Securities with characteristics of liabilities and equity are convertible debt that may be exchanged for common stock of the issuer
When the debt and equity elements of convertible debt are treated as inseparable, the entire proceeds should be accounted for and reported as a liability until conversion
Warrants allow a debtholder to obtain common shares by paying an additional amount for the shares
When warrants are nondetachable, the entire proceeds are attributed to debt
When warrants are detachable, the proceeds are allocated between the debt and the warrants based on their relative fair values at the time of issuance
