# ASC 505-10: Equity — Overall Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/505/10/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:36:31.592Z to 2026-09-10T00:37:26.444Z Record version: sha256:c98365de8da01e7305bc9b923cbe38e20580d0052c23dbc5d1f30809ce5bc381 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10: Equity — Overall ### Machine-generated study aids ```json { "summary": "ASC 505-10 is the residual \"Overall\" subtopic for equity — it covers equity matters not addressed in the other Equity subtopics (stock dividends/splits, treasury stock, spinoffs) or in other Topics such as 480 and 815. Its core rules are that transactions in an entity's own capital stock (and quasi-reorganization adjustments and transfers to/from appropriated retained earnings) never affect net income, that additional paid-in capital may not be used to relieve income of charges, and that notes received for stock are generally shown as a deduction from equity rather than as an asset. It also imposes extensive disclosures on the rights and privileges of outstanding securities, convertible preferred stock, redemption requirements, and liquidation preferences.", "key_points": [ "Additional paid-in capital, however created, shall not be used to relieve income of current or future charges that would otherwise hit the income statement (505-10-25-1), except in reorganizations under 852-20-25-2.", "Adjustments, charges, or credits from transactions in the entity's own capital stock, transfers to/from appropriated retained earnings, and quasi-reorganization adjustments are excluded from net income under all circumstances (505-10-25-2).", "A note received as a contribution to equity is generally reported as a deduction from shareholders' equity, not as an asset, unless there is substantial evidence of ability and intent to pay quickly or it is collected in cash before issuance (505-10-45-2); appropriated retained earnings must be shown within equity, with no costs or losses charged to it and no part transferred to income (505-10-45-3 through 45-4).", "Changes in the separate accounts comprising shareholders' equity and in the number of shares must be disclosed for at least the most recent annual period and any subsequent interim period (505-10-50-2), and pertinent rights and privileges of each class of security must be explained (505-10-50-3, 50-13).", "Preferred stock with an involuntary liquidation preference considerably in excess of par or stated value must disclose that preference in the aggregate in the equity section of the balance sheet, not per share or only in the notes (505-10-50-4); call/redemption amounts, cumulative dividend arrearages, dividends declared, and five-year redemption requirements are also required (505-10-50-5, 50-11, 50-15).", "Convertible preferred stock is in scope unless 470-20 or 480-10 requires liability classification, and only after the issuer determines under 815-15 whether an embedded conversion feature must be bifurcated as a derivative; Topic 718 awards are excluded (505-10-15-2(d)); if such stock must be redeemed once the conversion feature expires, it is reclassified as a Topic 480 liability at fair value with a corresponding reduction of equity and no gain or loss (505-10-35-1).", "Pending ASU 2026-01 (annual periods beginning after December 15, 2026): paid-in-kind dividends on equity-classified preferred stock are initially measured using the paid-in-kind dividend rate stated in the preferred stock agreement (505-10-30-1; 505-10-65-1)." ], "categories": [ "Debt and equity", "Disclosure", "Presentation", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "The exam favorite here is the bright-line rule that an entity can never recognize gain or loss (or relieve income of charges through APIC) on transactions in its own stock — everything runs through equity. A common misunderstanding is treating a subscription note received for shares as an asset; absent quick collection it must be shown as a contra-equity deduction.", "related_topics": [ "480-10", "470-20", "815-40", "718", "260-10", "852-20" ], "key_concepts": [ "residual interest in net assets", "additional paid-in capital", "appropriated retained earnings", "notes receivable for stock issuance", "convertible preferred stock", "liquidation preference disclosure", "paid-in-kind dividends", "down round feature" ] } ``` Source downloaded (UTC): 2026-09-10T00:36:31.592Z to 2026-09-10T00:36:31.592Z Record version: sha256:9a77719e17bba533fac56f92dfe1b97824b1df8d9dfd0c6e697ccbef664356d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/505/10/#00-status) SEC content: no ##### [505-10-00-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:31.592Z to 2026-09-10T00:36:31.592Z Record version: sha256:b21aaee8fa486a8c7492de6551d8974192a359c56cb6330801dd1abdfee38db0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Contingently Convertible InstrumentsAddedAccounting Standards Update No. 2020-0608/05/2020
Convertible SecurityAddedAccounting Standards Update No. 2020-0608/05/2020
Down Round FeatureAddedAccounting Standards Update No. 2017-1107/13/2017
Equity RestructuringAddedAccounting Standards Update No. 2017-1107/13/2017
Financial InstrumentAmendedAccounting Standards Update No. 2024-0203/29/2024
Financial InstrumentAddedAccounting Standards Update No. 2017-1107/13/2017
Registration Payment ArrangementAddedAccounting Standards Update No. 2016-1912/14/2016
Security (1st def.)SupersededAccounting Standards Update No. 2020-0608/05/2020
Standard Antidilution ProvisionsAddedAccounting Standards Update No. 2017-1107/13/2017
505-10-05-1AmendedAccounting Standards Update No. 2018-0706/20/2018
505-10-05-3AmendedAccounting Standards Update No. 2020-0608/05/2020
505-10-05-5 through 05-7
AddedAccounting Standards Update No. 2020-0608/05/2020
505-10-15-1AmendedAccounting Standards Update No. 2016-1912/14/2016
505-10-15-2AmendedAccounting Standards Update No. 2026-0104/23/2026
505-10-15-2AmendedAccounting Standards Update No. 2020-0608/05/2020
505-10-15-3AddedAccounting Standards Update No. 2026-0104/23/2026
505-10-15-4AddedAccounting Standards Update No. 2026-0104/23/2026
505-10-25-3AmendedAccounting Standards Update No. 2018-0706/20/2018
505-10-30-1AddedAccounting Standards Update No. 2026-0104/23/2026
505-10-35-1AddedAccounting Standards Update No. 2020-0608/05/2020
505-10-45-2AmendedAccounting Standards Update No. 2015-1006/12/2015
505-10-50-3AmendedAccounting Standards Update No. 2017-1107/13/2017
505-10-50-3AAddedAccounting Standards Update No. 2017-1107/13/2017
505-10-50-4AmendedAccounting Standards Update No. 2023-0610/09/2023
505-10-50-6 through 50-10ASupersededAccounting Standards Update No. 2020-0608/05/2020
505-10-50-8AmendedMaintenance Update 2016-11 (PDF)06/27/2016
505-10-50-12 through 50-18
AddedAccounting Standards Update No. 2020-0608/05/2020
505-10-60-1AmendedAccounting Standards Update No. 2011-0506/16/2011
505-10-60-2SupersededAccounting Standards Update No. 2020-0608/05/2020
505-10-60-6AmendedAccounting Standards Update No. 2016-1912/14/2016
505-10-60-7AddedAccounting Standards Update No. 2017-1107/13/2017
505-10-60-8AddedAccounting Standards Update No. 2021-0405/03/2021
505-10-65-1AddedAccounting Standards Update No. 2026-0104/23/2026
Source downloaded (UTC): 2026-09-10T00:36:34.119Z to 2026-09-10T00:36:34.119Z Record version: sha256:2a8616f829f71da43587341d3d3c38f7bb83734d76e760741f52df51606f1244 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/505/10/#05-overview-and-background) SEC content: no ##### [505-10-05-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:34.119Z to 2026-09-10T00:36:34.119Z Record version: sha256:79223b3c1dc28f9e98807d342390e3e001eb014737e8f04c90662d9128419c50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Equity Topic includes the following Subtopics: 1. a Overall 2. b Stock Dividends and Stock Splits 3. c Treasury Stock 4. d [Subparagraph superseded by Accounting Standards Update No. 2018-07](https://asc.understandingaccounting.org/updates/asu-2018-07/). 5. e Spinoffs and Reverse Spinoffs. ##### [505-10-05-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:34.119Z to 2026-09-10T00:36:34.119Z Record version: sha256:f87ecfb67e49af2cc2268bde05f4fce7c6ac72c16634fcb5f4edde7cc4634c11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Overall Subtopic addresses financial accounting and reporting for equity-related matters not specifically addressed in the other Subtopics of the Equity Topic or other Topics that also address equity matters. ##### [505-10-05-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:34.119Z to 2026-09-10T00:36:34.119Z Record version: sha256:4890b0893f218bf017c2fb233f6e136f3eb3e47711fdbf2bc996233148ddc900 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Equity, sometimes referred to as net assets, is the residual interest in the assets of an entity that remains after deducting its liabilities. The Subtopics of the Equity Topic provide guidance on several specific elements of transactions, accounts and financial instruments that are classified as components of equity as well as overall general guidance related to equity. Issues that relate to whether a specific financial instrument shall be classified as equity or outside of the equity classification are addressed in Topic 480 as well as other Topics (such as Topic 815 on derivatives and hedging) that address these classification matters. ##### [505-10-05-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:34.119Z to 2026-09-10T00:36:34.119Z Record version: sha256:043b07139d00e95e4577611928aea6df3879daafe7f55fc656d223ebf38c2290 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other Topics, including industry-specific Topics, also contain guidance related to specific equity matters associated with those Topics. Equity guidance in those Topics is intended to be incremental to the guidance otherwise established in this Topic. #### Convertible Preferred Stock ##### [505-10-05-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:34.119Z to 2026-09-10T00:36:34.119Z Record version: sha256:7ac9e404159cdf514fa988ce0251a1157b3bddb498794e6f21ab30875943b39e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities may issue convertible preferred stock that may be convertible into common stock at the lower of a conversion rate fixed at time of issuance and