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2 edition of Yield test for determining whether a convertible security is a commonstock equivalent found in the catalog.

Yield test for determining whether a convertible security is a commonstock equivalent

Financial Accounting Standards Board.

Yield test for determining whether a convertible security is a commonstock equivalent

an amendment of APB Opinion no.15.

by Financial Accounting Standards Board.

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Published by FASB in Stamford, Conn .
Written in English


Edition Notes

SeriesExposure draft, Exposure draft (Financial Accounting Standards Board)
ID Numbers
Open LibraryOL14381971M

The floor value of a convertible bond is the greater of 1. Conversion value 2. Bond investment value – value as a corporate bond without the conversion option (based on the convertible bond’s cash flow if not converted). • To estimate the bond investment value, one has to determine the required yield on a non-convertible bond. Study Exam 5 Ch. Study Guide C flashcards from Ginger H. on StudyBlue.

The preferred is convertible into 4 shares of common stock. Currently, the preferred stock is trading at $ while the common stock is trading at $ If a customer buys preferred shares, converts, and then sells the common stock in the market, the profit or loss is (ignoring commissions): A. $ gain B. $ loss C. $7, gain. Synonyms for convertible security in Free Thesaurus. Antonyms for convertible security. 1 synonym for convertible security: convertible. What are synonyms for convertible security?

In determining whether an agreement's purchase price is significantly in excess of or below fair market value, amounts between book value and fair market value fall within a safe haven. The determination of book value should be made in accordance with GAAP or a book value used for any other substantial non-tax purpose. The principle to be applied when determining whether certain security positions may be offset for margin purposes against other related security positions is expressed in .


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Yield test for determining whether a convertible security is a commonstock equivalent by Financial Accounting Standards Board. Download PDF EPUB FB2

This amendment applies the common stock equivalency test in a manner consistent with the objective of Opinion 15 for a convertible security that pays much or all of its yield at maturity.

Yield test for determining whether a convertible security is a common stock equivalent: an amendment of APB opinion no. 15 Author: Financial Accounting Standards Board.

Financial Accounting Standards Board, Statement of Financial Accounting Standards No. 85, Yield Test for Determining Whether a Convertible Security Is a Common Stock Equivalent (Stamford, Conn.: FASB, ).Cited by: 4. FASB Statement No. 55, Determining whether a Convertible Security Is a Common Stock Equivalent FASB Statement No.

85, Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent FASB Statement No. Earnings per Share FASB In (). Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent—an amendment of APB Opinion No.

Status. Issued: March Effective Date: Applied to convertible securities issued after Ma Affects: Amends paragraph 85, Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent, along with the interpretations of Opinion no.

The FASB and the IASC redeliberate EPS Other global book-entry securites include: * Convertible money market preferred--Texas Instruments issued, in March ofthe first convertible security to come to market in global book-entry form.

FASB Statement No. 55, Determining whether a Convertible Security Is a Common Stock Equivalent FASB Statement No. 85, Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent FASB Statement No. Earnings per Share FASB In. Capi Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent.

Common stock equivalents. Generally, the EPS computation is based on the common stock outstanding during the period and any common stock equivalents. 85, Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent, along with the interpretations of Opinion no.

The FASB and the IASC redeliberate EPS. Conversion is assumed if the convertible security is a common stock equivalent. The reason for this is simple: Since the convertible bond contains the option to be converted into stock, the rising price of the underlying stock increases the value of the convertible security.

If the stock does poorly, however, the investor won’t be able to convert the security to stock and will only have the yield. 85 "Yield Test for Determining whether a Convertible Security is a Common Stock Equivalent " (FASB, ) and supplemented by AICPA Interpretations, comprises current U.S.

85, Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent, along with the interpretations of Opinion no. The FASB and the IASC redeliberate EPS Issue 1: Are the convertible preferred shares issued to an ESOP considered common stock equivalents.

Convertible security. A security convertible into common stock at a predetermined conversion rate—for example, a convertible preferred stock where each share of preferred stock is convertible into three shares of common stock.

Diluted EPS. EPS calculated to show, on a pro forma basis, per share earnings for the period available to common. Under existing rules, a convertible security is a common stock equivalent if at the time it is issued it has an effective yield of less than two-thirds of the current average Aa-rated corporate bond yield.

Weighted average number of shares outstanding. The sum of shares of common stock weighted by the fraction of the year they were outstanding. Convertible debt and debt with stock warrants are different in that: (1) if the market price of the stock increases sufficiently, the issuer can force conversion of convertible debt into common stock by calling the issue for redemption, but the issuer cannot force exercise of the warrants; (2) convertible debt may be essentially equity capital, whereas debt with stock warrants is debt with the additional right to acquire.

Convertible Bond: A convertible bond is a type of debt security that can be converted into a predetermined amount of the underlying company's equity at certain times during the bond's life.

Convertible bonds are corporate bonds that can be exchanged for common stock in the issuing company. Companies issue convertible bonds to. Bridgewater Corp. offered holders of its 1, convertible bonds a premium of $ per bond to induce conversion into shares of its common stock.

Upon conversion of all the bonds, Bridgewater Corp. recorded the $, pre- mium as a reduction of paid-in capital. (h) Substantial equivalence test - (1) In general.

The substantial equivalence test described in this paragraph applies to determine whether a complex contract is a section (m) transaction. The substantial equivalence test assesses whether a complex contract substantially replicates the economic performance of the underlying security by comparing, at various testing prices for the.

This is the test adopted by the FASB in Statement no. 85, Yield Test for Determining Whether a Convertible Security Is a Common Stock Equivalent, and is consistent with the APB's objective in Opinion no. 15 to include securities that have a yield to the holder significantly below the yield of a similar security without the conversion option.

Features of Convertible Debt Securities The debt securities issued in a Rule A/Regulation S offering may be convertible into shares of .This results in a system of two coupled Black-Scholes equations for the value of the convertible bond: Equation 1. Equation 2. where U is the value of the convertible bond, V is the value of COCB, S is the underlying stock price, r is the risk free rate, q is the dividend yield, and rc is the credit spread.85, Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent, along with the interpretations of Opinion no.

The FASB and the IASC redeliberate EPS Generally, accounts receivable are included among Class III (noncash equivalent) assets, along with inventory, fixed assets, patents and prepaid expenses, etc.