Preference Shares - FA — OpenTuition Forums

EEllis3y ago

Hello and Happy New Year! iI'm working my way through the BP revision kit and am on question 44.4, The questions asks: Which of the following may appear as Current Liabilities for a company in the SOFP? One of the multiple choice answers has come up as 'Preference Dividends payable on redeemable preference shares'... I was under the impression that these according to the Open Tuition manual were effectively the same as long-term loans and would go under the heading NCL in the SOFP. However, BPP seems to take a different view? Please clarify. Thanks!

John MoffatTutor3y ago#1

There is not OpenTuition manual :-) I assume that you are referring to our lecture notes (and that you have watched the lectures that are needed to go with the lecture notes). The preference shares themselves are a non-current liability, but the dividends payable on the preference shares are payable yearly (or more often every six months depending on the agreement). Therefore any preference dividends owing will always be a current liability.

EEllis3y ago#2

Yes, of course i have watched the online lecture and read through the notes :) That makes a lot of sense! Thanks

John MoffatTutor3y ago#3

You are welcome :-)

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