shreyans jain (ABC) (192 Points)
22 September 2011Can anyone tell me if there is any order of (Priortiness) transfer from free Reserves to CRR (if any one of them is not sufficent) ie. the amount equivalent to nominal value of the shares bought back in case follwing Reserves are given:
1. Security Premum A//c
2. General Reseve
3. P/L A/c (Cr)
Or we can Assume as We like?
CA RICHA BADALIA
(CA,CS)
(1682 Points)
Replied 22 September 2011
According to me no such priority list is mentioned in 77A. but generally free reserves ie GR and PL is utilised first and then balance in Securites Premium A/c.
shreyans jain
(ABC)
(192 Points)
Replied 22 September 2011
@ Richa Mam,
Thanks a lot , but is there any particular logic/reason behined it?
ACCOUNTANT
(Student)
(559 Points)
Replied 22 September 2011
Probably since the existing reserves are the profits earned when the shareholders are the part of the owners for such reserves......
and Securities premium is only the amout paid to the company by the shareholders excess on the share's nominal value before they enter the company......though it is the part of something they have paid for the company........
ashish gupta
( student)
(1922 Points)
Replied 22 September 2011
I think securities premium should be utilised first as there are limited use of securities premium and other free reserves can be utilised for any pupose.
ACCOUNTANT
(Student)
(559 Points)
Replied 22 September 2011
Including you have to transfer the amount of security premium on the bought back shares to the
General Reserve
For the shares which dont exist cant retain the premium collected on bought back shares in the securities premium a/c ....
But u still get confirmed from an expert/.......
shashi bhusan panda
(Accounts Executive)
(24 Points)
Replied 23 September 2011
Hi,
can you have any short note for Industrial Law and Auditing for ICWAI Inter.
SANTOSH MANCHALA
(CA)
(78 Points)
Replied 25 September 2011
HI,
According to me, u have to first use balance in security premium A/c,as it has limited uses
(i.e.only 5 uses)and buy back is one of them.The order may like this,
1)security premium A/c
2)General reserve
3)Divinded equilisation Reserve
4)P & L A/c (cr)
CAclubindia
