Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 15-10 a. Cumulative . Dividends not paid in any year must be made up in a later year before any profits can be distributed to common shareholders. Unpaid annual dividends on cumulative preferred shares are referred to as dividends in arrears and, if they exist, must be disclosed in a note to the financial statements. b. Participating . Preferred shares that are participating share proportionately with the common shareholders in any profit distribution beyond a prescribed amount. c. Convertible . Preferred shareholders may, at their option, exchange their preferred shares for common shares based on a predetermined ratio. d. Callable . At the option of the issuing corporation, preferred shares can be redeemed at specified future dates and at stipulated prices. e. Retractable . The holder, at his or her option, may sell the shares back to the issuing company, usually at specified prices at specified times.
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