Which of the following is/are true regarding the classification of redeemable preferred shares on the balance sheet?
A)The classification of redeemable preferred shares on the balance sheet depends on the conditions for redemption.
B)If only the issuing firm has the option to redeem, then the preferred shares are part of its shareholders' equity.
C)If the issuing firm must redeem the preferred shares (so-called "mandatory redemption"), either at a specified time or upon a specified condition certain to occur, the issuing firm treats the preferred shares as a liability.
D)If the preferred shareholders have the option to require redemption, then the preferred shares appear between liabilities and shareholders' equity under U.S.GAAP and as a liability under IFRS.
E)all of the above

Question

Quizplus · Accepted Answer

All of the statements are true regarding the classification of redeemable preferred shares on the balance sheet. The classification depends on the conditions for redemption, if only the issuing firm has the option to redeem then the preferred shares are part of its shareholders' equity, if the issuing firm must redeem the preferred shares (so-called "mandatory redemption"), either at a specified time or upon a specified condition certain to occur, the issuing firm treats the preferred shares as a liability, and if the preferred shareholders have the option to require redemption, then the preferred shares appear between liabilities and shareholders' equity under U.S.GAAP and as a liability under IFRS.

Which of the Following Is/are True Regarding the Classification of Redeemable