{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/505/20/#sec-99-sec-materials","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"505","topic_title":"Equity","subtopic":"505-20","subtopic_title":"Stock Dividends and Stock Splits","section":{"number":"S99","label":"SEC 99 SEC Materials","anchor":"sec-99-sec-materials","is_sec":true,"groups":[{"block":null,"heading":"SEC Staff Guidance","paragraphs":[{"citation":"505-20-S99-1","para":"S99-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following is the text of SAB Topic 1.D.2, \"Free Distributions\" by Japanese Companies.<ul class=\"ul simple\" id=\"d3e188340-122773__GUID-BD70D72B-8017-4301-AF1F-44465C8CE251\"><li class=\"li\" id=\"d3e188340-122773__SL6405677-122773\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_FE1A6A5E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Facts: It is the general practice in Japan for corporations to issue \"free distributions\" of common stock to existing shareholders in conjunction with offerings of common stock so that such offerings may be made at less than market. These free distributions usually are from 5 to 10 percent of outstanding stock and are accounted for in accordance with provisions of the Commercial Code of Japan by a transfer of the par value of the stock distributed from paid-in capital to the common stock account. Similar distributions are sometimes made at times other than when offering new stock and are also designated \"free distributions.\" U.S. accounting practice would require that the fair value of such shares, if issued by U.S. companies, be transferred from retained earnings to the appropriate capital accounts. </span></span></div></li><li class=\"li\" id=\"d3e188340-122773__SL6405678-122773\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_FE1A6BFF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Question: Should the financial statements of Japanese corporations included in Commission filings which are stated to be prepared in accordance with U.S. GAAP be adjusted to account for stock distributions of less than 25 percent of outstanding stock by transferring the fair value of such stock from retained earnings to appropriate capital accounts? </span></span></div></li><li class=\"li\" id=\"d3e188340-122773__SL6405679-122773\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_FE1A6D5F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Interpretive Response: If registrants and their independent accountants believe that the institutional and economic environment in Japan with respect to the registrant is sufficiently different that U.S. accounting principles for stock dividends should not apply to free distributions, the staff will not object to such distributions being accounted for at par value in accordance with Japanese practice. </span></span></div></li><li class=\"li\" id=\"d3e188340-122773__SL6405680-122773\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_FE1A6E6A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If such financial statements are identified as being prepared in accordance with U.S. GAAP, then there should be footnote disclosure of the method being used which indicates that U.S. companies issuing shares in comparable amounts would be required to account for them as stock dividends, and including in such disclosure the fair value of any such shares issued during the year and the cumulative amount (either in an aggregate figure or a listing of the amounts by year) of the fair value of shares issued over time. </span></span></div></li></ul></div></div>","snippet":"The following is the text of SAB Topic 1.D.2, \"Free Distributions\" by Japanese Companies.\nFacts: It is the general practice in Japan for corporations to issue \"free distributions\" of common stock to existing shareholders…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:310a10abd4e816173c98a50245c8dd40357a6d25894685813569af5e5cf9d23c","downloaded_from":"2026-09-10T00:37:57.398Z","last_downloaded_at":"2026-09-10T00:37:57.398Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479921","source_sha256":"7bc5d73770de8be27c7f21155dbb5f7d2af28ba59eeeff734bfc658827f4e14a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a876379813d68ae8da286bd188cb314c9d7b8c8be4569879aed1e4526278331c","downloaded_from":"2026-09-10T00:37:57.398Z","last_downloaded_at":"2026-09-10T00:37:57.398Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479921","source_sha256":"7bc5d73770de8be27c7f21155dbb5f7d2af28ba59eeeff734bfc658827f4e14a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6ebb5a45e6a690872a57c06efc6ba32673f737c23a74f95ec2cd2eea4c8ad924","downloaded_from":"2026-09-10T00:37:57.398Z","last_downloaded_at":"2026-09-10T00:37:57.398Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479921","source_sha256":"7bc5d73770de8be27c7f21155dbb5f7d2af28ba59eeeff734bfc658827f4e14a"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6ebb5a45e6a690872a57c06efc6ba32673f737c23a74f95ec2cd2eea4c8ad924","downloaded_from":"2026-09-10T00:37:57.398Z","last_downloaded_at":"2026-09-10T00:37:57.398Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479921","source_sha256":"7bc5d73770de8be27c7f21155dbb5f7d2af28ba59eeeff734bfc658827f4e14a"}}