Under USGAAP,if an Entity Issues 4% Preferred Stock That Gives Shareholders

Multiple Choice

Under U.S.GAAP,if an entity issues 4% preferred stock that gives shareholders the right to redeem the shares if the prevailing interest rates on 5-year certificates of deposit exceed 4%,how should this stock be accounted for on the books of the entity?

A) initially as equity and then reclassified as a liability when the triggering event occurs
B) as a liability since the chances are more likely than not that the triggering event will occur
C) as equity or a liability at the option of the entity
D) as a permanent part of equity,to be debited as shares are redeemed