According to the FASB ASC, redeemable preferred stock should be
A) Included in the common stock section.
B) Included as a liability.
C) Excluded from the stockholders' equity section.
D) Included as a contra item in the stockholders' equity section.

Question

Quizplus · Accepted Answer

The FASB ASC specifies that redeemable preferred stock should be classified as a liability instead of as stockholders' equity because it contains a redemption feature that gives the holders the right to receive their investment back at a future date, similar to a debt instrument. Therefore, it should be reported separately from other equity instruments such as common stock.

According to the FASB ASC, Redeemable Preferred Stock Should Be