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Buyback of shares
Accountancy
Face valve of shares bought back= 12,50,000 Face value of debentures issued for buyback of shares =3,00,000 Premium on the above said debentures =60,000 Face value of preference shares issued for buyback =2,50,000 Then what will be the amount to be transferred to capital redemption reserve ?
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Best Answer
CRR to be created to the extent of face value of shares bought back. At the same time ,we have to consider how much it has impacted the free reserves. CRR will come into existence only if we buy back shares using free reserves of the company. So in the given case : FV value of shares bought back - preference shares issued for buy back = 1250000 - 250000 So CRR to be created for 1000000
Naveen Vs
CRR to be created to the extent of face value of shares bought back. At the same time ,we have to consider how much it has impacted the free reserves. CRR will come into existence only if we buy back shares using free reserves of the company. So in the given case : FV value of shares bought back - preference shares issued for buy back = 1250000 - 250000 So CRR to be created for 1000000
Why didn't we consider the debentures issued for buy back?
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