In its 1990 discussion memorandum on distinguishing between liabilities and equity, the FASB posed the question, "Should the sharp distinction between liabilities and equity be effectively eliminated?" To do so would be consistent with the equity theory of equity and with the notion that the capital structure (debt versus equity) of a firm is irrelevant to users of financial statements.

Side 1: Argue for elimination of the distinction between debt and equity. Support your argument by citing the entity theory of equity as well as the finance theory asserting that capital structure is irrelevant.

Side 2: Argue against the elimination of the distinction between debt and equity. Support your argument by citing the propriety theory of equity as well as the finance theory asserting that capital structure is relevant.

Choose one side and present your argument