Equity Problem #2

Part A.

The Bockster Company issues $20 million of preferred stock
(preference shares using IFRS terminology) on January 1, 2010 at
par value. The preferred stock has a 5% fixed annual cash dividend
and can be redeemed at the option of the holder for a fixed amount
of cash at any time.

Required:    Discuss how Bockster
should account for this preferred stock under IFRS.

Part B.

Now assume the preferred stock is not redeemable, but instead is
convertible into a fixed number of shares of common stock at the
option of the holder at any time.

Required:    Discuss how Bockster
should account for this preferred stock under IFRS.