Question

Heidi Aurora Imports applies International Financial Reporting Standards. The company issued shares of the company's Class B stock. Heidi Aurora Imports should report the stock in the company's statement of financial position:

A) Common Equity
B) Long-Term Liabilities
C) Current Liabilities
D) Other Comprehensive Income

Answer 1

Heidi Aurora Imports should report the stock in the company's statement of financial position under the category Common Equity.

Step-by-step explanation:

Heidi Aurora Imports should report the stock in the company's statement of financial position under the category Common Equity. This category represents the ownership interest in the company and includes the value of the company's shares issued to shareholders.Reporting stock in the equity section reflects that issuing stock involves selling off company ownership to the public. Unlike borrowing from a bank or issuing bonds, which would place a firm under a commitment to scheduled interest payments, issuing stock does not require such commitments and changes the control structure, making the company responsible to a board of directors and the shareholders. The classification of shares directly affects a firm's financial statements and informs investors and stakeholders about the financial structure of the company.