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Question
When preference shares are redeemed out of divisible profits, a transfer to Capital Redemption Reserve can be made out of _____________.
When preference shares are redeemed out of divisible profits, a transfer to Capital Redemption Reserve can be made out of _____________.
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Solution
The correct option is C divided equalization reserve
To the extent that the preference shares are redeemed out of profits, Capital Redemption Reserve Account must be credited with dividend equalization reserve that are by debiting the profit and loss Account, general reserve or other accounts showing profits otherwise available for distribution of dividends.
To the extent that the preference shares are redeemed out of profits, Capital Redemption Reserve Account must be credited with dividend equalization reserve that are by debiting the profit and loss Account, general reserve or other accounts showing profits otherwise available for distribution of dividends.
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