Preference shares,as noted in AASB 132:
A) should be regarded as debt when redemption is at the option of the holder or on a specified date.
B) will be classified as debt or equity based on their legal form rather than the substance of the financial instrument.
C) exhibit the characteristics of equity when they are non-redeemable.
D) will have their classification as debt or equity affected by the intention to make distributions in the future.

Question

Quizplus · Accepted Answer

Preference shares should be regarded as debt when redemption is at the option of the holder or on a specified date, as this creates an obligation to deliver cash or another financial asset, which is a characteristic of a financial liability.

Preference Shares,as Noted in AASB 132