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APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions ISSUE



In situations in which an enterprise incurs significant costs in defending itself against a hostile takeover attempt, under what circumstances should the costs incurred for its defense be classified as an extraordinary item? If the enterprise purchases treasury shares from the group that initiated the takeover attempt, what costs should be included directly in equity as part of the cost of acquiring the treasury shares? EITF DISCUSSION The Task Force reached a consensus that extraordinary treatment of costs incurred in a takeover defense would generally not be appropriate (except possibly for "going-private " transactions) and that only direct costs of acquiring treasury shares should be charged to equity. [Note: This consensus has been nullified by Technical Bulletin 85-6. See STATUS section.] The Task Force discussed whether any amounts that constitute reimbursement of a "raider's" expenses should be included in the cost of the treasury shares acquired or charged to expense. No consensus was reached on that issue. Copyright © 2006, Financial Accounting Standards Board Not for redistribution Page 1The SEC Observer stated that he believes that amounts designated as or reasonably determinable to be expense reimbursements should be charged to expense. He said that a purchase of shares from a corporate "raider " at a price unreasonably in excess of the market price is evidence that the purchase price includes amounts representing reimbursement of expenses. STATUS This issue was subsequently addressed in Technical Bulletin 85-6, which was issued o

Year: 1985
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