Straight from IASA:
* If the issue has a mandatory sinking fund provision and is rated a PSF 1 or PSF 2, then statement value equals cost or amortized cost
* If the ratings are PSF 3, PSF4, PSF 5 or PSF 6 then statement value equals the lowest of cost, amortized cost or market value.
* If the preferred stock issue does not have a mandatory sinking fund provision, if it is a rated P-1 or P-2, it is valued at market value.
* If it is rated P-3, P-4, P-5 or P-6 then it is valued at the lowest of cost or market.
Quote:
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Originally Posted by IASA 9-14
Preferred stocks are valued at cost, amortized cost, lower of cost or amortized cost, or market depending on the rating of the preferred stock by the SVO and whether the preferred stock has mandatory sinking fund provisions. The SVO rates preferred stocks on a sliding scale of 1 through 6 with 1 being the most highly rated (similar to the ratings given to bonds). In addition, for preferred stocks the SVO also includes in the rating either “PSF,” which means that this stock is a preferred with a mandatory sinking fund or “P,” which simply means it is a preferred with no mandatory sinking fund. If the issue has a mandatory sinking fund provision and is rated a PSF l or PSF 2, then statement value equals cost or amortized cost. If the ratings are PSF 3, PSF4, PSF 5 or PSF 6 then statement value equals the lowest of cost, amortized cost or market value. If the preferred stock issue does not have a mandatory sinking fund provision, if it is a rated P-1 or P-2, it is valued at market value. If it is rated P-3, P-4, P-5 or P-6 then it is valued at the lowest of cost or market.
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04-20-2009, 03:32 PM
IASA 9, Q6 on TIA Sample Questions
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