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Whenever there is redemption of shares and
1:There is no new issue of shares
2:the new issue of shares does not adequately cover the redemption
It is a capital reserve,created out of a revenue reserve,and therefore cannot be used to pay off dividends.
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What is capital redemption reserves?
Capital Redemption Revere is an reserve created when a company buys it owns shares which reduces its share capital. This reserve is not distributable to shareholders and can be used to pay bonus shared issued.
Can capital redemption reserve account be created out of securities premium account?
No. CRR should be created out of divisible profits only
Can revaluation reserve be use for bonus issue?
Yes it can use any of the capital reserves for the purpose, like Share Premium Account, Capital Redemption Reserve & Revaluation Reserve...
What is the difference between capital reserve and reserve capital?
Capital reserve is a reserve created to deal with general, unspecified contingencies such as inflation. It is a fund set aside for the specific purpose and can not be distributed for other uses. Normally it is legally not distributable as dividends to shareholdersReserve Capital is the part of the Authorised capital which is not yet called up
Is revaluation reserve a capital reserve?
Yes...revaluation reserve is a part of capital reserve.
Why is capital redemption reserve created?
No
How is capital redemption reserve created?
from undistributable profits to shareholders
What is capital redemption reserves?
Capital Redemption Revere is an reserve created when a company buys it owns shares which reduces its share capital. This reserve is not distributable to shareholders and can be used to pay bonus shared issued.
Difference between Debenture Redemption Reserve and Capital redumption Reserve?
The Capital Redemption Reserve is a fund that secures a creditor. Debenture Redemption Reserve is for the purpose of security payments only.
Can capital redemption reserve account be created out of securities premium account?
No. CRR should be created out of divisible profits only
Can revaluation reserve be use for bonus issue?
Yes it can use any of the capital reserves for the purpose, like Share Premium Account, Capital Redemption Reserve & Revaluation Reserve...
What are free reserves under companies act 1956?
investment allowance reserve, capital reserve received in cash, security premium received in cash,capital redemption reserve,
What is the use of capital redemption reserve?
A capital redemption reserve is a reserve created by a company to hold funds that are set aside for the purpose of redeeming or buying back its own shares. This reserve is typically established when a company repurchases its shares or when it reduces its share capital, ensuring that the company's capital remains intact and that shareholders are protected. The funds in this reserve cannot be distributed as dividends, as they are meant to maintain financial stability and comply with legal requirements regarding capital maintenance. Overall, it serves to enhance shareholder confidence and reinforce the company's financial structure.
Define redemption of debentures out of capital?
When debentures are redeemed out of capital, no transfer is made to general reserve or debenture redemption reserve account. In this method it is assumed that the company has sufficient funds to redeem the debentures. So the profits are not utilised to replace the debentures.It affects adversely to the Working Capital of the company.
After redemption of debenture debenture reduption reserve where to transfer whether in PL Ac or in General reserve.?
After redemption of debentures, debenture redemption reserve is to be transferred to general reserve.
Define capital reserve?
Capital reserve is the amount created to increase in market value of assets at the time of revaluation of assets.
Examine Debenture can be redeemed only out of capital?
No Debentures can not be redeemed out of capital only. Gov of India and SEBI has indirectly placed restrictions on redemption of debentures. Now it is compulsory to create Debenture Redemption Reserve at-least 50% of the debentures issued.
