CAPITAL REDEMPTION RESERVE.
raghuram grandhi (6 Points)
28 June 2018
Why Capital Redemption Reserve is created? What is the purpose behind it's creation?
3 Replies
prasad Nilugal
( GST Practitioner & Accounts )
(14805 Points)
Replied 28 June 2018
Capital redemption reserve is created out of profit for redemption of preference shares . same will be redemed only after fully paid .
Yogesh
(JAIPUR)
(2 Points)
Replied 28 February 2019
1. When capital reduce by a company & buy its own share then company create CRR,
as a : New ES/PS are issued to redeem the old PS the difference between Face value of PS & new share will transfer CRR
2. CRR transfer in undistributed profit,( General Reserve,Profit and loss)
3. CRR fund utilized only for issuing Bonus Share.(no dividend can be distributed out of this fund.
4. Importance of CRR
:- Maintain Working capital
:- To protect the interest of creditors
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