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The FASB's Basic Ownership Approach and a Reclassification of Preferred Stock as a Liability
Sponsored By Georgia Tech Financial Analysis Lab
- Topics:
- Accounting > Accounting Standards , Balance Sheet
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- Abstract:
- In Preliminary Views: Financial Instruments with Characteristics of Equity, the FASB expresses a preference for a basic ownership approach for distinguishing between liabilities and equity. Under this approach, preferred stock, long considered a component of shareholders' equity, would be reported as a liability. If this change takes place, the impact on the balance sheet and income statement, including measures of leverage and interest coverage will be great, especially for companies that have relied heavily on preferred stock for financing.
- DETAILS
- Sponsored by: Georgia Tech Financial Analysis Lab
- Posted: June 18, 2008
- Length: 13 pages
- Format: PDF (110 kb)
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