A Preference Share Is a Financial Liability

question 37

Multiple Choice

A preference share is a financial liability:

• A) if it provides for mandatory redemption by the issuer for a fixed or determinable amount at a fixed or determinable future date.
• B) if it gives the holder the right to require the issuer to redeem the instrument at or after a particular date for a fixed or determinable amount.
• C) if it gives the issuer the sole discretion to redeem the instrument at a date of their choice for a fixed or determinable amount.
• D) if it provides for mandatory redemption by the issuer for a fixed or determinable amount at a fixed or determinable future date and if it gives the holder the right to require the issuer to redeem the instrument at or after a particular date for a fixed or determinable amount.

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Definitions:

Financial Statement Line Item

A financial statement line item refers to any single entry that appears in the financial statements, representing financial numbers or details.

Trend Statements

Financial reports or analyses that track the progress, direction, or movements of specific metrics or indicators over periods.

Stability

The degree to which an economy, market, or financial asset experiences minimal fluctuations and maintains a consistent performance over time.

Growth And Decline

Refers to the phases in the business cycle or individual investments where they experience an increase in value (growth) or a decrease in value (decline).