Companies recognize a gain or loss when shareholders exercise convertible preference shares.

Name: Companies recognize a gain or loss when shareholders exercise convertible preference shares.
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Question

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When shareholders exercise convertible preference shares, the company does not recognize a gain or loss. Instead, the conversion is treated as an equity transaction, where preference shares are converted into common shares, affecting the equity structure but not the income statement.

Companies Recognize a Gain or Loss When Shareholders Exercise Convertible