Which of the following is/are true?

Question

Quizplus · Accepted Answer

- A) Under both U.S. GAAP and IFRS, preferred stock that is redeemable only at the option of the issuing firm is classified as equity because the firm is not obligated to pay the shareholders.- B) Both U.S. GAAP and IFRS classify preferred stock that is subject to mandatory redemption as a liability because there is a contractual obligation to transfer economic benefits.- C) U.S. GAAP allows for a unique classification where preferred stock that can be redeemed at the option of the shareholder is not classified strictly as equity or liability but in a mezzanine section between the two, reflecting its conditional obligation.- D) IFRS treats preferred stock that can be redeemed at the option of the shareholder as a financial liability because it represents a present obligation to transfer economic benefits.

Which of the Following Is/are True