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MEANING OF INADEQUATE PROFIT FOR GIVING REMUNERATION

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(Querist)
11 July 2009 PLEASE TELL THE MEANING OF INADEQUATE PROFIT FOR GIVING REMUNERATION
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
11 July 2009 When the company earns cash loss in any year then it is termed as inadequate profit.

For eg.

Sales 10 Lakhs
Exp 12 Lakhs
LOss 2 Lakhs (inadequate profits)

Sales 10 Lakhs
Exp 7 Lakhs
Depn. 5 Lakhs
Loss 2 Lakhs
Cash Profit (loss + depn.) 3 Lakhs
(adequate profits available)
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
11 July 2009 When the company earns cash loss in any year then it is termed as inadequate profit.

For eg.

Sales 10 Lakhs
Exp 12 Lakhs
LOss 2 Lakhs (inadequate profits)

Sales 10 Lakhs
Exp 7 Lakhs
Depn. 5 Lakhs
Loss 2 Lakhs
Cash Profit (loss + depn.) 3 Lakhs
(adequate profits available)
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
11 July 2009 When the company earns cash loss in any year then it is termed as inadequate profit.

For eg.

Sales 10 Lakhs
Exp 12 Lakhs
LOss 2 Lakhs (inadequate profits)

Sales 10 Lakhs
Exp 7 Lakhs
Depn. 5 Lakhs
Loss 2 Lakhs
Cash Profit (loss + depn.) 3 Lakhs
(adequate profits available)
Profile Image

CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
11 July 2009 When the company earns cash loss in any year then it is termed as inadequate profit.

For eg.

Sales 10 Lakhs
Exp 12 Lakhs
LOss 2 Lakhs (inadequate profits)

Sales 10 Lakhs
Exp 7 Lakhs
Depn. 5 Lakhs
Loss 2 Lakhs
Cash Profit (loss + depn.) 3 Lakhs
(adequate profits available)
Profile Image

CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
11 July 2009 When the company earns cash loss in any year then it is termed as inadequate profit.

For eg.

Sales 10 Lakhs
Exp 12 Lakhs
LOss 2 Lakhs (inadequate profits)

Sales 10 Lakhs
Exp 7 Lakhs
Depn. 5 Lakhs
Loss 2 Lakhs
Cash Profit (loss + depn.) 3 Lakhs
(adequate profits available)
Profile Image

CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
11 July 2009 When the company earns cash loss in any year then it is termed as inadequate profit.

For eg.

Sales 10 Lakhs
Exp 12 Lakhs
LOss 2 Lakhs (inadequate profits)

Sales 10 Lakhs
Exp 7 Lakhs
Depn. 5 Lakhs
Loss 2 Lakhs
Cash Profit (loss + depn.) 3 Lakhs
(adequate profits available)
Profile Image

CA. B.SRINIVASULU

Profile Image

CA. B.SRINIVASULU (Expert)
11 July 2009 When the company earns cash loss in any year then it is termed as inadequate profit.

For eg.

Sales 10 Lakhs
Exp 12 Lakhs
LOss 2 Lakhs (inadequate profits)

Sales 10 Lakhs
Exp 7 Lakhs
Depn. 5 Lakhs
Loss 2 Lakhs
Cash Profit (loss + depn.) 3 Lakhs
(adequate profits available)
Upgrade to CAclubindia Pro. Subscribe Now!

Profile Image

CA. B.SRINIVASULU

Profile Image

CA. B.SRINIVASULU (Expert)
11 July 2009 When the company earns cash loss in any year then it is termed as inadequate profit.

For eg.

Sales 10 Lakhs
Exp 12 Lakhs
LOss 2 Lakhs (inadequate profits)

Sales 10 Lakhs
Exp 7 Lakhs
Depn. 5 Lakhs
Loss 2 Lakhs
Cash Profit (loss + depn.) 3 Lakhs
(adequate profits available)
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Ankur Garg

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Ankur Garg (Expert)
13 July 2009 Hi Gaurav,

Lets discuss in a simple way:

Suppose in a financial year your profit are: Rs. 10,00,00,000

Remuneration of M.D. is Rs. 50,00,000 i.e. 5%. Till now everything is fine.

============================================

Now suppose in the next financial year profit fall to Rs. 8,00,00,000.

and remuneration remain the same i.e. Rs. 50,00,000. Now % of remuneration will automatically increase to 6.25%.

This is called inadequate profit as far as remuneration provisions are concerned.

Best Regards

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