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Debenture Redemption Investment

Which among t...

Question

Which among these is true?

A

The Debenture Redemption Reserve Account is shown on the liabilities side of the Balance Sheet under the head 'Reserve and Surplus'

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B

Under the sec. 80(5A) of companies (Amendment) Act, 1988, a company limited by shares shall issue irredeemable preference shares

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C

Insurance fund is not an example of divisible profits

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D

The Capital Redemption Reserve Account may not be applied by the company in issuing fully paid bonus shares to the members of the company

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Solution

The correct option is A The Debenture Redemption Reserve Account is shown on the liabilities side of the Balance Sheet under the head 'Reserve and Surplus'
Debenture redemption reserve is created is created out of the divisible profits for redemption of debentures. As per the provisions of companies act 2013 creation of debenture redemption reserve is compulsory. Hence, they will be shown on the liabilities side of balance sheet under the head Reserves and surplus.

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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.

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. A limited company has to redeem redeemable preference shares of the value of Rs. 1,00,000 for which the company has issued 3,000 equity shares of Rs. 10 each at a premium of 10%. The amount to be transferred to capital redemption reserve account will be ___________.

Q. A limited company has to redeem redeemable preference shares of the value of Rs.

1, 00, 000

for which the company has issues

3000

equity shares of Rs.

10

each at a premium of

10 %

. The amount to be transferred to capital redemption reserve account will be.

Q. Solid ltd. issued 2,000, 10% preference shares of Rs. 100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 equity shares of Rs. 100 each at a premium of 20% per share. At the time of redemption of preference shares, the amount to be transferred by the company to the Capital Redemption Reserve Account will be-

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