November 19, 2009

EITF Reaches Consensus to Account for Elective Stock/Cash Dividends as a Stock Issuance

On November 19, 2009, the Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (ETIF) reached a consensus that the stock portion of elective stock/cash dividends would be accounted for as a stock issuance. This accounting treatment would include the stock portion of the dividend arrangement prospectively in reported per share amounts. The stock portion would be considered contingently issuable shares until paid under the current earnings per share guidance. The EITF also concluded that companies would report the stock portion of these elective dividends as a liability on the balance sheet when there is an obligation to pay shareholders in stock. The EITF will provide further guidance for the accounting and reporting of these liabilities at a later time. If the EITF's consensus is ratified by the FASB, it would be effective for interim and annual periods ending on or after December 15, 2009.

Under 2008 and 2009 IRS Revenue Procedures, the elective stock/cash dividends are available to listed REITs to satisfy their dividend requirements through 2009. The REITs that have previously offered these elective stock/cash dividends to their shareholders have equally accounted for the stock portion of the dividends on a retrospective or prospective basis when reporting per share amounts. As a result of the diversity in reporting these dividends, the EITF examined this presentation issue, including the effects of the dividends on the calculation of per share amounts. On September 30, the EITF exposed for public comment its original position to apply the stock portion of these dividends retrospectively. NAREIT urged members to provide their views to the EITF on the proposal. As a result of the users' views and comment letters received that favored the prospective treatment, the EITF reversed its initial decision and concluded that the stock portion of the dividends would be reported prospectively in per share amounts.


For further information, please contact Sally Glenn at or George Yungmann at
NAREIT® does not intend this publication to be a solicitation related to any particular company, nor does it intend to provide investment, legal or tax advice. Investors should consult with their own investment, legal or tax advisers regarding the appropriateness of investing in any of the securities or investment strategies discussed in this publication. Nothing herein should be construed to be an endorsement by NAREIT of any specific company or products or as an offer to sell or a solicitation to buy any security or other financial instrument or to participate in any trading strategy. NAREIT expressly disclaims any liability for the accuracy, timeliness or completeness of data in this publication. Unless otherwise indicated, all data are derived from, and apply only to, publicly traded securities. All values are unaudited and subject to revision. Any investment returns or performance data (past, hypothetical, or otherwise) are not necessarily indicative of future returns or performance. © Copyright 2009 National Association of Real Estate Investment Trusts®. NAREIT® is the exclusive registered trademark of the National Association of Real Estate Investment Trusts.

Follow us on:  YouTube Facebook Twitter RSS Feeds:   Video RSS Articles RSS