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Should there be a third category for hybrid equity-liabilities claims? Alternatively, should accounting standards eliminate the distinction between equity and liabilities ciaims? What might be some pros and cons of one of these proposals? Recently, over 170 speclal purpose acqubsition corporations were forced to restate their balance sheets because they misclassified warrants as equity when the warrants should have been classified as labilities (See attached article: White, Nicola M. RRestatements Surge as SPACs Stumble Over Same Accounting Error." Bloomberg Tax News. May 18, 2021). The warrant contracts in question are convertible into common stock but include a feature that they could have a cash payout in certain circumstances. Securities which have features of debt and equity are dithcult to classify as strictly one or the other for accounting purposes (See Deloitte Roadimao to Distinguibhing (liabilities from Equity B ). Some securities that are classified as equity under U.S. GAAP are treated as liabilities under IFRS Should there be a third category for hybrid equity-liabilities claims? Alternatively, should accounting standards ellminate the distinction between equity and liabilities claims? What might be some pros and cons of one of these proposals

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