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I cant see the difference between irredeemable shares and a loan note….
is it that irred shares are accounted for by accounting entries similar to ordinary shares? even if so, this wd justt be mechanics.
what is the basic difference?
Irredeemable preference shares are accounted for in the same way as ordinary shares and appear as equity on the Statement of financial position.
The money is never repayable (irredeemable) and the holders of them will receive a fixed dividend each year (unlike ordinary shares where the dividend changes).Loan notes is just like raising a loan (borrowing money) – its simply that they borrow the money from lots of different people instead of it all coming from one place.
The money will be repayable (they say when, when they borrow the money). They will pay interest each year. Because they are really just a loan, they appear as a non-current liability in the Statement of financial position.
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