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Using SPR for Redemption of preference shares
Accountancy
When we can use Securities premium (SPR) balance for premium of redemption of pref shares (as point 4 of sec 52 of companies act 2013 says) then why do we always write off premium on redemption from p&L surplus or general reserve and never from SPR?
Answers (4)
Companies which are complying with accounting standards as prescribed in section 133 of companies act, can use use security premium only for limited purpose. 1. Issue of fully paid bonus share 2. Write off the premium on equity shares. 3 Buy back of equity shares In accounts we always assume that company is complying with accounting standards that's why we cannot use security premium for writing off the premium on redemption.
Thread Starter
Garima BhargavaOkk got it, thanks
Actually every company can security premium for that 5 purposes prescribed in sec 52 But those companies (which follow accounting standard prescribed by central government as per sec 133)only that companies can't use for 1.written off priliminary expenses and 2. redemption of preference &debentures.but they can use to 1.issue of bonus shares,2.commision,expenses,etc,3.BuyBack
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