ASU 2026-01: Initially Measuring Paid-in-Kind Dividends on Equity-Classified Preferred Stock

On April 23, 2026, the FASB issued Accounting Standards Update (ASU) 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. Current U.S. generally accepted accounting principles (U.S. GAAP) does not address how an issuer should initially measure paid-in-kind (PIK) dividends on equity-classified preferred stock, resulting in diversity in practice. Issuers measure PIK dividends on equity-classified preferred stock using various practices, such as:

• At the fair value of the additional preferred stock issuable on the date