We've cancelled some preference shares & converted them into ordinary shares. The new ordinary shares have the same nominal value as the original preference shares.
But the preference shares were accounted partly as a liability as per FRS 25.
The sum of the equity element of the preference shares plus the remaining liability (ie the accounting value) is less than the nominal value of the preference shares.
1) How to account for the difference in values? (P&L for the year, P&L reserve, share premium, other reserve)
2) Other than 1), Is the double-entry below correct?
Dr FRS liability
Dr Preference share capital
Dr ? (Difference between liability + prefs - ords)
Cr Ordinary share capital
Chris Jones