a fixed discount to the market price of the common stock at the date of conversion. ##### [505-10-05-6](https://asc.understandingaccounting.org/asc/505/10/#505-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:34.119Z to 2026-09-10T00:36:34.119Z Record version: sha256:01cb167d6a58452972d02731df19a4bc24d1731bae79500b0903e8144a47625d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain convertible preferred stock may have a contingently adjustable conversion ratio. Examples of a conversion price that is variable based on future events are the following: 1. a A liquidation or a change in control of an entity 2. b A subsequent round of financing at a price lower than the [convertible security](https://asc.understandingaccounting.org/glossary/c/#convertible-security "A security that is convertible into another security based on a conversion rate. For example, convertible preferred stock that is convertible into common stock on a two-for-one basis (two shares of common for each share of preferred).")'s original conversion price 3. c An initial public offering at a share price lower than an agreed-upon amount. ##### [505-10-05-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:34.119Z to 2026-09-10T00:36:34.119Z Record version: sha256:2f2da9ddd6f456e533e745f04cf9a53a9a666f0e565dbad11d9e08c67aa02f58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain convertible preferred stock may become convertible only upon the occurrence of a future event outside the control of the holder. Source downloaded (UTC): 2026-09-10T00:36:36.763Z to 2026-09-10T00:36:36.763Z Record version: sha256:ee4ff7b3bd137dba35aca0fd5db5e77a40f44676c3573a4e74e7227ac931d097 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/505/10/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [505-10-15-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:36.763Z to 2026-09-10T00:36:36.763Z Record version: sha256:0472912ab842463a98de293eb0c15dba64f24a418a75db565c0bf7fcdaa1123f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities, unless more specific guidance is provided in other Topics. #### Instruments ##### [505-10-15-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-15-2) Pending content: yes Source downloaded (UTC): 2026-09-10T00:36:36.763Z to 2026-09-10T00:36:36.763Z Record version: sha256:b67eaf217b59f82905c2c8f9a5542ef5e96d3bb80acf9b0987d1695ced39e4fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all of the following instruments and activities: 1. a Transactions in an entity's own common stock 2. b Receivables related to the issuance of equity interests and the appropriation of retained earnings 3. c [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 4. 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](https://asc.understandingaccounting.org/asc/815/15/#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. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [505-10-65-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-65-1)The guidance in this Subtopic applies to all of the following instruments and activities: 1. a Transactions in an entity's own common stock 2. b Receivables related to the issuance of equity interests and the appropriation of retained earnings 3. c [Subparagraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). 4. 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](https://asc.understandingaccounting.org/asc/815/15/#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. 5. e Paid-in-kind dividends on [preferred stock](https://asc.understandingaccounting.org/glossary/p/#preferred-stock "A security that has preferential rights compared to common stock.") (see paragraph [505-10-15-3](https://asc.understandingaccounting.org/asc/505/10/#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](https://asc.understandingaccounting.org/asc/480/10/#480-10-S99-3A)). #### Paid-in-Kind Dividends on Preferred Stock ##### [505-10-15-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-15-3) Pending content: yes Source downloaded (UTC): 2026-09-10T00:36:36.763Z to 2026-09-10T00:36:36.763Z Record version: sha256:6f7bcbd6e19c87810880f7da537c34acf4307d5372fec21940fb2edc28972be0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [505-10-65-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-65-1)Paid-in-kind dividends are dividends that an issuer satisfies by either: 1. a Delivering to the holder additional preferred stock with the same terms as the original preferred stock 2. 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](https://asc.understandingaccounting.org/asc/505/10/#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. ##### [505-10-15-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-15-4) Pending content: yes Source downloaded (UTC): 2026-09-10T00:36:36.763Z to 2026-09-10T00:36:36.763Z Record version: sha256:ea93791572c836a908cdb8b55dd4199cd6f4822328da8d9a444e7fcc5287b5aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [505-10-65-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-65-1)The guidance in paragraph [505-10-30-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-30-1) shall not apply if: 1. 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)](https://asc.understandingaccounting.org/asc/505/10/#505-10-15-2). 2. b The transaction represents a deemed dividend (for example, certain redemptions of preferred stock). Source downloaded (UTC): 2026-09-10T00:36:43.800Z to 2026-09-10T00:36:43.800Z Record version: sha256:56c55b2329f7407efb1153d24456667e9d78d00af287e92b026c780bf99380aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/505/10/#25-recognition) SEC content: no ##### [505-10-25-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:43.800Z to 2026-09-10T00:36:43.800Z Record version: sha256:e371257e4b0fd3f677abf685c4aaf68da5fd65647639338682daabcaaef5cabb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Additional paid-in capital, however created, shall not be used to relieve income of the current or future years of charges that would otherwise be made to the income statement. See paragraph [852-20-25-2](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-2) for an exception to this guidance related to reorganizations. ##### [505-10-25-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:43.800Z to 2026-09-10T00:36:43.800Z Record version: sha256:1ffc380493a4ee0a404315a99962d88e69faf7c954907dabb422620a3dfbe30a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following shall be excluded from the determination of net income or the results of operations under all circumstances: 1. a Adjustments or charges or credits resulting from transactions in the entity's own capital stock 2. b Transfers to and from accounts properly designated as appropriated retained earnings (see paragraph [505-10-45-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-3) for what is meant by properly designated as appropriated retained earnings) 3. c Adjustments made pursuant to a quasi-reorganization (see Subtopic 852-20 for information concerning quasi-reorganizations). ##### [505-10-25-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:43.800Z to 2026-09-10T00:36:43.800Z Record version: sha256:1edb4999d4a206d43659cb4c4caedb09f307d532aee29c4be315f6c26942a5be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [323-10-25-3 through 25-5](https://asc.understandingaccounting.org/asc/323/10/#323-10-25-3) provide guidance on accounting for share-based compensation granted by an investor to employees or nonemployees of an equity method investee that provide goods or services to the investee that are used or consumed in the investee's operations. An investee shall recognize the costs of the share-based payment incurred by the investor on its behalf, and a corresponding capital contribution, as the costs are incurred on its behalf (that is, in the same period(s) as if the investor had paid cash to employees and nonemployees of the investee following the guidance in Topic 718 on stock compensation. Source downloaded (UTC): 2026-09-10T00:36:46.312Z to 2026-09-10T00:36:46.312Z Record version: sha256:ccc7bcec3f974d7865e0adc3f7586575a4c7996a9ba7214e85302d9d3a54406c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/505/10/#30-initial-measurement) SEC content: no #### Paid-in-Kind Dividends on Preferred Stock ##### [505-10-30-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-30-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:36:46.312Z to 2026-09-10T00:36:46.312Z Record version: sha256:56c67d1304b0d4154c2554332dc4996c402bec81f588694c35ee38b78a109769 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [505-10-65-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-65-1)Paid-in-kind dividends on [preferred stock](https://asc.understandingaccounting.org/glossary/p/#preferred-stock "A security that has preferential rights compared to common stock.") issued to preferred shareholders shall be initially measured on the basis of the paid-in-kind dividend rate stated in the preferred stock agreement. For example, if the preferred stock agreement specifies that paid-in-kind dividends are calculated by multiplying the paid-in-kind dividend rate by the liquidation value of the preferred stock outstanding, an entity should measure the paid-in-kind dividend at that amount. Source downloaded (UTC): 2026-09-10T00:36:48.162Z to 2026-09-10T00:36:48.162Z Record version: sha256:617bbc72b624b8f2a8b915edfba5af6df1ecc4fa66fbe886ea7072820f3f4e6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/505/10/#35-subsequent-measurement) SEC content: no ##### [505-10-35-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:48.162Z to 2026-09-10T00:36:48.162Z Record version: sha256:a49d0f26c1373b5a25ee90562d3bb00b549880e7fe0a2e0f93cfd7e26004343e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If convertible preferred stock is required to be redeemed once the conversion feature expires, the financial instrument becomes a liability under the guidance in Topic 480 upon expiration of the conversion feature and paragraph [480-10-30-2](https://asc.understandingaccounting.org/asc/480/10/#480-10-30-2) requires the issuer to reclassify an instrument that becomes mandatorily redeemable as a liability, measured initially at fair value with a corresponding reduction of equity (no gain or loss is to be recognized). That may entail an adjustment to paid-in