The classification of preferred stock is always identical under US GAAP and IFRS.

Expert Solution

First let us understand what preference share is. A preference share is the share which receives a fixed dividend and before the common share holders are paid. Also if the company goes into liquidity, the preference share holders will be paid before the common stock holders.

Now coming to the classification part.

US GAAP: A preference share will always be classified as equity where the preeference shares are not mandatorily redeemable. The payment will be shown as dividend here be it a fixed percentage or otherwise. However, only where the preference shares are mandatorily redeemable after a number of years is classified as a financial liability and the payment to preference share holders is recorded as interest expense.

IFRS: The concept under IFRS is different. Under IFRS a preference share is normally reported as a financial liability since it bears a fixed rate of dividend and the dividend paid is recoded as interest expense. However only in case where the payment of preference dividend is not mandatory and is discretionary for indefinite periid, the same may be classified as equity. Where an onus comes on the company to pay dividend, it will be classified as financial liability.

ekkarill92 answered 1 year ago

State how derivatives and changes in their values are reported under US GAAP and IFRS.

Accounting under IFRS and US GAAP is similar for all of the following topics EXCEPT:

US generally accepted accounting principles(GAAP) is similiar but not identical to International Financial Reporting Standards (IFRS)....

US generally accepted accounting principles(GAAP) is similiar but not identical to International Financial Reporting Standards (IFRS). Please compare and contrast their financial accounting guidelines. Typed answer please.

Compare the IFRS to the US GAAP. What is the current situation regarding the IFRS?

why would it be advantageous for us gaap and ifrs to be the same

1. How do IFRS and U.S. GAAP differ with respect to the classification of debt that...

1. How do IFRS and U.S. GAAP differ with respect to the classification of debt that is expected to be refinanced? 2. What is the difference between the use of the term contingent liability in U.S. GAAP and IFRS? Thank you!

US GAAP vs IFRS Express your opinion on the the issue of whether the US should...

US GAAP vs IFRS Express your opinion on the the issue of whether the US should adopt IFRS and supporty your opinion with reasons and pros and cons of adoption. If you like, please read the first two sections of "IFRS 2018 Interpretation and application of International financial reporting standards" in order to answer the question. Thank you

Composite depreciation is allowed under GAAP but is rarely used. Under IFRS it is required. Should...

Composite depreciation is allowed under GAAP but is rarely used. Under IFRS it is required. Should composite depreciation be required or allowed or prohibited? Defend your answer and remember, it is allowed under GAAP but rarely used.

Explain the difference between IFRS and US GAAP in terms of inventory management..

Summarize IFRS/GAAP differences from the following: Differences • Presentation of the income statement under GAAP follows...

Summarize IFRS/GAAP differences from the following: Differences • Presentation of the income statement under GAAP follows either a single-step or multiple-step format. IFRS does not mention a single-step or multiple-step approach. • Under IFRS, companies must classify expenses by either nature or function. GAAP does not have that requirement, but the SEC requires a functional presentation. • IFRS identifies certain minimum items that should be presented on the income statement. GAAP has no minimum information requirements. However, the SEC rules...

Question