According to the FASB, redeemable preferred stock should be
A) included with common stock.
B) included as a liability.
C) excluded from the stockholders' equity heading.
D) included as a contra item in stockholders' equity.

Question

Quizplus · Accepted Answer

Redeemable preferred stock should be included as a liability because the issuing company has an obligation to redeem the stock at a future date for a predetermined amount. It is not considered part of stockholders' equity because it is more like a debt instrument than an ownership interest in the company.

According to the FASB, Redeemable Preferred Stock Should Be