Problem: In a recent discussion memorandum, Distinguishing between Liability and Equity Instruments and Accounting for Instruments with Characteristics of Both, the FASB addressed the issue of whether redeemable preferred stock is debt or equity.
Required:
Present arguments in favor of presenting redeemable preferred stock as equity. Your arguments should take into consideration definitions of the elements of financial statements in SFAS No. 6 and any other relevant aspects of the conceptual framework, as well as implications regarding the usefulness of financial statement information to investors.