14 October 2013
If a co. wants to buy back 100000 equity share of rs. 10 each. for this purpose co. issued 2000 debenture @100 each and preference share 5000 @ 100 each. then plz tell from what amount we will create CRR.
14 October 2013
Where a company purchases is on shares out of free reserves then a some equals to the nominal value of the shares so purchased shall be transferred to the capital Redemption reserve amount and details of such transfer shall be disclosed in the balance sheet.
In your case Rs.3,00,000 will be transferred to CRR...
14 October 2013
You can utilise the CRR balance for writing off the premium on redemption of preference shares.. Instead of debiting P/L, U can dr CRR..
Ins intead of redeeming at 10 if you have redeemed it at 110..
then the entry would as follows..
Redeemable Prep share Capital A/c. 10,00,000 Premium on redemption A/c. 1,00,000 To Prep shareholder 11,00,000
15 October 2013
aryan as u told that we will create CRR with 300000 but in CS Scanner issue of debenture is not considered fresh issue. fact is we can buy back or redeem by fresh issue of share or from free reserve and surplus.. then why we consider the issue of debenture as a fresh issue.
15 October 2013
Sources of Buy Back Section 77B provides three sources to Buy Back its own shares or other specified securities out of three sources: Free reserves
Securities premium account
Proceeds of an earlier issue of shares or other specified securities.
[Section 77A(l), The Company's Act 1956]. Buy back of any kind of shares is not allowed out of the proceeds of any earlier issue of the same kinds of shares.
In such a case buy back generally done with the proceeds of Equity or Prep shares..
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