The statement addresses the accounting treatment for three financial instruments. These were formerly allowed to be accounted for as a companys owners equity. The statement requires these instruments to be classified as liabilities on a companys statement of financial position.
Statement 150 impacts three types of “freestanding” financial instruments.
The first type is a mandatory redeemable ownership share, which the issuing company is obligated to buy back in exchange for cash or other assets.
A second type of instrument is a forward purchase contract or a written put option on the issuers equity shares that requires or may require the issuer to settle the obligation by transferring assets.
The third type of instrument covered by the statement are those obligations that can be settled with shares, the monetary value of which is fixed, tied to a variable such as a market index, or varies inversely with the value of the issuers shares.