I need help with a discussion question for class.

Some financial instruments such as convertible bonds, preferred stocks, warrants and options can have both debt and shareholders equity features. They can be converted into common stock or into preferred stocks by investors. This topic has been debated for several years on whether: Viewpoint 1: Issuers should account for an instrument with both liability and equity characteristics entirely as a liability or entirely as an equity instrument depending on which characteristic governs. Viewpoint 2: Issuers should account for an instrument as consisting of a liability component and an equity component that should be accounted for separately. Which of the two viewpoints do you favor? Develop an argument in support of your choice. In considering this question, you should disregard the current position of the FASB on the issue. Instead, focus on conceptual issues regarding the practicable and theoretically appropriate treatment, unconstrained by US GAAP and IFRS. Also, focus your deliberations on convertible bonds as the instrument with both liability and equity characteristics.