capital if, upon reclassification, the fair value of the liability differs from the carrying amount of the previously convertible preferred stock. That financial instrument would be subsequently measured under the provisions of Topic 480. Source downloaded (UTC): 2026-09-10T00:36:51.979Z to 2026-09-10T00:36:51.979Z Record version: sha256:c2011d50ae00832bedc8f95224913da425db328365c943d1439914e1fb7f74c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/505/10/#45-other-presentation-matters) SEC content: no ##### [505-10-45-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:51.979Z to 2026-09-10T00:36:51.979Z Record version: sha256:88f03fd1aa33099cfed0875680ec7d6967f4c77ccb64a99f0d0c2c81a06bdc5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides guidance related to whether an entity shall report a note receivable arising from the issuance of equity interests either as a reduction of shareholders' equity or as an asset. Guidance is also provided related to appropriations of retained earnings. #### Receivables for Issuance of Equity ##### [505-10-45-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:51.979Z to 2026-09-10T00:36:51.979Z Record version: sha256:19793561b96ad69ba226c34c1e001f927d2f974499f430c2c652764baad7279e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may receive a note, rather than cash, as a contribution to its equity. The transaction may be a sale of capital stock or a contribution to paid-in capital. Reporting the note as an asset is generally not appropriate, except in very limited circumstances in which there is substantial evidence of ability and intent to pay within a reasonably short period of time, for example, as discussed for public entities in paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1) (paragraphs 27 through 29), which requires a deduction of the receivable from equity. However, such notes may be recorded as an asset if collected in cash before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25). #### Appropriations of Retained Earnings ##### [505-10-45-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:51.979Z to 2026-09-10T00:36:51.979Z Record version: sha256:1c35037d8e089126ebed94ef7d842f4eda419a5c35f27bea70c3ebf4e89321aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Appropriation of retained earnings is permitted, provided that it is shown within the shareholders' equity section of the balance sheet and is clearly identified as an appropriation of retained earnings. ##### [505-10-45-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:51.979Z to 2026-09-10T00:36:51.979Z Record version: sha256:a35c7007604b4c260d05263ad3976d7946b3fc9594cb4e60d5667c2b55e66d11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs or losses shall not be charged to an appropriation of retained earnings, and no part of the appropriation shall be transferred to income. Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:6591ef421d4ab048413e543820a35410fe860f7d1868a5d8daab964511b55b3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/505/10/#50-disclosure) SEC content: no ##### [505-10-50-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:1d489c6b583cc3f2e54fbf8c5527aed6008c71c8e103b0fc406897cff3a3a681 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides guidance on the disclosure requirements associated with the separate accounts comprising shareholders' equity and the specific outstanding securities issued by an entity. ##### [505-10-50-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:c332aff5d32149728382eac4adf05575c56b4928a63c0eb75e26b6e785fecaff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If both financial position and results of operations are presented, disclosure of changes in the separate accounts comprising shareholders' equity (in addition to retained earnings) and of the changes in the number of shares of equity securities during at least the most recent annual fiscal period and any subsequent interim period presented is required to make the financial statements sufficiently informative. Disclosure of such changes may take the form of separate statements or may be made in the basic financial statements or notes thereto. ##### [505-10-50-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:c4039652b03449c2981a17942de4e1f3b06e9349265b0d070064e1d6b0ae7a2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall explain, in summary form within its financial statements, the pertinent rights and privileges of the various securities outstanding. Examples of information that shall be disclosed are dividend and liquidation preferences, [participation rights](https://asc.understandingaccounting.org/glossary/p/#participation-rights "Contractual rights of security holders to receive dividends or returns from the security issuer's profits, cash flows, or returns on investments."), call prices and dates, conversion or exercise prices or rates and pertinent dates, sinking-fund requirements, unusual voting rights, and significant terms of contracts to issue additional shares or terms that may change conversion or exercise prices (excluding [standard antidilution provisions](https://asc.understandingaccounting.org/glossary/s/#standard-antidilution-provisions "Standard antidilution provisions are those that result in adjustments to the conversion ratio in the event of an equity restructuring transaction that are designed to maintain the value of the conversion option.")). An entity shall disclose within its financial statements the number of shares issued upon conversion, exercise, or satisfaction of required conditions during at least the most recent annual fiscal period and any subsequent interim period presented. An entity also shall disclose within the financial statements actual changes to conversion or exercise prices that occur during the reporting period (excluding changes due to standard antidilution provisions). ##### [505-10-50-3A](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-3A) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:fdcd3bc574a8e3810dc4fb0af6099ed65a5e39d2545a5b92277073bb5b8cfcb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a [financial instrument](https://asc.understandingaccounting.org/glossary/f/#financial-instrument "Cash, evidence of an ownership interest in an entity, or a contract that both: Imposes on one entity a contractual obligation either: To deliver cash or another financial instrument to a second entity To exchange other financial instruments on potentially unfavorable terms with the second entity. Conveys to that second entity a contractual right either: To receive cash or another financial instrument from the first entity To exchange other financial instruments on potentially favorable terms with the first entity. The use of the term financial instrument in this definition is recursive (because the term financial instrument is included in it), though it is not circular. The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity. Any number of obligations to deliver financial instruments can be links in a chain that qualifies a particular contract as a financial instrument. Contractual rights and contractual obligations encompass both those that are conditioned on the occurrence of a specified event and those that are not. All contractual rights (contractual obligations) that are financial instruments meet the definition of asset (liability) set forth in FASB Concepts Statement No. 6, Elements of Financial Statements, although some may not be recognized as assets (liabilities) in financial statements—that is, they may be off-balance-sheet—because they fail to meet some other criterion for recognition. For some financial instruments, the right is held by or the obligation is due from (or the obligation is owed to or by) a group of entities rather than a single entity. (P) December 16, 2024; (N) December 16, 2025105-10-65-9Cash, evidence of an ownership interest in an entity, or a contract that both: Imposes on one entity a contractual obligation either: To deliver cash or another financial instrument to a second entity To exchange other financial instruments on potentially unfavorable terms with the second entity. Conveys to that second entity a contractual right either: To receive cash or another financial instrument from the first entity To exchange other financial instruments on potentially favorable terms with the first entity. The use of the term financial instrument in this definition is recursive (because the term financial instrument is included in it), though it is not circular. The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity. Any number of obligations to deliver financial instruments can be links in a chain that qualifies a particular contract as a financial instrument. Contractual rights and contractual obligations encompass both those that are conditioned on the occurrence of a specified event and those that are not. Some contractual rights (contractual obligations) that are financial instruments may not be recognized in financial statements—that is, they may be off-balance-sheet—because they fail to meet some other criterion for recognition. For some financial instruments, the right is held by or the obligation is due from (or the obligation is owed to or by) a group of entities rather than a single entity.") with a [down round feature](https://asc.understandingaccounting.org/glossary/d/#down-round-feature "A feature in a financial instrument that reduces the strike price of an issued financial instrument if the issuer sells shares of its stock for an amount less than the currently stated strike price of the issued financial instrument or issues an equity-linked financial instrument with a strike price below the currently stated strike price of the issued financial instrument. A down round feature may reduce the strike price of a financial instrument to the current issuance price, or the reduction may be limited by a floor or on the basis of a formula that results in a price that is at a discount to the original exercise price but above the new issuance price of the shares, or may reduce the strike price to below the current issuance price. A standard antidilution provision is not considered a down round feature.") that has been triggered during the reporting period and for which an entity has recognized the effect in accordance with paragraph [260-10-25-1](https://asc.understandingaccounting.org/asc/260/10/#260-10-25-1), an entity shall disclose the following: 1. a The fact that the feature has been triggered 2. b The value of the effect of the down round feature that has been triggered. #### Securities with Preferences ##### [505-10-50-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:07a05e90c6554df6dbc59ddebc789f3444afbc7067c692d7176fbfc3ec363ef4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that issues [preferred stock](https://asc.understandingaccounting.org/glossary/p/#preferred-stock "A security that has preferential rights compared to common stock.") (or other senior stock) that has a preference in involuntary liquidation considerably in excess of the par or stated value of the shares shall disclose the liquidation preference of the stock (the relationship between the preference in liquidation and the par or stated value of the shares). That disclosure shall be made in the equity section of the statement of financial position in the aggregate, either parenthetically or in short, rather than on a per-share basis or through disclosure in the notes. Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance: [105-10-65-7](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-7)An entity that issues [preferred stock](https://asc.understandingaccounting.org/glossary/p/#preferred-stock "A security that has preferential rights compared to common stock.") (or other senior stock) that has a preference in involuntary liquidation other than par or stated value of the shares shall disclose the liquidation preference of the stock (the relationship between the preference in liquidation and the par or stated value of the shares). That disclosure shall be made in the equity section of the statement of financial position in the aggregate, either parenthetically or in short, rather than on a per-share basis or through disclosure in the notes. ##### [505-10-50-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:d7d76d7d04b17d6f5342a87658eab542bd5c9b9091a5708acc9e562c6fd7ce09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, an entity shall disclose both of the following within its financial statements (either on the face of the statement of financial position or in the notes thereto): 1. a The aggregate or per-share amounts at which preferred stock may be called or is subject to redemption through sinking-fund operations or otherwise 2. b The aggregate and per-share amounts of arrearages in cumulative preferred dividends. ##### [505-10-50-6](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:78a7498f4910d9111294d809d85df7502cb3d27e5e8d319a9baad664116db953 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [505-10-50-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:235f2a26948dca483c77c906a201d09faf98c9b984014ead572972f282cb8fbe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [505-10-50-8](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:d8830cb9254dc64a7b0ff91ea4ceb59f01839ddfa9dd15ab943cbf4876092584 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [505-10-50-9](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:f2f43a6c197f0c0052750fc418c6041bb14fad6a1c78ed4dc1f1a61caed67cb0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [505-10-50-10](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:425a9c8d517160fee137ccaa9f2046ffc867f7d5373f1f353f89784f5b054331 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [505-10-50-10A](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-10A) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:7d16dfec0fb04a0273341a9072529814d5264bdc1d48723dc790d672eaf4f740 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). #### Redeemable Securities ##### [505-10-50-11](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:11bef9945b22d595b285503bacb14ab452a863257dd22424668abc6b6ff1a160 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that issues redeemable stock shall disclose the amount of redemption requirements, separately by issue or combined, for all issues of capital stock that are redeemable at fixed or determinable prices on fixed or determinable dates in each of the five years following the date of the latest statement of financial position presented. #### Convertible Preferred Stock ##### [505-10-50-12](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:d717d25b2747038a3e8d029d5dbeda9c47ef9279863a7fd436eab52322a833c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the disclosure about convertible preferred stock is to provide users of financial statements with: 1. a Information about the terms and features of convertible preferred stock 2. b An understanding of how those instruments have been reported in an entity's statement of financial position and statement of financial performance 3. c Information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity's future cash flows related to those instruments. ##### [505-10-50-13](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:bae1ce84446df5c6a79c968d04d40febd94d089d7f9fa9f7ba8b883f3383af98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To comply with the general disclosure requirements of paragraph [505-10-50-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-3), an entity shall explain the pertinent rights and privileges of each outstanding instrument, including, but not limited to, the following information: 1. a Number of shares issued and par value 2. b Dividends 3. c Conversion or exercise prices or rates and number of shares into which the instrument is potentially convertible 4. d Pertinent dates, such as conversion date(s) 5. e Parties that control the conversion rights 6. f Manner of settlement upon conversion and any alternative settlement methods, such as cash, shares, or a combination of cash and shares 7. g Terms that may change conversion or exercise prices, number of shares to be issued, or other conversion rights and the timing of those rights (excluding standard antidilution provisions) 8. h Liquidation preference required by paragraph [505-10-50-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-4) and unusual voting rights 9. i Other material terms and features of the instrument that are not listed above. ##### [505-10-50-14](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:87165e4092c17fe352ad4233f5b3b4683ec6117ca98e40dc2457ae73a6a45d51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall provide the following incremental information for [contingently convertible instruments](https://asc.understandingaccounting.org/glossary/c/#contingently-convertible-instruments "Contingently convertible instruments are instruments that have embedded conversion features that are contingently convertible or exercisable based on either of the following: A market price trigger Multiple contingencies if one of the contingencies is a market price trigger and the instrument can be converted or share settled based on meeting the specified market condition. A market price trigger is a market condition that is based at least in part on the issuer's own share price. Examples of contingently convertible instruments include contingently convertible debt, contingently convertible preferred stock, and the instrument described by paragraph 260-10-45-43, all with embedded market price triggers.") or the instruments that are described in paragraphs [505-10-05-6 through 05-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-05-6) : 1. a Events or changes in circumstances that would adjust or change the contingency or would cause the contingency to be met 2. b Information on whether the shares that would be issued if the contingently convertible securities were converted are included in the calculation of diluted earnings per share (EPS) and the reasons why or why not 3. c Other information that is helpful in understanding both the nature of the contingencies and the potential impact of conversion. ##### [505-10-50-15](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:a2c98380e6e47c5b662169509eb7978db69798fb8bbf29b914818c7fa303f0fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the amount of dividends declared for each period for which a statement of financial performance is presented, in addition to the disclosures required by paragraph [505-10-50-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-5). ##### [505-10-50-16](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:e3885004235f50b55936d827ee67b1d45562db8b124080ba415a5186f5e23fd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the following as of the date of the latest statement of financial position presented: 1. a Changes to conversion or exercise prices that occur during the reporting period other than changes due to standard antidilution provisions 2. b Events or changes in circumstances that occur during the reporting period that cause conversion contingencies to be met or conversion terms to be significantly changed 3. c The number of shares issued upon conversion, exercise, or satisfaction of required conditions during the reporting period. ##### [505-10-50-17](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:e80e7238e4ea8fe6d073d920f0e6cd8a138cf36c6170ab02b9b79c107f4daed5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a conversion option is accounted for as a derivative in accordance with Subtopic 815-15, an entity shall provide disclosures in accordance with Topic 815 for the conversion option in addition to the disclosures required by the guidance in this Section, if applicable. ##### [505-10-50-18](https://asc.understandingaccounting.org/asc/505/10/#505-10-50-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:56.123Z to 2026-09-10T00:36:56.123Z Record version: sha256:fb155cfa8d76ab2c6c4302a037d29cc9789344e51e635bfde885d4cd6aadd530 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the following information about derivative transactions entered into in connection with the issuance of convertible preferred stock within the scope of this Subtopic regardless of whether such derivative transactions are accounted for as assets, liabilities, or equity instruments: 1. a The terms of those derivative transactions (including the terms of settlement) 2. b How those derivative transactions relate to the instruments within the scope of this Subtopic 3. c The number of shares underlying the derivative transactions 4. d The reasons for entering into those derivative transactions. Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:bf7dedd046dba0dfbd8aed02b8d82f9e1322ee8937bc31b7f658d5bada26bdca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/505/10/#60-relationships) SEC content: no #### Comprehensive Income ##### [505-10-60-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:ec22c78950a518ad7f4ca9374db91258340bb30f97aed48b576f0ac012ee3734 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the required presentation and disclosure related to other comprehensive income, see paragraphs [220-10-45-1 through 45-17](https://asc.understandingaccounting.org/asc/220/10/#220-10-45-1) . #### Debt ##### [505-10-60-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:53ae8885b1ce9026991d42a6f30a0e8999c7d62bcbec2d127a2916e9199dbfb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-06](https://asc.understandingaccounting.org/updates/asu-2020-06/). ##### [505-10-60-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:301e3074135a85bc7a12f4a40508092a0b6e102cd8ee2233049b7fc0d7cde317 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the need to allocate proceeds from the sale of debt with stock purchase warrants to the debt and the warrants, see Subtopic 470-20. #### Distinguishing Liabilities from Equity ##### [505-10-60-3A](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-3A) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:28c4bd447f7d17fee257e9b62a855f5d1d0e5d166d18453510cf9ea93fd1500a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on whether a specific financial instrument shall be classified as equity or outside of the equity classification, see Topic 480. #### Consolidation ##### [505-10-60-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:6ddabf603fa0487a81bdc8b49c13d3333fe0d057b8a0ce2b4db4300feffb40ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the treatment of shares of a parent held by its subsidiary in the consolidated balance sheet, see paragraph [810-10-45-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-5). For guidance on the accounting for the purchase (early extinguishment) of a wholly owned subsidiary's mandatorily redeemable [preferred stock](https://asc.understandingaccounting.org/glossary/p/#preferred-stock "A security that has preferential rights compared to common stock."), see paragraphs [810-10-40-1 through 40-2A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-1). #### Derivatives and Hedging ##### [505-10-60-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:9541d5bd9767eb2628c687baa851771a3145224fb30f2e4c2a77985b2b942582 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the potential classification of an embedded derivative as an equity instrument, see Topic 815. #### Financial Instruments ##### [505-10-60-6](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:5ccc2455dce288bbbb42b5572288884efbe529d7bb884d6464a21454d5c15a55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the accounting for a [registration payment arrangement](https://asc.understandingaccounting.org/glossary/r/#registration-payment-arrangement "An arrangement with both of the following characteristics: It specifies that the issuer will endeavor to do either of the following: File a registration statement for the resale of specified financial instruments and/or for the resale of equity shares that are issuable upon exercise or conversion of specified financial instruments and for that registration statement to be declared effective by the U.S. Securities and Exchange Commission (SEC) (or other applicable securities regulator if the registration statement will be filed in a foreign jurisdiction) within a specified grace period Maintain the effectiveness of the registration statement for a specified period of time (or in perpetuity). It requires the issuer to transfer consideration to the counterparty if the registration statement for the resale of the financial instrument or instruments subject to the arrangement is not declared effective or if effectiveness of the registration statement is not maintained. That consideration may be payable in a lump sum or it may be payable periodically, and the form of the consideration may vary. For example, the consideration may be in the form of cash, equity instruments, or adjustments to the terms of the financial instrument or instruments that are subject to the registration payment arrangement (such as an increased interest rate on a debt instrument)."), see Subtopic 825-20. ##### [505-10-60-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:e0e669135e58bd7c244b48b1d0273f5b66726cd37ca828e10737f929fd89f48b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the accounting for an equity-classified freestanding [financial instrument](https://asc.understandingaccounting.org/glossary/f/#financial-instrument "Cash, evidence of an ownership interest in an entity, or a contract that both: Imposes on one entity a contractual obligation either: To deliver cash or another financial instrument to a second entity To exchange other financial instruments on potentially unfavorable terms with the second entity. Conveys to that second entity a contractual right either: To receive cash or another financial instrument from the first entity To exchange other financial instruments on potentially favorable terms with the first entity. The use of the term financial instrument in this definition is recursive (because the term financial instrument is included in it), though it is not circular. The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity. Any number of obligations to deliver financial instruments can be links in a chain that qualifies a particular contract as a financial instrument. Contractual rights and contractual obligations encompass both those that are conditioned on the occurrence of a specified event and those that are not. All contractual rights (contractual obligations) that are financial instruments meet the definition of asset (liability) set forth in FASB Concepts Statement No. 6, Elements of Financial Statements, although some may not be recognized as assets (liabilities) in financial statements—that is, they may be off-balance-sheet—because they fail to meet some other criterion for recognition. For some financial instruments, the right is held by or the obligation is due from (or the obligation is owed to or by) a group of entities rather than a single entity. (P) December 16, 2024; (N) December 16, 2025105-10-65-9Cash, evidence of an ownership interest in an entity, or a contract that both: Imposes on one entity a contractual obligation either: To deliver cash or another financial instrument to a second entity To exchange other financial instruments on potentially unfavorable terms with the second entity. Conveys to that second entity a contractual right either: To receive cash or another financial instrument from the first entity To exchange other financial instruments on potentially favorable terms with the first entity. The use of the term financial instrument in this definition is recursive (because the term financial instrument is included in it), though it is not circular. The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity. Any number of obligations to deliver financial instruments can be links in a chain that qualifies a particular contract as a financial instrument. Contractual rights and contractual obligations encompass both those that are conditioned on the occurrence of a specified event and those that are not. Some contractual rights (contractual obligations) that are financial instruments may not be recognized in financial statements—that is, they may be off-balance-sheet—because they fail to meet some other criterion for recognition. For some financial instruments, the right is held by or the obligation is due from (or the obligation is owed to or by) a group of entities rather than a single entity.") with a [down round feature](https://asc.understandingaccounting.org/glossary/d/#down-round-feature "A feature in a financial instrument that reduces the strike price of an issued financial instrument if the issuer sells shares of its stock for an amount less than the currently stated strike price of the issued financial instrument or issues an equity-linked financial instrument with a strike price below the currently stated strike price of the issued financial instrument. A down round feature may reduce the strike price of a financial instrument to the current issuance price, or the reduction may be limited by a floor or on the basis of a formula that results in a price that is at a discount to the original exercise price but above the new issuance price of the shares, or may reduce the strike price to below the current issuance price. A standard antidilution provision is not considered a down round feature."), see Topic 260 on earnings per share. ##### [505-10-60-8](https://asc.understandingaccounting.org/asc/505/10/#505-10-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:36:57.989Z to 2026-09-10T00:36:57.989Z Record version: sha256:cff47bb5b14f503411573801afd790e2834409bdc221e2a84be02d1a9b744349 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange, see Subtopic 815-40 on contracts in entity's own equity. Source downloaded (UTC): 2026-09-10T00:37:00.517Z to 2026-09-10T00:37:00.517Z Record version: sha256:5313dc60a0eff2274a3768908df5a5afb910719b7f5d613c1c209f53c117120e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/505/10/#65-transition-and-open-effective-date-information) SEC content: no #### Transition Related to Accounting Standards Update No. 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock ##### [505-10-65-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:00.517Z to 2026-09-10T00:37:00.517Z Record version: sha256:ce366001d39c33bb268bc83357b011ec418f0a1a250c8bdd33fa6618256fd924 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Accounting Standards Update 2026-01](https://asc.understandingaccounting.org/updates/asu-2026-01/) 2028-06-13 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 2026-12-16 The following represents the transition and effective date information related to Accounting Standards Update No. 2026-01, _Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock_: **Effective date and early adoption** 1. a All entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. 