Next Generation Corporation (a private company) has preferred shares outstanding, which require Next Generation to redeem the shares for cash at an amount equal to fair value of the company's business assets at the time of issuance of the preferred shares. The preferred shares are held by Richard Parent (the founder and former president of Parent Corporation), who intends to redeem the preferred shares at some point in the future. At the time of issuance of the preferred shares, Parent had transferred the business assets of Parent Corp. to Next Generation (a newly established corporation at the time) as part of an estate freeze transaction, and received these preferred shares as consideration.
(a) How should the preferred shares be classified on the statement of financial position if Next Generation follows IFRS?
(b) Would the answer to part (a) be different if Next Generation follows ASPE?
(c) Discuss why this type of transaction involving preferred shares is called an "estate freeze."