12. Share Capital (10)
*50,00,000
General Reserve
6,50,000
Securities Premium
5,40,000
Profit & Loss Account
3,75,000
The company issued 5,000 debentures of 100 each at 10% premium to finance buyback. The company decides to buyback 20% of its paid up capital @ 15 each. What amount to be transferred to cap
redemption reserve
Answers
Answered by
1
Answer:
540000 securities premium
Answered by
0
Answer:
Amount to be transferred to capital redemption reserve is 10,00,000 (10×100000 shares)
Explanation:
In the given question
Free reserves available for buyback after debentures issue at premium are
- General reserve 650000
- Securities premium 540000 plus 50000 i.e 590000
- Profit & loss account 375000
The company buy backs 20% of its paid up capital i.e. 100000 shares @15
When the buy back is at premium the amount for buyback is adjusted from free reserves as above i.e. Rs.15,00,000.
Balance in free reserves after buy back i.e. profit and loss account is 115000
As per the buy back rules stated in companies act, the nominal value or par value of share must be transferred to capital redemption reserve after buy back 10,00,000 i.e. 10*100000 shares.
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