IAS 32 requires that subscription capital of co-operatives be treated as liabilities instead of equity since they're repayable on demand. This'll lead to some co-ops having negative equity. Because of this, there is a Liability/Equity project on now, but in the meantime, there's an ED proposing a quick fix. This ED provides limited exceptions to the financial liability definition in IAS 32 to give relief to certain entities with financial instruments that are akin to equity (eg partnerships, co-operative entities and mutual funds in particular). The ED proposes that financial instruments puttable at fair value should be classified as equity, provided that specific criteria are met.
My question is, if some capital is treated as liabilities, in the event of dissolution, what is the ranking order of repayment of contributions? Are members ranked with creditors? If so, among the creditors how are they ranked?
2007-11-16
15:55:08
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2 answers
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asked by
Sandy
7
in
Other - Business & Finance