B Ltd issued 700,000 shares of Rs 10 each. The balance in the securities premium reserve account and…
The transfer to the capital redemption reserve is Rs 10,00,000. Under section 69 of the Companies Act, 2013, a buy-back from free reserves or securities premium requires a…
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B Ltd issued 700,000 shares of Rs 10 each. The balance in the securities premium reserve account and general reserve account were Rs 3000,000 and 6000,000 respectively. The company bought back 100,000 shares for Rs. 40 each. Amount Transferred to Capital Redemption Reserve Account is:
Answer and explanation
Correct answer C
The transfer to the capital redemption reserve is Rs 10,00,000. Under section 69 of the Companies Act, 2013, a buy-back from free reserves or securities premium requires a transfer equal to the nominal value purchased: 100,000 shares × Rs 10 = Rs 10,00,000. The Rs 40 purchase price includes a premium and does not determine this transfer.
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Kerala SET (LBS Centre)