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The course notes didn’t talk about “Irredeemable Preference Shares” but I saw a question on it in the study kit.
Please anyone can explain this I would be very grateful.
Preference share are share that get a fixed dividend.
(So 10% $1 preference shares get a fixed dividend of 10c each year)
The word ‘redeemable’ means repayable, and so ‘irredeemable’ means never repayable.
ORDINARY SHARE AND PREFFERENCE SHARE BOTH COMES IN WHICH SECTION :
A. BALANCE SHEET
B. ST OF CHANGES IN EQUITY
C. ST OF CASH FLOW
D. BOTH A AND Bcorrect answer is D.
i suggest you to also read your study text…The course notes are pretty helpful but they can’t be replaced with ur textbook..
there is a question 207 in kaplan revision kit. It takes only ordinary shares in st of changes in equity. little bit confusing!
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yeah its fact but one thing which i havnt seen anywhere, what is the accounting treatment of irredeemable preference shares, roger that and m waiting for ur humble response.
Redeemable shares are classified as a liability on the statement of financial position.
Irredeemable shares are classified as equity on the statement of financial position.Extracts from the accounting records of Andratx Co relating to the year ended 31 December 20X6 are as follows:
Revaluation surplus $230,000 Equity interim dividend paid $12,000 Profit before tax $178,000 Estimated tax liability for year $45,000 8% $1 Preference shares $100,000 Under provision for tax in previous year $5,600 Proceeds of issue of 2,000 $1 equity shares $5,000 Final equity dividend proposed $30,000 What was the total of equity reported in the statement of changes in equity at 31 December 20X6?
A $312,400 B $356,000 C $348,000 D $342,400
What is the correct answer ?
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