2. b Early adoption of the pending content that links to this paragraph is permitted in an interim or annual reporting period in which the financial statements have not yet been issued or made available for issuance. If an entity adopts the pending content that links to this paragraph in an interim reporting period, it shall apply the pending content as of the beginning of the annual reporting period that includes that interim reporting period. **Transition method** 1. c An entity shall apply the pending content that links to this paragraph using either of the following transition methods: 1. 1 On a prospective basis to paid-in-kind dividends recognized on preferred stock on or after the initial application date of the pending content that links to this paragraph. 2. 2 On a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity) as of the beginning of the earliest period presented. Under this transition method, an entity shall apply the pending content that links to this paragraph to paid-in-kind dividends recognized on preferred stock that is outstanding as of the initial application date of the pending content. **Transition disclosures** 1. d An entity that applies the pending content that links to this paragraph prospectively in accordance with (c)(1) shall provide the following transition disclosures in the financial statements of both the interim reporting period (if applicable) and the annual reporting period in which the pending content is applied: 1. 1 The nature of the change in accounting principle, including an explanation of the newly adopted accounting principle 2. 2 The method of applying the change. 2. e An entity that applies the pending content that links to this paragraph on a modified retrospective basis in accordance with (c)(2) shall provide the following transition disclosures in the financial statements of both the interim reporting period (if applicable) and the annual reporting period in which the pending content is applied: 1. 1 The nature of the change in accounting principle, including an explanation of the newly adopted accounting principle 2. 2 The method of applying the change 3. 3 The cumulative effect of the change on retained earnings or other components of equity in the statement of financial position as of the beginning of the earliest period presented 4. 4 The effect of the change on income available to common shareholders, any other affected financial statement line items, and any affected per-share amounts for the current reporting period and any prior reporting periods retrospectively adjusted. Source downloaded (UTC): 2026-09-10T00:37:07.251Z to 2026-09-10T00:37:07.251Z Record version: sha256:ac5e25329d961bcb95661999722e0266b06fbcda6dbac542f2d869b0bc211d64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/505/10/#sec-00-status) SEC content: yes ##### [505-10-S00-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:07.251Z to 2026-09-10T00:37:07.251Z Record version: sha256:87a259f6e0971f9b082564b497a990ad0c7102be9e4437d0fcb53d05b069cf67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
505-10-S25-2SupersededAccounting Standards Update No. 2012-0308/27/2012
505-10-S45-10SupersededAccounting Standards Update No. 2012-0308/27/2012
505-10-S50-4SupersededAccounting Standards Update No. 2012-0308/27/2012
505-10-S50-5AmendedAccounting Standards Update No. 2020-0910/22/2020
505-10-S50-6AmendedAccounting Standards Update No. 2020-0910/22/2020
505-10-S50-7 through S50-9
SupersededAccounting Standards Update No. 2020-0910/22/2020
505-10-S99-1AmendedAccounting Standards Update No. 2019-0707/26/2019
505-10-S99-1AmendedAccounting Standards Update No. 2010-2108/02/2010
505-10-S99-2AmendedAccounting Standards Update No. 2019-0707/26/2019
505-10-S99-6SupersededAccounting Standards Update No. 2010-2208/19/2010
505-10-S99-7AmendedAccounting Standards Update No. 2012-0308/27/2012
Source downloaded (UTC): 2026-09-10T00:37:10.510Z to 2026-09-10T00:37:10.510Z Record version: sha256:46f6428cb54ff7c8e25fd449eb3eaadfe4ff99a277e3f7c9f98109be28d39d2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/505/10/#sec-25-recognition) SEC content: yes #### Expenses Related to an Equity Offering ##### [505-10-S25-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:10.510Z to 2026-09-10T00:37:10.510Z Record version: sha256:74df090700b36fcd57c536c255a3fe45f49335ef82ae0e36eeb8664478355191 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [340-10-S99-1](https://asc.understandingaccounting.org/asc/340/10/#340-10-S99-1), SAB Topic 5.A, for SEC Staff views on deferral of expenses related to an equity offering. ##### [505-10-S25-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-S25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:10.510Z to 2026-09-10T00:37:10.510Z Record version: sha256:920b749baa10bfefc48b270303fa75cdd26ee29ea8073e917c1b72c6f2eb6995 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). Source downloaded (UTC): 2026-09-10T00:37:12.273Z to 2026-09-10T00:37:12.273Z Record version: sha256:d7fccf7fc7cc27bd7fc7b152bbc0c540c5d672d94e3b29014917f1b25314703c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/505/10/#sec-30-initial-measurement) SEC content: yes #### Increasing Rate Preferred Stock ##### [505-10-S30-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:12.273Z to 2026-09-10T00:37:12.273Z Record version: sha256:eb737131190c7c2537975f52a009bab10324fd20df79a3e6ac035669d9a1339f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [505-10-S99-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-7), SAB Topic 5.Q., Question 1, for SEC Staff views on increasing rate preferred stock. Source downloaded (UTC): 2026-09-10T00:37:14.860Z to 2026-09-10T00:37:14.860Z Record version: sha256:4df2ded70c4647eb55514c0f2ec3d7c767b764843bfa96751be2e2788dc13c9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-S35: SEC 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/505/10/#sec-35-subsequent-measurement) SEC content: yes #### Increasing Rate Preferred Stock ##### [505-10-S35-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-S35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:14.860Z to 2026-09-10T00:37:14.860Z Record version: sha256:1ad9c696cfa2bb141b0961061a6a52960c2310651c4f1848c14d98bab60c09ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [505-10-S99-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-7), SAB Topic 5.Q, Questions 2 and 3, for SEC Staff views on increasing rate preferred stock. Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:72cd45abe06a1f482eea37e091cac917644f5c0e2aecc01a7dfc69369c09e0da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/505/10/#sec-45-other-presentation-matters) SEC content: yes #### Discounts on and Unamortized Balances of Shares ##### [505-10-S45-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:9b68efc24e805a1e755b6c1aa7b80768108d563608d153e33bb860cb48d86673 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [505-10-S99-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-2), Regulation S-X Rule 4-07, for requirements on presenting discounts on shares and unamortized balances of shares. #### Preferred Stock that Is Not Redeemable or Redeemable Solely at the Option of the Issuer ##### [505-10-S45-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:428eb3edfa9e68ca5a873646ed574201ad802bea07da0d929d66ee9943ee002b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rule 5-02.29, for requirements on presenting preferred stock that is not redeemable or redeemable solely at the option of the issuer. #### Common Stock ##### [505-10-S45-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:c17277330de758e8e55b85f8225bffeb10728b5f8b535b991f57a6904dfa73b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rule 5-02.30, for presentation requirements for common stock. #### Other Stockholders' Equity ##### [505-10-S45-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:758677d8f460248654027ba01abc2e5ec22af307f77dfe5a4e72ae32e0583cf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rule 5-02.31, for presentation requirements for other stockholders' equity. #### Subordinated Debt ##### [505-10-S45-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:d5d9700b86fae618913a3bbc4bea14c58524f0ecf58b83398112a59bc50a1da0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-2](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-2), SAB Topic 4.A, for SEC Staff views on prohibiting the presentation of subordinated debt within stockholders' equity. #### Presentation of S Corporation Undistributed Earnings in Financial Statements upon Termination of S Election ##### [505-10-S45-6](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:940cc4b56219a6571d60f5baf9a06ca763ca4f5ed9319d07843d6c6243c05336 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [505-10-S99-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-3), SAB Topic 4.B, for SEC Staff views on presenting S corporation undistributed earnings on the date the S election is terminated. #### Receivables Arising from the Issuance of Capital Stock to Officers and Other Employees ##### [505-10-S45-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:1184a8c0f8efc525021f1d89c223ccdef67b886f2da14d12d93b43fd5c1a8135 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [310-10-S99-2](https://asc.understandingaccounting.org/asc/310/10/#310-10-S99-2), SAB Topic 4.E, for SEC Staff views on presenting receivables arising from sales of capital stock to officers and other employees. #### Presentation of Equity Section in Limited Partnership Financial Statements ##### [505-10-S45-8](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:d8919edc9c7074b45cd9efd98c0452c6cb17bc924cd0abfb3d9de37bf14d40ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [505-10-S99-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-5), SAB Topic 4.F, for SEC Staff views on presenting equity in limited partnership financial statements. #### Presentation of Notes and Other Receivables in a General Partner's Balance Sheet ##### [505-10-S45-9](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:5212ed866a34715f9c92e5413eb999118117aaf79c0747e974614bda12de0ec6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [310-10-S99-3](https://asc.understandingaccounting.org/asc/310/10/#310-10-S99-3), SAB