How does a company use revenue reserves for capital expenditure?
If revenue reserves were not sufficient to meet capital expenditure and directors lent money to meet such shortfall how does the company repay the debt?
narasimha murty (Managing partner) (54 Points)
18 September 2009How does a company use revenue reserves for capital expenditure?
If revenue reserves were not sufficient to meet capital expenditure and directors lent money to meet such shortfall how does the company repay the debt?
The company can repay that debt in Installment or by any other payment methods from the Future revnue profits or Capital receipts. It is not compulsory that, the company has to pay from the Revnue profits/reserves only.
Because Directors money given to the company is considered as a loan, and the loan can be repaid by either Capital or revnue profits.
Ankur Shah (Practicing Company Secretary)
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