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Preference shares

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Preference shares

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by Stephen Widberg.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 3, 2023 at 8:10 am #692771
    RobertLangdon
    Participant
    • Topics: 5
    • Replies: 4
    • ☆

    Hi, Please help me with this case.

    Company A has an investment in Company B in the form of preference shares with no obligation to pay dividends but gives Company A the right to free using some of Company B’s infrastructure.
    Should I classify this as an equity instrument or debt instrument in the Company’s financial statements applying IAS 32 and IFRS9, in both conditions of redeemable shares and irredeemable shares ?

    Many thanks!

    October 4, 2023 at 9:01 am #692807
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3404
    • ☆☆☆☆☆

    Which exam question is this please – I don’t recognise the scenario (or understand the word infrastructure)?

    If you are asking out of curiosity, company B will record a financial liability if there is a contractual obligation to deliver cash or ANOTHER FINANCIAL ASSET

    🙂

    October 8, 2023 at 5:11 am #692916
    RobertLangdon
    Participant
    • Topics: 5
    • Replies: 4
    • ☆

    The word infrastructure here means house, pool, yard…
    The investment in preference gives the investor the right to use these for free
    So does this count as a financial asset, or just or policy benefit given to the investor?
    Then how should i recognise these investment, financial liability or equity instrument, in each case of irredeemable and redeemable preferen shares ?
    Many thanks !

    October 8, 2023 at 6:51 am #692918
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3404
    • ☆☆☆☆☆

    As stated earlier, I’m not sure this is an exam question. If you are asking from curiosity, apply the definition in my last post.

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    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Preference shares’ is closed to new replies.

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