Question

Balance of capital reduction is utilized to ?

Answer 1

Answer:

Capital Reduction/Reconstruction Account is used for reducing share capital, paying/waiving off liabilities or revaluation of assets in order to write off unnecessary items such as P/L (Dr), Goodwill, Fictitious assets etc.

Answer 2

Introduction:

Capital reduction is the process of lowering a company's shareholder equity through share cancellations and repurchases, often known as share buybacks.

Explanation:

Companies reduce capital for a variety of objectives, including enhancing shareholder value and developing a more efficient capital structure. The Capital Reduction/Reconstruction Account is used to reduce share capital, pay/waive off liabilities, or revalue assets in order to write off superfluous things such as P/L (Dr), Goodwill, Fictitious assets, and so on.