We're now going to take a look at the cash conversion option under US Gap.

So what are the requirements under this type of accounting? Well, there are two main issues here.

Firstly, if the rental bond is going to convert into cash, and it doesn't mean just all cash, it can mean part cash as well.

And the second reason is that the option element of the convertible doesn't meet the derivative accounting rules.

So this means even convertibles with a small portion of cash conversion will be captured by this accounting method.

And secondly, we have to estimate the debt liability unlike previously where we just plugged it.

In this case, we've got to estimate the debt liability value by taking the yield of a similar bond without the convertible option present, valuing it using that yield.

There's a slight different mechanics there.

So what is the accounting? As we said, we first measure the debt liability by taking a comparative bonds yield without the convertible option.

And then any difference, which is the value of the option, is put into equity in the AP line.

And there's no subsequent re measurement that goes through the profit and loss.

So this means that the debt line is going to be measured at amortized cost going forward just like a regular bond.