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.
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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.