PwC has commented on the FASB’s proposal to amend the guidance for distinguishing liabilities from equity. The proposed changes are intended to simplify the accounting for convertible instruments and contracts in an entity’s own equity, as well as the related earnings per share considerations. In addition, the FASB is proposing additional disclosure requirements.
We believe some of the proposed changes would simplify and improve financial reporting and provide decision-useful information for investors. However, we do not agree with certain of the proposed amendments that would remove guidance that practice often utilizes to distinguish liabilities from equity.