Read the case study below. Using the AREA framework, decide whether the Class A common (ie. ordinary) shares may be reported in shareholders’ equity. Explain the application of relevant passages from AASB 132 and the Conceptual Framework to the Class A Common Shares, making specific connections between wording in in the standards and framework with the features of the shares. In class, discuss your answers in your group and come up with a group consensus of what the accountant should advise the company to do.
Do you agree with the proposed classification of the Class A shares as equity? In your answer refer to relevant accounting standards.