Topic 4.G, for SEC Staff views on presenting certain notes and other receivables in a general partner's balance sheet. ##### [505-10-S45-10](https://asc.understandingaccounting.org/asc/505/10/#505-10-S45-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:17.407Z to 2026-09-10T00:37:17.407Z Record version: sha256:23249fbd2f173804b27f677c932f0bbf38d495e5449a33bdc2eedd7b188528f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:6fb93939b861fef41b9bdf60f724d3ca225ee3996443595387ddcdde30d39b67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/505/10/#sec-50-disclosure) SEC content: yes #### Changes in Each Caption of Other Stockholders' Equity ##### [505-10-S50-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:7448024563ef02dc0180f2c6ac45c5594b6371f3ad6b6dc3fd22c5933365eda9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [505-10-S99-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-1), Regulation S-X Rule 3-04, for disclosure requirements for changes in stockholders' equity. #### Preferred Shares ##### [505-10-S50-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:e707b3a951851545a8f0e7bf7f48763c5660ba98b2bc2541ea2d585c6bc02a2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [235-10-S99-1](https://asc.understandingaccounting.org/asc/235/10/#235-10-S99-1), Regulation S-X Rule 4-08(d), for disclosure requirements for preferred shares. #### Restrictions that Limit the Payment of Dividends by the Registrant ##### [505-10-S50-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:84482b64553dacf43782b8b280430a1ecfda6ae5964c4eccff20f56d44587737 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [235-10-S99-1](https://asc.understandingaccounting.org/asc/235/10/#235-10-S99-1), Regulation S-X Rule 4-08(e), for disclosure requirements for restrictions that limit the payment of dividends by the registrant. ##### [505-10-S50-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:072ba378fec35834b5f307873f575a6a4212e6bd6a230b69647483268fcd208e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2012-03](https://asc.understandingaccounting.org/updates/asu-2012-03/). #### Guarantors and Issuers of Guaranteed Securities Registered or Being Registered ##### [505-10-S50-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:c9ad01361299e343141bb5f7e689bb1e7d411df0dcc3863ca277ca4fea682c6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-1](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-1), Regulation S-X Rule 3-10, for requirements applicable to financial statements of guarantors and issuers of guaranteed debt or debt-like securities registered or being registered. ##### [505-10-S50-6](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:fceb9f618f96ea8351c7fe88edd0d5dd57bc45dfc742de4dbf872faf1bf62209 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-1A](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-1A), Regulation S-X Rule 13-01, for disclosure requirements about guarantors and issuers of guaranteed debt or debt-like securities registered or being registered. ##### [505-10-S50-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:47fa273f7f998848bbf416921fc1fde6959243c37063716da7ea7133f7bdbd81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-09](https://asc.understandingaccounting.org/updates/asu-2020-09/). ##### [505-10-S50-8](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:efe6f2390a126e785a633f38e7b6b631213adce713abc104acbec75739d5f58f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-09](https://asc.understandingaccounting.org/updates/asu-2020-09/). ##### [505-10-S50-9](https://asc.understandingaccounting.org/asc/505/10/#505-10-S50-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:20.547Z to 2026-09-10T00:37:20.547Z Record version: sha256:db6b2fa5717125c22eb429e822f6217ebb4bc85253db3d88840b89475798da59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2020-09](https://asc.understandingaccounting.org/updates/asu-2020-09/). Source downloaded (UTC): 2026-09-10T00:37:26.444Z to 2026-09-10T00:37:26.444Z Record version: sha256:7ebfde6f9481f0fd6a05d78326e86a88eebf633e1243724b99f441658ca345d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 505-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/505/10/#sec-99-sec-materials) SEC content: yes #### SEC Rules, Regulations, and Interpretations ##### [505-10-S99-1](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:26.444Z to 2026-09-10T00:37:26.444Z Record version: sha256:5ec48cb1aaab0956e9f2bd28dee4144b2507991e3e46deae246074b5e8cb5105 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 3-04, Changes in Other Stockholders' Equity and Noncontrolling Interests (17 CFR 210.3-04). - An analysis of the changes in each caption of stockholders' equity and noncontrolling interests presented in the balance sheets shall be given in a note or separate statement. This analysis shall be presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which a statement of comprehensive income is required to be filed with all significant reconciling items described by appropriate captions with contributions from and distributions to owners shown separately. Also, state separately the adjustments to the balance at the beginning of the earliest period presented for items which were retroactively applied to periods prior to that period. With respect to any dividends, state the amount per share and in the aggregate for each class of shares. Provide a separate schedule in the notes to the financial statements that shows the effects of any changes in the registrant's ownership interest in a subsidiary on the equity attributable to the registrant. - \[83 FR 50199, Oct. 4, 2018\] ##### [505-10-S99-2](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:26.444Z to 2026-09-10T00:37:26.444Z Record version: sha256:34252e545c35122d70353fb985f12075499bcb3da4018000e1d9e325231b5784 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 4-07, Discount on Shares (17 CFR 210.4-07). - Discount on shares, or any unamortized balance thereof, shall be shown separately as a deduction from the applicable account(s) as circumstances require. #### SEC Staff Guidance ##### [505-10-S99-3](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:26.444Z to 2026-09-10T00:37:26.444Z Record version: sha256:8dada42eaeca1f51d7b17a38d78b552114b72d5d6914fdae353fd8ebd922b23e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 4.B, S Corporations. - Facts: An S corporation has undistributed earnings on the date its S election is terminated. - Question: How should such earnings be reflected in the financial statements? - Interpretive Response: Such earnings must be included in the financial statements as additional paid-in capital. This assumes a constructive distribution to the owners followed by a contribution to the capital of the corporation. ##### [505-10-S99-4](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:26.444Z to 2026-09-10T00:37:26.444Z Record version: sha256:d9b9d151528bbe2755b89aafb2c6d807bac2a4cddd88d826fd4c4b2c827b6cf5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 4.C, Changes in Capital Structure. - Facts: A capital structure change to a stock dividend, stock split or reverse split occurs after the date of the latest reported balance sheet but before the release of the financial statements or the effective date of the registration statement, whichever is later. - Question: What effect must be given to such a change? - Interpretive Response: Such changes in the capital structure must be given retroactive effect in the balance sheet. - An appropriately cross-referenced note should disclose the retroactive treatment, explain the change made and state the date the change became effective. ##### [505-10-S99-5](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:26.444Z to 2026-09-10T00:37:26.444Z Record version: sha256:ab3c469dd3c62a3573d3a5b5eac804012d8e753c531737acb1e8689f5c592891 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 4.F, Limited Partnerships. - Facts: There exist a number of publicly held partnerships having one or more corporate or individual general partners and a relatively larger number of limited partners. There are no specific requirements or guidelines relating to the presentation of the partnership equity accounts in the financial statements. In addition, there are many approaches to the parallel problem of relating the results of operations to the two classes of partnership equity interests. - Question: How should the financial statements of limited partnerships be presented so that the two ownership classes can readily determine their relative participations in both the net assets of the partnership and in the results of its operations? - Interpretive Response: The equity section of a partnership balance sheet should distinguish between amounts ascribed to each ownership class. The equity attributed to the general partners should be stated separately from the equity of the limited partners, and changes in the number of equity units authorized and outstanding should be shown for each ownership class. A statement of changes in partnership equity for each ownership class should be furnished for each period for which an income statement is included. - The income statements of partnerships should be presented in a manner which clearly shows the aggregate amount of net income (loss) allocated to the general partners and the aggregate amount allocated to the limited partners. The statement of income should also state the results of operations on a per unit basis. ##### [505-10-S99-6](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:26.444Z to 2026-09-10T00:37:26.444Z Record version: sha256:775a255dfe8b4ee9492352379428e53dcb25b5774fa110a853bed6ff3742fed8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-22](https://asc.understandingaccounting.org/updates/asu-2010-22/). ##### [505-10-S99-7](https://asc.understandingaccounting.org/asc/505/10/#505-10-S99-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:37:26.444Z to 2026-09-10T00:37:26.444Z Record version: sha256:36700bb5bb55c59f3c9fe7bbda9be790a90d2d16f59b0e915b346092ae8ea39b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.Q, Increasing Rate Preferred Stock. - Facts: A registrant issues