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Uses of Securities Premium

Securities pr...

Question

Securities premium account cannot be utilized for _________.

A

Securities premium on fresh issue of shares

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B

Dividend equalization reserve

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C

General Reserve

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D

Proceeds of fresh issue of shares

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Solution

The correct option is A
Securities premium on fresh issue of shares

Securities premium can be utilized for all of the mentioned options i.e.

writing off any preliminary expenses of the company

writing off expenses of issue of shares and debentures

providing for the premium that is payable on the redemption of debentures

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Similar questions

Q. Following are debits of ABC Ltd: Outstanding Redeemable preference shares

=

3, 00, 000

Premium on redemption

=

10 %

General Reserve

= 1, 15, 000

. Security Premium Balance

=

35, 000

Fresh issue of shares to be made at

10 %

discount. The face value of fresh issued share will be ________.

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. X Ltd. decides to redeem 650, 15% Pref. Shares of Rs. 100 each at 10% premium. It has a General Reserve of Rs. 45,500 and a Securities Premium of Rs. 1,000. If the new equity shares are to be issued at 30% premium, the minimum number of equity shares of Rs 10 each to be issued for the purpose of redemption is ________.

Q. X Ltd. decides to redeem 650, 15% Pref. Shares of Rs. 100 each at 10% premium. It has a General Reserve of Rs. 45,500 and a Securities Premium of Rs. 1,000. If the new equity shares are to be issued at 20% discount, the minimum number of equity shares of Rs 10 each to be issued for the purpose of redemption is ___________.

Q. 1,00,000 equity shares of Rs. 10 each are issued at a premium of 10% to redeem the preference shares, the proceeds of a fresh issue under Section 80 is ________.

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