Premium payable on Buyback

Why premium on buyback adjusted against securities premium but not with free reserves ? Why securities premium not considered as free reserve?

Ramya kudupudi

Ramya kudupudi

CA Inter


18-May-20 07:47


Answers (1)

Free reserves are reserves which are available for distribution as dividends. Securities premium cannot be paid as dividends and hence not a free reserves. The premium on buy back is first set off against securities premium as securities premium has limited use. If SP balance is not sufficient, P&L is used.

Suraj Lakhotia

Suraj Lakhotia


18-May-20 08:54

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