Debt instruments known as equity commitment notes and equity contract notes have been issued by enterprises that agree to repay the debt from the issuance of, at their discretion, either common stock or perpetual preferred stock. Equity commitment notes are repaid with cash proceeds from the sale of either common or preferred stock, whereas equity contract notes obligate the holder to take either common or preferred stock in lieu of cash. The issue is whether those securities should be included in the issuer's earnings-per-share computations and whether distinction should be made between equity commitment notes and equity contract notes. EITF DISCUSSION The Task Force reached a consensus that shares contingently issuable under equity commitment notes and equity contract notes should not be included in either primary or fully diluted earningsper-share computations. The Task Force agreed that no substantive differences between equity Copyright © 2006, Financial Accounting Standards Board Not for redistribution Page 1commitment notes and equity contract notes would appear to affect that consensus. [Note: Thi
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