On July 1, 2017, the company issued 20,000 preferred shares for $10 per share to

Question

On July 1, 2017, the company issued 20,000 preferred shares for $10 per share to an investment bank. Each preferred share is convertible for a fixed number of common shares and has a mandatory 5% annual dividend that must be paid on December 31 of each fiscal year. These preferred shares must be redeemed by the company for cash if the market price of common shares exceeds $10 per share. Currently, the common shares are in trading range around $6 per share. How many dividend should be pay at Dec 31 2017 according to IFRS

Explanation / Answer

Dividend payment as at 31st December 2017 is = Number of prefference shares * value per share * annual dividend %

Dividend Payment is = 20000*10*5%

Dividend Payment is = $ 10,000 /-

Since the prefference shares are not converted till 31st December 2017, dividend is paid as at 31st December 2017.

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