Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Premium on Redemption....

Dilpreet Singh Chadha (169 Points)

18 August 2018

Can we use securities premium reserve account for writing off premium on redemption of preference shares and debentures

Reply
Follow
Share

6 Replies

NIKUNJ (NIL) (131 Points)
Replied 18 August 2018

yes you can do that

Upgrade to CAclubindia Pro. Subscribe Now!

Srivalli (Student) (200 Points)
Replied 18 August 2018

yes we can use for redemption

Dilpreet Singh Chadha (169 Points)
Replied 18 August 2018

but in institutes study material they have not used it
they have only used free reserves and ignored securities premium reserve

Srivalli (Student) (200 Points)
Replied 18 August 2018

please refer to the question utilisation of securities premium. It clearly states that we can use securities premium for redemption of preference shares

Shashank Srivastav (40 Points)
Replied 18 August 2018

According to Section 52 of Companies Act, Security Premium can be utilized for providing premium on redemption of preference shares and debentures. But if the company is u/s 133 then it can't do so. Section 133 talks about the company to comply with the accounting standards which most of the companies complies. Therefore in study material it has been assumed that the company is u/s 133 and the question has been solved accordingly.