Arguments in favour of presenting redeemable preferred stock as a liability
According to SFAS 150, a mandatorily redeemable preferred stock should be reported as liabilities in the statement of financial position. This is unlike other types of preferred stock that are reported as equity in the stockholders’ equity section of the balance sheet. There are several arguments for the presentation of preferred stock as equity. Below is a discussion of why redeemable preferred stock should be presented as equity in the balance sheet. Firstly, the definition of redeemable preferred stock shows that it is more of equity than debt. It is defined as preferred stock that allows the issuer to ...
