Capital Redemption Reserve may be used for making partly paid up shares as fully paid up.

True

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False

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Solution

The correct option is B False
This statement is false. Capital Redemption reserve is created to redeem fully paid preference shares. When the company proposes to redeem the preference shares out of the profits, it transfers an amount equal to the nominal value of redeemable preference shares to the capital redemption reserve.

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Similar questions

Q. Consider the following statements:
1. The bonus shares shall not be issued in lieu of dividend,
2. A company may issue fully paid up bonus shares to its members out of its 'Capital Redemption Reserve Account'
3. A company may not issue bonus shares out of its 'Securities Premium Account'
Which of the above statement/s is are not correct?

Q. Assertion :Under the provisions of new Company Act 2013, a company may issue fully paid-up bonus shares out of its free reserves, security premium account and the capital redemption reserve account. Reason: According to the new provisions of Company Act, 2013, no issue of bonus shares shall be made by capitalising reserves created by the revaluation of assets.

How will you disclose the following items in the Balance Sheet of a company:

(i) Loose Tools

(ii) Uncalled liability on partly paid-up shares

(iii) Debentures Redemption Reserve

(iv) Mastheads and publishing titles

(v) 10% debentures

(vi) Proposed dividends

(vii) Share forfeited account

(viii) Capital Redemption Reserve

(ix) Mining Rights

(x) Work-in-progress

Ravi Ltd., forfeited 800 shares of Rs. 10 each, Rs. 7.50 paid, for non-payment of Final call of Rs. 2.50 per share. Out of these, 600 shares were re-issued at Rs. 6 per share as fully paid up. Calculate the amount to be transferred to Capital Reserve?

Q. Buyback of shares should not exceed _____ of paid up capital and free reserve of the company.

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