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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Accounting for corporate finance: UK GAAP before 1 January 2005: lenders: mark to market: convertibles

Accounting for convertible securities

The market value of a convertible is difficult to calculate. This is because the convertible includes an option to convert. The value of an option depends upon, amongst other factors, the time to the option date and the volatility of the underlying share.

See the examples of convertible securities using accruals accounting at CFM22120, and see also CFM25000 for more on accounting for hybrid debt.