Definition
Temporary Equity – A balance-sheet category sitting between total liabilities and permanent stockholders' equity, used for instruments (typically preferred stock) that have equity-like features but also carry a redemption right outside the company's control — for example, preferred shares redeemable at the holder's option, or automatically upon a change of control. Because redemption isn't fully within management's control, accounting rules bar classifying the instrument as permanent equity, even though it behaves like equity in every other respect until redeemed or converted. Found In: Balance Sheet (between "Total Liabilities" and "Stockholders' Equity/Deficit")