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hh360 hh360
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Posts: 85
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5 years ago
Explain why a company would want to classify a financial instrument as debt instead of equity?
Textbook 
Intermediate Accounting, Volume 2

Intermediate Accounting, Volume 2


Edition: 5th
Authors:
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wrote...
5 years ago
Many companies want to classify financial instruments as equity and not debt in order to
improve their debt-to-equity. By recording certain items as equity, they will avoid possible
loan covenant problems. In addition income is affected by the retirement and interest
payments if the item is classified as debt.
hh360 Author
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5 years ago
Mind blown, I've bookmarked this site on told my friends
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5 years ago
Really appreciate that, see you soon
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