Preferred Stock Dividend Accounting Clarified by US Board (1)

Companies gained more clarity Thursday on how to account for certain dividends they pay out to shareholders in their financial reports.

The Financial Accounting Standards Board issued final guidance to fill a hole in the US rulebook that has led to inconsistent information across companies. The update—the board’s first to be released in 2026—gives issuers direction on how they should initially measure paid-in-kind dividends on equity-classified preferred stock.

The update “will enhance the comparability of financial information,” FASB Chair Richard Jones said in a statement.

Board members voted in December to finalize the targeted plan after it garnered ...