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Financial gearing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Financial gearing

  • This topic has 5 replies, 2 voices, and was last updated 3 years ago by AvatarJohn Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • September 5, 2022 at 10:29 am #665211
    AvatarJames124
    Participant
    • Topics: 166
    • Replies: 138
    • ☆☆☆

    Irredeemable preference share would be considered equity and Redeemable preference share will be considered as debt.
    Actually in Kaplan it says considered preference shares as debt so I was confused between redeemable and irredeemable.

    September 5, 2022 at 5:43 pm #665260
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    In financial accounts, your first sentence is correct as to how they are presented in the financial statements.

    However for financial management they are treated as being debt.

    September 7, 2022 at 5:45 am #665511
    AvatarJames124
    Participant
    • Topics: 166
    • Replies: 138
    • ☆☆☆

    So will consider both as debt no matter it is redeemable preference share or irredeemable preference share?

    September 7, 2022 at 8:52 am #665538
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    Correct (for Paper FM).

    September 7, 2022 at 8:56 am #665540
    AvatarJames124
    Participant
    • Topics: 166
    • Replies: 138
    • ☆☆☆

    Thank you.

    September 7, 2022 at 9:23 am #665560
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    You are welcome.

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘Financial gearing’ is closed to new replies.

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