Financial Assets and Financial Liabilities

Question 1

If preference shares contain no obligation to make payment, what are they classed as?

Answer 1

Equity

Question 2

If preference shares are redeemable, or have a fixed cumulative dividend, what are they classed as?

Answer 2

A financial liability

Question 3

Where do dividends on instruments go?

Answer 3

They are classed as a liability, and so are a finance cost in the profit or loss