Can anyone please explain me why premium on redemption of preference shares is not adjusted in operating activities in FM (May 2011) paper.......Please also explain the share premium A/c....
Gaurav Singh (student) (496 Points)
14 October 2011Can anyone please explain me why premium on redemption of preference shares is not adjusted in operating activities in FM (May 2011) paper.......Please also explain the share premium A/c....
probably in that question there was a share premium a/c in balance sheet,you see when we redeem pref share the journal is
pref share cap -dr
premium on redmn--dr
to pref. share holders
and to cancel out the premium we use the share premium a/c and pass the entry
share premium--dr
to premium on redmpn.
thats why premium was not adjusted on operating activity because it didnt have any relation with p/l
sprite ,clear hai!!!!!!!!!!!!!!!
CA SUMiT PATWARi
(Chartered Accountant)
(1441 Points)
Replied 15 October 2011
It's the result of financing activity. So the outflow(face value + premium paid on redemption) would be shown under financing activity and not operating activity.
Arniv Sharda
(CA Final)
(3006 Points)
Replied 15 October 2011
| Originally posted by : CA Sumit Patwari | ||
 |
It's the result of financing activity. So the outflow(face value + premium paid on redemption) would be shown under financing activity and not operating activity. |
 |
agreed
cheers
CS RAJESH C.CHOUDHARY
(ASSISTANT MANAGER)
(14607 Points)
Replied 15 October 2011
Dear Gaurav,
Share premium is a result of Investing activity not operational activity and it is the reason
All the Best 
nikhil
((CA Final) Article)
(363 Points)
Replied 16 October 2011
premium on redemption will be shown in operating activity under adjustment of non-cash items and (fase value of share + premium )show in financing activity....
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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