While IFRS require separate financial reporting of the separate components of all compound instruments, GAAP requires separate financial reporting of the components of all of the following compound instruments except
A)debt and a conversion feature
B)debt and detachable warrants
C)bonds and common stock
D)bonds and preferred stock

Question

Quizplus · Accepted Answer

Under GAAP, a compound instrument like debt with a conversion feature (e.g., convertible debt) is not required to be reported as separate components. Instead, it is reported as a single, combined financial instrument. Other compound instruments, such as debt with detachable warrants or bonds combined with other types of stock, may require separate reporting of their components under GAAP.

While IFRS Require Separate Financial Reporting of the Separate Components