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Need some help with this discussion post, please!
Some financial instruments such as convertible bonds, preferred stocks, warrants, and options can have both debt and equity features. They can be converted into common stock, or into preferred stocks by investors.
Please discuss whether these securities should be reported as:
Which of the two options do you favor and why? Develop and explain your argument. In considering this question, you should disregard the current position of the FASB on the issue. Instead, focus on conceptual issues regarding the practicable and theoretically appropriate treatment, unconstrained by US GAAP and IFRS. Also, focus your deliberations on convertible bonds as the instrument with both liability and equity characteristics.
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