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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › convertible debt
Hi Sir,
What would happen if the buyer of the debt did not exercise the equity option?
What would happen to the equity amount?
regards
Hi,
You don’t need to worry about this for FR. If the equity option was not exercised then the buyer would take all the cash at the conversion date and so the liability extinguished. The equity amount would stay there and you could transfer it to another reserve if you wished.
Thanks
