Which ONE of the Following Statements Is NOT True About

question 89

Multiple Choice

Which ONE of the following statements is NOT true about preferred stock?

• A) Preferred dividend payments are fixed amounts paid regularly by the firm, similar to the interest payments on corporate bonds.
• B) Preferred dividends are deductable from taxable income just like the interest on bonds.
• C) Preferred stock holders have limited voting privileges relative to common-stock owners.
• D) While preferred stock is legally classified as perpetuities, some issues do have a fixed maturity.

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Definitions:

Cost Model

An accounting method that values an asset based on its historical cost less any accumulated depreciation and impairment losses.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use.

Recoverable Amount Test

A financial assessment to determine the higher of an asset's fair value less costs of disposal and its value in use.

Fair Value

What is expected as profit from selling an asset or what is required as payment to transfer a liability in a smooth market transaction on the established measurement date.