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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
N. K. Gupta posted an Question
April 05, 2021 • 03:42 am
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30 points
30 points
- UGC NET
- Commerce
Capital resumption reserve account explain please
capital resumption reserve account explain please why we create this account
3 Answer(s)
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Rucha rajesh shingvekar
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A limited company may issue redeemable preference shares if it’s Articles of Association provide. Thus, these preference shares are liable for redemption within a period not exceeding twenty years from the date of issue. A company cannot issue irredeemable preference shares. Also, a company can redeem only fully paid-up preference shares out of the profits available for dividend or out of the proceeds of a fresh issue of shares for redemption. Hence, the preference shares are redeemed from the capital reserve account created for the purpose of the redemption.
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Priya gulani Best Answer
Capital redemption reserve account is a type of reserve maintained by a company limited by shares and as the name suggests this reserve deals with shares which are redeemable. The shares which are purported to be redeemed are paid out of the profits of a company. For this purpose, out of the profits, an amount equivalent to the nominal value of the share supposed to be redeemed is transferred to a reserve. This reserve is called a capital redemption reserve account. https://www.slideshare.net/mobile/snehajoy2/accounts-new
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Priya gulani
Capital redemption reserve account is a type of reserve maintained by a company limited by shares and as the name suggests this reserve deals with shares which are redeemable. The shares which are purported to be redeemed are paid out of the profits of a company. For this purpose, out of the profits, an amount equivalent to the nominal value of the share supposed to be redeemed is transferred to a reserve. This reserve is called a capital redemption reserve account. https://www.slideshare.net/mobile/snehajoy2/accounts-new
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Priya gulani
Capital redemption reserve account is a type of reserve maintained by a company limited by shares and as the name suggests this reserve deals with shares which are redeemable. The shares which are purported to be redeemed are paid out of the profits of a company. For this purpose, out of the profits, an amount equivalent to the nominal value of the share supposed to be redeemed is transferred to a reserve. This reserve is called a capital redemption reserve account. https://www.slideshare.net/mobile/snehajoy2/accounts-new
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Rucha rajesh shingvekar![best-answer]()
Capital Redemption Reserve Account When the company proposes to redeem the preference shares out of the profits, it transfers an amount equal to the nominal value of the redeemable preference shares to the Capital Redemption Reserve A/c out of the profits of the company. Also, in this case, the provisions relating to the reduction of share capital shall apply. The company can also use the Capital Redemption Reserve to issue the fully paid-up bonus shares.