Determined accounting treatment of embedded derivatives in debt agreement

Determined accounting treatment of embedded derivatives in debt agreement

In conjunction with Stout's Business Valuation team, we determined the accounting treatment of certain default provisions embedded within the debt of a publicly traded heavy equipment manufacturer.  We determined that a default escalation clause resulted in an embedded derivative within the debt agreement that was required to be fair valued and accounted for separately as a mark-to-market derivative. We provided accounting documentation to support discussions with the company’s auditor and to direct the efforts of our complex securities valuation team.

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