In one of its first acts in a busy New Year, the Financial Accounting Standards Board (FASB) has just released Accounting Standards Update No. 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash, an amendment to the FASB Accounting Standards Codification™, the authoritative source for applying FASB-recognized, GAAP principles to non-governmental entities.
The objective of the new update: to address the diversity of practice in accounting for certain combined stock/cash distributions to shareholders. The amendments clarify that the stock portion is considered an issuance of shares and not a stock dividend for purposes of applying accounting topics, Equity and Earnings per Share. The new guidance is effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis.
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