GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Issue of fully paid bonus shares
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Distribution of dividend
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Redemption of shares
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All of the above
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Detailed explanation-1: -The provisions relating to the capital redemption reserve are set out in section 733 of the Companies Act 2006. Subject to the company’s articles, the capital redemption reserve may be: Used to pay up new shares to be allotted to members as fully paid bonus shares.
Detailed explanation-2: -This statement is false. Capital Redemption reserve is created to redeem fully paid preference shares. When the company proposes to redeem the preference shares out of the profits, it transfers an amount equal to the nominal value of redeemable preference shares to the capital redemption reserve.
Detailed explanation-3: -(2) The capital redemption reserve account may be applied by the company, in paying up unissued shares of the company to be issued to member of the company as fully paid bonus shares.
Detailed explanation-4: -The Company cannot issue bonus shares by capitalising reserves created by the revaluation of assets.