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Redeemable preference shares issued at a premium

This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.

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January 18, 2018 at 6:55 am #430973
Anonymous
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A redeemable preference share is issued at a premium. The redeemable preference is to be classified as a liability. Is the full amount of the redeemable preference shares (par + premium) be classified as liability or only the par value is classified as liability while the premium is classified as equity?
January 18, 2018 at 7:29 am #430978
MikeLittle
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If the share is issued at a premium and only the nominal value is repayable on redemption date, the journal entry to record the issue would be:
Dr Cash $105 (assuming $5 premium)
Cr Preference Shares account $100
Cr Share Premium account $5
OK?
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