This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: As it relates to consideration given by a vendor to a customer the SEC staff believes that the expense associated with a "free" product or service delivered at the time of sale of another product or service should be classified as cost of sales. b. Search debt with conversions and other options 470-20 Comments Made by SEC Observer at Emerging Issues Task Force (EITF) Meetings > > > SEC Observer Comment: Debt Exchangeable for the Stock of Another Entity S99-1 The following is the text of the SEC Observer Comment: Debt Exchangeable for the Stock of Another Entity. An issue has been discussed involving an enterprise that holds investments in common stock of other enterprises and issues debt securities that permit the holder to acquire a fixed number of shares of such common stock. These types of transactions are commonly affected through the sale of either debt with detachable warrants that can be exchanged for the stock investment or debt without detachable warrants (the debt itself must be exchanged for the stock investment - also referred to as "exchangeable" debt). Those debt issues differ from traditional warrants or convertible instruments because the traditional instruments involve exchanges for the equity securities of the issuer. There have been questions as to whether the exchangeable debt should be treated similar to traditional convertibles as specified in Subtopic 470-20 or whether the transaction requires separate accounting for the exchangeability feature. The SEC staff believes that Subtopic 470-20 does not apply to the accounting for debt that is exchangeable for the stock of another entity and therefore separation of the debt element and exchangeability feature is required c. Search software cost of sales and services 985-705 Comments Made by SEC Observer at Emerging Issues Task Force (EITF) Meetings > > > SEC Observer Comment: Accounting for the Film and Software Costs Associated with Developing Entertainment and Educational Software Products S99-1 The following is the text of SEC Observer Comment: Accounting for the Film and Software Costs Associated with Developing Entertainment and Educational Software Products. The SEC staff has become aware of diversity in the application of generally accepted accounting principles to exploitation, film, and other software development costs associated with EE products. The SEC staff has learned that certain registrants are recording all costs incurred in the development of EE products pursuant to the provisions of Topics 340, 720, and 985. Other registrants are separating exploitation and film costs from other software development costs and accounting for the other software development costs using Topic 985 and capitalizing film and exploitation costs as film cost inventory as described in Topic 926....
View Full Document
- Spring '13
- Accounting, International Financial Reporting Standards, legal entity, Financial Accounting Standards Board, VIE