Irredeemable preference share

This topic has 2 replies, 3 voices, and was last updated 10 years ago by Rebecca Singh.

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July 19, 2013 at 5:19 pm #134151
anonguy
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the dividend paid for irredeemable preference share (cumulative and non-cumulative) is it a finance cost in statement of profit or loss or treat it like a normal dividend paid to ordinary share which will be deducted in retained earnings?
July 19, 2013 at 9:06 pm #134155
MikeLittle
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That’s a good question! I keep saying in lectures that I should write to the examiner and ask this very same question! Irredeemable preference shares fit neither into the definition of equity (that element which shares the surplus in a liquidation after all liabilities have been paid in full) nor the definition of a liability (an obligation arising from past events ….)

Fortunately the examiner does not ask this element in the examinations :-)))
June 5, 2016 at 3:24 am #319474
Rebecca Singh
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Redeemable preference share dividends are classified as finance costs (expense) in the Income Statement and irredeemable preference share dividends are classified as dividends and are treated as distribution of profits and reported in Statement of Changes in Equity.
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