Where preference shares are redeemable at the discretion of the issuer, and shareholders have not been advised of the company's intention to redeem the shares they:
A) meet the definition of a liability.
B) represent debt.
C) are recognised as equity.
D) are recognised as a financial liability.

Question

Quizplus · Accepted Answer

Preference shares that are redeemable at the discretion of the issuer and for which shareholders have not been advised of the company's intention to redeem are recognized as equity because they do not obligate the company to transfer economic resources to the shareholders.

Where Preference Shares Are Redeemable at the Discretion of the Issuer