Sabre is a private company reporting under IFRS and incorporated 20 years ago. They have experienced financial
Question:
Sabre is a private company reporting under IFRS and incorporated 20 years ago. They have experienced financial difficulties over the past year and needed to obtain additional financing. Once their financial position has improved they would like to have a public share offering.
It is now November 20x5. Sabre’s fiscal year-end is December 31, 20x5. The Chief Financial Officer, has provided you (Financial Controller) with some accounting issues facing the company for 20x5.
He would like you to prepare a brief memo outlining any alternative accounting policies and your recommendations on the appropriate measurement and disclosure.
Sabre issued preferred shares to investors, who also owned common shares, during 20x5. The preferred shares are currently reported as equity. The preferred shares must be redeemed for cash, or bought back for cash, at their $100 stated value per share, in 20x6. The dividends are cumulative. If there are any dividends in arrears they must be paid before the redemption date.
Again, to conserve cash, Sabre has reduced salaries to top management staff and issued stock options as compensation. Sabre provides note disclosure of their stock options.
Intermediate Accounting Volume 1
ISBN: 9781260306743
7th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod Dick