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Authorised Share Capital

Premium on re...

Question

Premium on redemption of preference shares can be provided out of _________.

A

Securities premium account

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B

Capital reserve account

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C

General reserve account

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D

All of the above

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Solution

The correct option is D All of the above
Premium on redemption of share is the amount paid to the preference shareholders over the face value of the shares.
Any premium on redemption of preference shares shall be be provided out of profits ,share premium account, capital reserve and general reserve account.

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Q. Preference shares amounting to Rs. 2,00,000 are redeemed at a premium of 5%, by issue of shares amounting to Rs. 1,00,000 at a premium of 10 %. The amount to be transferred to capital redemption reserve will be _____.

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Q. A company wishes to redeem its preference shares amounting to Rs. 1,00,000 at a premium of 5% and for this purpose issues 5,000 equity shares of Rs. 10 each at a premium of 5%. The company also has a balance of Rs. 1,00,000 as General Reserves and Rs. 50,000 in profit and loss account. The amount to be transferred to Capital Redemption Reserve account for the purpose of redemption is ____________.

Q. X Ltd has redeemed its 12% preferences shares of Rs 1,00,000 at a premium of 4%. To meet the redemption it has issued Rs 1,00,000 worth of shares of Rs 20 each at a premium of 5%. The balance outstanding to the credit of Securities Premium Account after adjusting premium on redemption of preference shares = ?

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