Armstrong Co. (a specialty bike-accessory manufacturer) is expecting growth in sales of some products targeted to the low-price market. Armstrong is contemplating a preference share issue to help finance this expansion in operations. The company is leaning toward preference shares because ownership will not be diluted, but the investors will get an extra dividend if the company does well. The company management wants to be certain that its reporting of the transaction is transparent to its current shareholders and wants you to research the disclosure requirements related to its capital structure. Armstrong Company uses IFRS to prepare their financial statements.

Identify the authoritative literature that addresses disclosure of information about capital structure. What information about share capital must companies disclose? Discuss how Armstrong should report the proposed preference share issue.

Armstrong Co. (a specialty bike-accessory manufacturer) is expecting growth in sales of some products targeted to the low-price market. Armstrong is contemplating a preference share issue to help finance this expansion in operations. The company is leaning toward preference shares because ownership will not be diluted, but the investors will get an extra dividend if the company does well. The company management wants to be certain that its reporting of the transaction is transparent to its current shareholders and wants you to research the disclosure requirements related to its capital structure. Armstrong Company uses IFRS to prepare their financial statements.

Identify the authoritative literature that addresses disclosure of information about capital structure. What information about share capital must companies disclose? Discuss how Armstrong should report the proposed preference share issue.