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Debt, warrants, and equity: What’s trending in SEC comments
Publication date: 30 Nov 2021
us Podcast
Our series on SEC comment letter trends continues with an area that often puts companies in the staff's spotlight: debt, warrants, and equity.
In each episode of our What’s trending in SEC comments series, our guests bring you the latest themes in comment letters from the SEC’s Division of Corporation Finance for the most common topical areas of the financial statements.
This week we focus on debt, warrants, and equity. Tom Barbieri, a Deputy Chief Accountant in PwC’s National Office, and John Horan, Managing Director in PwC’s National Office, joined Heather Horn to break down some of the questions raised in these comments, giving you a deeper understanding of the SEC staff’s expectations, as well as context and insights into the GAAP requirements.
Topics include:
- 1:46 - What types of comments are companies getting? Tom and John discuss the main themes of comments. Common questions relate to SPAC warrants and earnouts, debt modifications, preferred stock, embedded derivatives, and EPS.
- 4:51 - SPAC warrants and earnouts. Accounting for SPAC warrants and earnouts can be complicated. John and Heather discuss the types of questions the SEC is asking on this topic and some best practices for determining the appropriate accounting.
- 17:34 - Debt modifications and extinguishments. Accounting for a troubled debt restructuring, debt modifications, or extinguishment can be complex. Tom and Heather discuss some tips for getting disclosures about these transactions right the first time.
- 23:51 - Preferred stock. John and Heather talk about the SEC staff’s interest in particular topical areas when asking about preferred stock.
- 31:05 - Embedded derivatives. Tom and Heather discuss accounting for embedded conversion features and other redemption provisions, and the importance of providing the right level of context for these in your disclosures.
- 33:51 - Earnings per share. EPS has continued to be an ongoing area of focus for the SEC staff. John explains some of the areas that might give rise to a comment.
- 40:03 - Key takeaways and reminders. We close with some future areas to pay attention to and helpful advice for issuers to address these issues heading into year end. Heather tries to stump Tom and John with some niche accounting questions.
About our guests
Tom Barbieri is a Deputy Chief Accountant in PwC’s National Office and the financial instruments accounting leader. He has nearly 30 years of experience advising clients on complex accounting and financial reporting issues relating to financial instruments. During Tom’s tenure in the National Office, he has been at the forefront of emerging accounting issues and has regular interactions with the FASB, SEC, and other regulators and standard setters.
John Horan is a managing director in PwC’s National Office where he assists clients with complex accounting issues in the areas of foreign currency, liabilities and equity, earnings per share, and derivatives and hedging. John specializes in large capital transactions and initial public offerings.
About our host
Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.
Transcripts available upon request. Please send requests to us_podcast@pwc.com.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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