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SEC Staff Accounting Bulletin No. 64, Views on SAB Applicability, Common Stock Reporting, Redeemable Preferred Stock Accounting, and Issuance of Shares Prior to Initial Public Offering SEC Staff Accounting Bulletin No. 68, Accounting for Increasing Rate P



An enterprise issues preferred stock that is redeemable only at the issuer's option and that has preference in dividends and liquidation. The terms of the issue specify a below-market-rate dividend for an initial period after issuance and a market-rate dividend after the initial period. The issue is whether dividends should be imputed at the market rate during the initial period with the difference between dividends at the market rate and those at the stated rate recognized as an addition to the preferred stock. EITF DISCUSSION The Task Force did not reach a consensus on this issue. However, the members agreed that authoritative literature does not address and current practice would not generally require recognition of a market-rate dividend during the initial period for preferred stock redeemable only at the issuer's option. The specific issue involved a savings and loan holding company that issued the preferred stock to the Federal Savings and Loan Insurance Corporation (FSLIC) in connection with the acquisition of a troubled financial institution. Regarding the registrant-specific case, the Task Force Chairman Copyright © 1987, Financial Accounting Standards Boar

Year: 1986
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