Liability or equity?

The new Canadian Institute of Chartered Accountants (CICA) Handbook Section 3860, 'Financial instruments - disclosure and presentation,' took effect on Jan. 1, 1996. It pertains to key changes to previous practice for the classification of financial instruments between liabilities and equity. The Emerging Issues Committee Abstract No. 69, 'Recognition and measurement of financial instruments presented as liabilities or equity under CICA 3860,' underscores the impact of the changes on 'high/low' redeemable preferred shares commonly issued in estate freeze arrangements in private firms.