The chairman of a public limited company has written his annual report to the shareholders,...
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The chairman of a public limited company has written his annual report to the shareholders, extract of which is quoted below: As a measure of confidence in our ability to expand operations in 2013 and 2014, and to provide the necessary financial base, we issued $0.5 million 8% Redeemable Loan Capital, 2007/2013, 20 million 6% $1 Redeemable Preference shares and 4 million $1 Ordinary shares. The opportunity was also taken to redeem the whole of the 5 million 11% Redeemable Preference shares Required: Answer the following questions on the above extract (1) In the description of the loan capital, what is the significance of a. 8%? b. 2007/2013 (2) In the description of the preference share issue, what is the significance of c. 6%? d. Redeemable? (3) Contrast the accounting treatment in the company's income statement of the interest due on the loan capital with dividends proposed on the ordinary shares
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