Class A and Class B nonredeemable preferred stock FN19 on 1/1/X1. Class A, by its terms, will pay no dividends during the years 20X1 through 20X3. Class B, by its terms, will pay dividends at annual rates of $2, $4 and $6 per share in the years 20X1, 20X2 and 20X3, respectively. Beginning in the year 20X4 and thereafter as long as they remain outstanding, each instrument will pay dividends at an annual rate of $8 per share. In all periods, the scheduled dividends are cumulative. - FN19 "Nonredeemable" preferred stock, as used in this SAB, refers to preferred stocks which are not redeemable or are redeemable only at the option of the issuer. - At the time of issuance, eight percent per annum was considered to be a market rate for dividend yield on Class A, given its characteristics other than scheduled cash dividend entitlements (voting rights, liquidation preference, etc.), as well as the registrant's financial condition and future economic prospects. Thus, the registrant could have expected to receive proceeds of approximately $100 per share for Class A if the dividend rate of $8 per share (the "perpetual dividend") had been in effect at date of issuance. In consideration of the dividend payment terms, however, Class A was issued for proceeds of $79 3/8 per share. The difference, $20 5/8, approximated the value of the absence of $8 per share dividends annually for three years, discounted at 8%. - The issuance price of Class B shares was determined by a similar approach, based on the terms and characteristics of the Class B shares. - Question 1: How should preferred stocks of this general type (referred to as "increasing rate preferred stocks") be reported in the balance sheet? - Interpretive Response: As is normally the case with other types of securities, increasing rate preferred stock should be recorded initially at its fair value on date of issuance. Thereafter, the carrying amount should be increased periodically as discussed in the Interpretive Response to Question 2. - Question 2: Is it acceptable to recognize the dividend costs of increasing rate preferred stocks according to their stated dividend schedules? - Interpretive Response: No. The staff believes that when consideration received for preferred stocks reflects expectations of future dividend streams, as is normally the case with cumulative preferred stocks, any discount due to an absence of dividends (as with Class A) or gradually increasing dividends (as with Class B) for an initial period represents prepaid, unstated dividend cost. FN20 Recognizing the dividend cost of these instruments according to their stated dividend schedules would report Class A as being cost-free, and would report the cost of Class B at less than its effective cost, from the standpoint of common stock interests (i. e., for purposes of computing income applicable to common stock and earnings per common share) during the years 20X1 through 20X3. - FN20 As described in the "Facts" section of this issue, a registrant would receive less in proceeds for a preferred stock, if the stock were to pay less than its perpetual dividend for some initial period(s), than if it were to pay the perpetual dividend from date of issuance. The staff views the discount on increasing rate preferred stock as equivalent to a prepayment of dividends by the issuer, as though the issuer had concurrently (a) issued the stock with the perpetual dividend being payable from date of issuance, and (b) returned to the investor a portion of the proceeds representing the present value of certain future dividend entitlements which the investor agreed to forgo. - Accordingly, the staff believes that discounts on increasing rate preferred stock should be amortized over the period(s) preceding commencement of the perpetual dividend, by charging imputed dividend cost against retained earnings and increasing the carrying amount of the preferred stock by a corresponding amount. The discount at time of issuance should be computed as the present value of the difference between (a) dividends that will be payable, if any, in the period(s) preceding commencement of the perpetual dividend; and (b) the perpetual dividend amount for a corresponding number of periods; discounted at a market rate for dividend yield on preferred stocks that are comparable (other than with respect to dividend payment schedules) from an investment standpoint. The amortization in each period should be the amount which, together with any stated dividend for the period (ignoring fluctuations in stated dividend amounts that might result from variable rates, FN21 results in a constant rate of effective cost vis-a-vis the carrying amount of the preferred stock (the market rate that was used to compute the discount). - FN21 See Question 3 regarding variable increasing rate preferred stocks. - Simplified (ignoring quarterly calculations) application of this accounting to the Class A preferred stock described in the "Facts" section of this bulletin would produce the following results on a per share basis: - ![](https://asc.understandingaccounting.org/asc-img/GUID-96D7FAF0-64E9-48C1-A918-98222C1C0EB7-low.gif) Carrying amount of preferred stock Beginning of Year (BOY) Imputed Dividend (8% of carrying Amount at BOY) "End of year " Year 20X1 $79.38 6.35 85.73 Year 20X2 85.73 6.86 92.59 Year 20X3 92.59 7.41 100.00 - During 20X4 and thereafter, the stated dividend of $8 measured against the carrying amount of $100 FN22 would reflect dividend cost of 8%, the market rate at time of issuance. - FN22 It should be noted that the $100 per share amount used in this issue is for illustrative purposes, and is not intended to imply that application of this issue will necessarily result in the carrying amount of a nonredeemable preferred stock being accreted to its par value, stated value, voluntary redemption value or involuntary liquidation value. - The staff believes that existing authoritative literature, while not explicitly addressing increasing rate preferred stocks, implicitly calls for the accounting described in this bulletin. - The pervasive, fundamental principle of accrual accounting would, in the staff's view, preclude registrants from recognizing the dividend cost on the basis of whatever cash payment schedule might be arranged. Furthermore, recognition of the effective cost of unstated rights and privileges is well-established in accounting, and is specifically called for by FASB ASC Subtopic 835-30, Interest—Imputation of Interest, and Topic 3.C of this codification for unstated interest costs of debt capital and unstated dividend costs of redeemable preferred stock capital, respectively. The staff believes that the requirement to recognize the effective periodic cost of capital applies also to nonredeemable preferred stocks because, for that purpose, the distinction between debt capital and preferred equity capital (whether redeemable FN23 or nonredeemable) is irrelevant from the standpoint of common stock interests. - FN23 Application of the interest method with respect to redeemable preferred stocks pursuant to Topic 3.C results in accounting consistent with the provisions of this bulletin irrespective of whether the redeemable preferred stocks have constant or increasing stated dividend rates. The interest method, as described in FASB ASC Subtopic 835-30, produces a constant effective periodic rate of cost that is comprised of amortization of discount as well as the stated cost in each period. - Question 3: Would the accounting for discounts on increasing rate preferred stock be affected by variable stated dividend rates? - Interpretive Response: No. If stated dividends on an increasing rate preferred stock are variable, computations of initial discount and subsequent amortization should be based on the value of the applicable index at date of issuance and should not be affected by subsequent changes in the index. - For example, assume that a preferred stock issued 1/1/X1 is scheduled to pay dividends at annual rates, applied to the stock's par value, equal to 20% of the actual (fluctuating) market yield on a particular Treasury security in 20X1 and 20X2, and 90% of the fluctuating market yield in 20X3 and thereafter. The discount would be computed as the present value of a two-year dividend stream equal to 70% (90% less 20%) of the 1/1/X1 Treasury security yield, annually, on the stock's par value. The discount would be amortized in years 20X1 and 20X2 so that, together with 20% of the 1/1/X1 Treasury yield on the stock's par value, a constant rate of cost vis-a-vis the stock's carrying amount would result. Changes in the Treasury security yield during 20X1 and 20X2 would, of course, cause the rate of total reported preferred dividend cost (amortization of discount plus cash dividends) in those years to be more or less than the rate indicated by discount amortization plus 20% of the 1/1/X1 Treasury security yield. However, the fluctuations would be due solely to the impact of changes in the index on the stated dividends for those periods. - Question 4: Will the staff expect retroactive changes by registrants to comply with the accounting described in this bulletin? - Interpretive Response: All registrants will be expected to follow the accounting described in this bulletin for increasing rate preferred stocks issued after December 4, 1986. FN24 Registrants that have not followed this accounting for increasing rate preferred stocks issued before that date were encouraged to retroactively change their accounting for those preferred stocks in the financial statements next filed with the Commission. The staff did not object if registrants did not make retroactive changes for those preferred stocks, provided that all presentations of and discussions regarding income applicable to common stock and earnings per share in future filings and shareholders' reports are accompanied by equally prominent supplemental disclosures (on the face of the income statement, in presentations of selected financial data, in MD&A, etc.) of the impact of not changing their accounting and an explanation of such impact (e. g., that dividend cost has been recognized on a cash basis). - FN24 The staff first publicly expressed its view as to the appropriate accounting at the December 3-4, 1986 meeting of the EITF.