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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

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Fresh issue of shares to be made at

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

Q. Consider the following statements:
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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 ___________.

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