Question
A company has ₹10,00,000 10% Redeemable Preference
Shares. These are redeemed at 10% premium out of fresh equity issue of ₹6,00,000 and balance from reserves. The company’s Securities Premium A/c has ₹50,000. How much should be transferred from General Reserve to Capital Redemption Reserve (CRR)?Solution
Total redemption = ₹10,00,000 + 10% premium = ₹11,00,000. Fresh issue = ₹6,00,000 → balance = ₹4,00,000 from reserves. Hence, CRR = ₹10,00,000 – ₹6,00,000 = ₹4,00,000. • CRR is calculated based on the face value redeemed from reserves. • Premium is handled separately (from Securities Premium A/c).
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