Under IFRS, which of the following statements is true?
A)Preferred shares must be classified as debt.
B)Preferred shares must be classified as equity.
C)Preferred shares can be classified as debt or equity depending on the rights attached to them.
D)Preferred shares can be classified as debt or equity at the option of the issuing company.

Question

Quizplus · Accepted Answer

Under IFRS, the classification of preferred shares as either debt or equity depends on the specific rights and obligations attached to them. If the preferred shares have characteristics similar to debt, such as a mandatory redemption requirement, they are classified as debt. If they resemble equity, such as having discretionary dividends, they are classified as equity.

Under IFRS, Which of the Following Statements Is True