The Bockster Company issues $20 million of preferred shares on January 1, Year 1, at par value.

Question:

The Bockster Company issues $20 million of preferred shares on January 1, Year 1, at The preferred shares have a 5 percent fixed annual cash dividend.
Part A. The preferred shareholders have the option to redeem the preferred shares for cash equal to any time after January 1, Year 2.
Required:
Discuss how Bockster should account for these redeemable preferred shares.
Part B. The preferred shareholders do not have the option to redeem the preferred shares, but instead have the option to convert the preferred shares into a fixed number of shares of any time after January 1, Year 2.
Required:
Discuss how Bockster should account for these convertible preferred shares.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...