GK
ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Profits available for dividends
|
|
|
Sale proceeds of the new issue of shares
|
|
|
All of the above
|
|
|
None of these
|
Detailed explanation-1: -Redeemable preference shares of a company can be redeemed out of profits of a company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of redemption. Was this answer helpful?
Detailed explanation-2: -Redemptions are when a company requires shareholders to sell a portion of their shares back to the company. For a company to redeem shares, it must have stipulated upfront that those shares are redeemable, or callable.
Detailed explanation-3: -To the extent that the preference shares are redeemed out of profits, Capital Redemption Reserve Account must be credited with dividend equalization reserve that are by debiting the profit and loss Account, general reserve or other accounts showing profits otherwise available for distribution of dividends.
Detailed explanation-4: -Detailed Solution. The Workmen’s Compensation Fund cannot be used for redemption of preference shares.