Motion Ltd issued $5 million in redeemable preference shares in a private placement on 1 July 2012.The shares are redeemable on 30 June 2016,have no voting rights and offer a fixed rate of return to the holder.The shares are redeemed as expected with a fresh issue of shares.What are the accounting entries and note disclosures to record the transactions on 1 July 2012and 30 June 2016?
A) Note disclosure: redeemable preference shares have characteristics different to ordinary shares and so have been disclosed separately in the shareholders' funds section of the statement of financial position.
B) Note disclosure: redeemable preference shares have characteristics different to ordinary shares and so have been disclosed separately in the shareholders' funds section of the statement of financial position.
C) Note disclosure: redeemable preference shares have the characteristics of debt and so have been classified as liabilities in the statement of financial position.
D) Note disclosure: redeemable preference shares are to be redeemed on 30 June 2008.

Question

Motion Ltd issued $5 million in redeemable preference shares in a private placement on 1 July 2012.The shares are redeemable on 30 June 2016,have no voting rights and offer a fixed rate of return to the holder.The shares are redeemed as expected with a fresh issue of shares.What are the accounting entries and note disclosures to record the transactions on 1 July 2012and 30 June 2016?
A) Note disclosure: redeemable preference shares have characteristics different to ordinary shares and so have been disclosed separately in the shareholders' funds section of the statement of financial position. 
B) Note disclosure: redeemable preference shares have characteristics different to ordinary shares and so have been disclosed separately in the shareholders' funds section of the statement of financial position. 
C) Note disclosure: redeemable preference shares have the characteristics of debt and so have been classified as liabilities in the statement of financial position. 
D) Note disclosure: redeemable preference shares are to be redeemed on 30 June 2008.

Quizplus · Accepted Answer

The Answer of Motion Ltd issued $5 million in redeemable preference shares in a private placement on 1 July 2012.The shares are redeemable on 30 June 2016,have no voting rights and offer a fixed rate of return to the holder.The shares are redeemed as expected with a fresh issue of shares.What are the accounting entries and note disclosures to record the transactions on 1 July 2012and 30 June 2016?
A) Note disclosure: redeemable preference shares have characteristics different to ordinary shares and so have been disclosed separately in the shareholders' funds section of the statement of financial position. 
B) Note disclosure: redeemable preference shares have characteristics different to ordinary shares and so have been disclosed separately in the shareholders' funds section of the statement of financial position. 
C) Note disclosure: redeemable preference shares have the characteristics of debt and so have been classified as liabilities in the statement of financial position. 
D) Note disclosure: redeemable preference shares are to be redeemed on 30 June 2008.

Motion Ltd Issued $5 Million in Redeemable Preference Shares in a Private