What are the uses available of Capital Reserve under the companies act 1956 and how is it created as per those provisions ? Please provide ref. to sections.
2 Replies
Deepak Kumar
(CA Final)
(26 Points)
Replied 03 May 2011
Whenever profit is earned through abnormal business activity it should be transferred to capital reserve.It is used for writting of fictitios assets and for issuing fully paid up shares and to write off capital losses .Refer section 78 and 80 of companies act,1956.
Arihant
(Business)
(207 Points)
Replied 04 May 2011
Besides forfieture of shares, sale of an undertaking and govt grant under AS 12 what are the other transactions which nessicitate formation of capital reserve as per Companies Act ?
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