Initial Measurement of Paid-In-Kind Dividends on Equity-Classified Preferred Stock (BDO Comment Letter)
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On September 30, 2025, the FASB issued an Exposure Draft on the initial measurement of paid-in-kind ("PIK") dividends on equity-classified preferred stock. Under the proposed amendments, PIK dividends would be initially measured based on the dividend rate specified in the preferred stock agreement.
In our comment letter, BDO expressed support for the Board’s proposal, noting that the proposed measurement methodology aligns with current practice and would help reduce diversity in the accounting treatment of PIK dividends for these instruments.