an Accounting Standards Update (ASU) that clarifies an issuer’s accounting for call options, including certain modifications or exchanges of freestanding equity-classified written call options (e.g., warrants) that remain equity classified after modification or exchange.

The ASU is based on a consensus of the FASB’s Emerging Issues Task Force (EITF). The ASU provides guidance on how an issuer would measure and recognize the effect of these transactions. Specifically, it provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense.

Click here to see the available press release on this issue.

 

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