CONVERTIBLE BONDS SETTLED FOR CASH UPON CONVERSION AND BALANCE SHEET TREATMENT FOR CERTAIN SALES OF MORTGAGE SERVICING RIGHTS.

ACCOUNTING standards; ACCOUNTING methods; CONVERTIBLE bonds; MORTGAGE loan servicing; ACCOUNTING; FINANCIAL statements; DEBT equity conversion; FINANCIAL Accounting Standards Board

The article reports on the accounting method for convertible bonds settled for cash upon conversion and balance sheet treatment of a sale of mortgage servicing rights with a subservicing agreement from a consensus reached by the U.S. Financial Accounting Standards Board emerging issues task force (EITF). The EITF issue, Convertible Bonds with Issuer Option to Settle for Cash Upon Conversion, discusses how the cash settlement of all or part of the convertible debt's conversion obligation affects the initial balance sheet treatment and subsequent accounting. The issue on Balance Sheet Treatment of a Sale of Mortgage Servicing Rights With a Subservicing Agreement answers the question of whether transaction should be considered as a sale with a deferred gain or as a financing. INSET: EXECUTIVE SUMMARY.