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I hope you are doing well.
I’ve a question from chapter Financial assets and financial liabilities.
On 1/4/x7, a company issues 40,000 $1 redeemable preference shares with a coupon rate of 8% at par. They are redeemable at a large premium which gives them an effective finance cost of 12% p.a
How these redeemable preference shares appear in SFP for years ending 31/3/x8 and 20×9?
I’ve no problem doing the calculation but just a bit confused of how it is treated in the SFP. So, according to the answer 41,600 (20×8) and 43,392 (20×9) are both treated as non current liability. May I know why both years are treated as non current liability?
Why would you wish to classify them as current liabilities? The debt is redeemable in more than a year presumably so classified as a non-current liability.