B Com Exam > B Com Questions > PCD Ltd. has issued capital of 20,00,000 in e...
Start Learning for Free
PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.?
Most Upvoted Answer
PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. T...
Transaction for Buyback of Shares by PCD Ltd.
PCD Ltd. has decided to buy back 10% of its share capital directly from its shareholders at a price of Rs. 8 per share. The following is the accounting treatment for the transaction.
Step 1: Check for Compliance with the Companies Act, 2013
Before proceeding with the buyback, PCD Ltd. needs to ensure that it complies with the provisions of Section 68 of the Companies Act, 2013. The company needs to ensure that:
- The buyback is authorized by the Articles of Association of the company.
- The buyback is approved by a special resolution passed by the shareholders in a general meeting.
- The buyback does not exceed 25% of the total paid-up capital and free reserves of the company.
- The ratio of the debt to equity after the buyback is not more than 2:1.
Assuming that PCD Ltd. complies with all the above conditions, the next step is to record the transaction in the books of the company.
Step 2: Transfer the Required Amount to the Buyback Reserve Account
PCD Ltd. needs to transfer the amount required for the buyback to the buyback reserve account. The amount transferred should be equivalent to the amount of shares being bought back multiplied by the buyback price of Rs. 8 per share. In this case, PCD Ltd. is buying back 10% of its share capital, which is 2,00,000 shares. Therefore, the amount transferred to the buyback reserve account would be:
2,00,000 shares x Rs. 8 per share = Rs. 16,00,000
Step 3: Reduce the Share Capital Account
PCD Ltd. needs to reduce its share capital account by the amount of shares being bought back. In this case, the share capital account needs to be reduced by 2,00,000 shares, which is 10% of the total share capital of 20,00,000. The share capital account would now be:
20,00,000 shares - 2,00,000 shares = 18,00,000 shares
Step 4: Transfer the Buyback Price to the Capital Redemption Reserve Account
PCD Ltd. needs to transfer the buyback price of Rs. 8 per share to the capital redemption reserve account. In this case, the total buyback price would be:
2,00,000 shares x Rs. 8 per share = Rs. 16,00,000
Therefore, the capital redemption reserve account would be:
Capital Redemption Reserve = Rs. 16,00,000
Step 5: Transfer the Securities Premium and General Reserve to the Capital Redemption Reserve Account
PCD Ltd. needs to transfer the balance in the securities premium account and the general reserve to the capital redemption reserve account. The transfer would be:
Capital Redemption Reserve = Rs. 16,00,000 (from Step 4)
+ Securities Premium Account = Rs. 1,00,000
+ General Reserve = Rs. 2,00,000
Total Capital Redemption Reserve = Rs.
|
Explore Courses for B Com exam
|
|
Similar B Com Doubts
PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.?
Question Description
PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.?.
PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.?.
Solutions for PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? in English & in Hindi are available as part of our courses for B Com.
Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free.
Here you can find the meaning of PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? defined & explained in the simplest way possible. Besides giving the explanation of
PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.?, a detailed solution for PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? has been provided alongside types of PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? theory, EduRev gives you an
ample number of questions to practice PCD Ltd. has issued capital of 20,00,000 in equity share of 10 each. The balance in the security premium account is 1,00,000 and the general reserve 2,00,000. The company decided to buy back 10 % of its share capital direct form its share holder at rupees 8 per share. Record the transaction relating to buy back in the books of the company in accordance with the provisions of section 68 of the companies Act,2013.? tests, examples and also practice B Com tests.
|
|
Explore Courses for B Com exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup