The guidance in this Subtopic applies to all entities, unless more specific guidance is provided in other Topics.
The guidance in this Subtopic applies to all of the following instruments and activities:
- a
Transactions in an entity's own common stock
- b
Receivables related to the issuance of equity interests and the appropriation of retained earnings
- c
- d
Convertible preferred stock, unless the guidance in other Subtopics (such as Subtopic 470-20 on debt with conversion and other options or 480-10 on distinguishing liabilities from equity) requires that the convertible preferred stock be classified as a liability. The relevant guidance in this Subtopic shall be considered after an issuer's determination under Subtopic 815-15 on embedded derivatives of whether an embedded conversion option or other embedded feature in convertible preferred stock should be accounted for separately as a derivative instrument (see paragraph 815-15-55-76B). The guidance in this Subtopic does not apply to convertible preferred stock that is issued as awards to a grantee in exchange for goods or services received (or to be received) that are within the scope of Topic 718 on stock compensation unless the instrument is modified in accordance with and no longer subject to the guidance in that Topic.
(P) December 16, 2026; (N) December 16, 2026
505-10-65-1The guidance in this Subtopic applies to all of the following instruments and activities:
- a
Transactions in an entity's own common stock
- b
Receivables related to the issuance of equity interests and the appropriation of retained earnings
- c
- d
Convertible preferred stock, unless the guidance in other Subtopics (such as Subtopic 470-20 on debt with conversion and other options or 480-10 on distinguishing liabilities from equity) requires that the convertible preferred stock be classified as a liability. The relevant guidance in this Subtopic shall be considered after an issuer's determination under Subtopic 815-15 on embedded derivatives of whether an embedded conversion option or other embedded feature in convertible preferred stock should be accounted for separately as a derivative instrument (see paragraph 815-15-55-76B). The guidance in this Subtopic does not apply to convertible preferred stock that is issued as awards to a grantee in exchange for goods or services received (or to be received) that are within the scope of Topic 718 on stock compensation unless the instrument is modified in accordance with and no longer subject to the guidance in that Topic. - e
Paid-in-kind dividends on preferred stock (see paragraph 505-10-15-3). The guidance on paid-in-kind dividends on preferred stock applies to preferred stock classified as equity, including preferred stock that is classified as temporary equity in accordance with SEC Staff Announcement, Classification and Measurement of Redeemable Securities (see paragraph 480-10-S99-3A).
(P) December 16, 2026; (N) December 16, 2026
505-10-65-1Paid-in-kind dividends are dividends that an issuer satisfies by either:- a
Delivering to the holder additional preferred stock with the same terms as the original preferred stock
- b
Increasing the value of the original preferred stock in accordance with the preferred stock agreement (for example, by increasing the original preferred stock’s liquidation value).
An entity shall apply the guidance in paragraph 505-10-30-1 on paid-in-kind dividends on preferred stock when the monetary value of the paid-in-kind dividends varies on the basis of the additional preferred stock issued or the increase in the original preferred stock’s liquidation value.(P) December 16, 2026; (N) December 16, 2026
505-10-65-1The guidance in paragraph 505-10-30-1 shall not apply if:- a
The issuer satisfies the dividend obligation by issuing a variable number of shares of the same preferred stock instrument that has a fixed monetary value. For example, a dividend obligation of $1,000 satisfied by delivering a variable number of shares with a current fair value of $1,000 to preferred shareholders would not be within the scope of the guidance in paragraph 505-10-15-2(e). - b
The transaction represents a deemed dividend (for example, certain redemptions of preferred stock).