International accounting standards require that convertible bonds be classified on the statement of financial position as:
A) Part liability, part equity
B) A liability
C) Either a liability or equity
D) As an asset

Question

Quizplus · Accepted Answer

International accounting standards require that convertible bonds be classified on the statement of financial position as part liability and part equity because they have both debt features (liability) and equity features (potential equity conversion). The portion of the funds received from investors that represents the liability is recorded as a liability on the balance sheet, and the conversion option is recorded as equity.

International Accounting Standards Require That Convertible Bonds Be Classified on the Statement