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The paid up value Of preference share and equity Share was to be reduced by 25% and 75% respectively. the face value will remain unchanged. show me journal entry of internal reconstruction and capital reduction chapter?
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The paid up value Of preference share and equity Share was to be reduc...
I think for this you have to reduce the number of shares if face value remain unchanged..
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The paid up value Of preference share and equity Share was to be reduc...
Journal Entry for Internal Reconstruction and Capital Reduction:
- Reduction of Preference Share Paid Up Value:
- Preference Share Paid Up Value A/c Dr. (25% of original value)
- Capital Reduction A/c Cr. (25% of original value)
- Reduction of Equity Share Paid Up Value:
- Equity Share Paid Up Value A/c Dr. (75% of original value)
- Capital Reduction A/c Cr. (75% of original value)
- Explanation:
Internal reconstruction involves reorganizing a company's financial structure without winding up the company. In this case, the paid-up value of preference shares and equity shares are being reduced to improve the financial position of the company.
- Impact of Reduction:
- Preference shareholders will have a reduced claim on the assets of the company.
- Equity shareholders will experience a significant reduction in their ownership stake in the company.
- Reasons for Capital Reduction:
- To eliminate accumulated losses and improve the financial health of the company.
- To align the company's capital structure with its current financial position.
- Legal Compliance:
- The reduction in share capital must comply with the regulations set by the Companies Act.
- Shareholders' approval and court approval may be required for the capital reduction.
- Financial Reporting:
- The reduction in share capital will be reflected in the company's financial statements.
- Shareholders will be informed of the capital reduction through a disclosure in the annual report.
- Conclusion:
Internal reconstruction and capital reduction are strategic financial decisions aimed at enhancing the company's financial stability and improving its long-term sustainability. Proper planning and compliance with legal requirements are essential for a successful capital reduction process.
- Reduction of Preference Share Paid Up Value:
- Preference Share Paid Up Value A/c Dr. (25% of original value)
- Capital Reduction A/c Cr. (25% of original value)
- Reduction of Equity Share Paid Up Value:
- Equity Share Paid Up Value A/c Dr. (75% of original value)
- Capital Reduction A/c Cr. (75% of original value)
- Explanation:
Internal reconstruction involves reorganizing a company's financial structure without winding up the company. In this case, the paid-up value of preference shares and equity shares are being reduced to improve the financial position of the company.
- Impact of Reduction:
- Preference shareholders will have a reduced claim on the assets of the company.
- Equity shareholders will experience a significant reduction in their ownership stake in the company.
- Reasons for Capital Reduction:
- To eliminate accumulated losses and improve the financial health of the company.
- To align the company's capital structure with its current financial position.
- Legal Compliance:
- The reduction in share capital must comply with the regulations set by the Companies Act.
- Shareholders' approval and court approval may be required for the capital reduction.
- Financial Reporting:
- The reduction in share capital will be reflected in the company's financial statements.
- Shareholders will be informed of the capital reduction through a disclosure in the annual report.
- Conclusion:
Internal reconstruction and capital reduction are strategic financial decisions aimed at enhancing the company's financial stability and improving its long-term sustainability. Proper planning and compliance with legal requirements are essential for a successful capital reduction process.
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The paid up value Of preference share and equity Share was to be reduced by 25% and 75% respectively. the face value will remain unchanged. show me journal entry of internal reconstruction and capital reduction chapter?
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The paid up value Of preference share and equity Share was to be reduced by 25% and 75% respectively. the face value will remain unchanged. show me journal entry of internal reconstruction and capital reduction chapter? 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 The paid up value Of preference share and equity Share was to be reduced by 25% and 75% respectively. the face value will remain unchanged. show me journal entry of internal reconstruction and capital reduction chapter? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The paid up value Of preference share and equity Share was to be reduced by 25% and 75% respectively. the face value will remain unchanged. show me journal entry of internal reconstruction and capital reduction chapter?.
The paid up value Of preference share and equity Share was to be reduced by 25% and 75% respectively. the face value will remain unchanged. show me journal entry of internal reconstruction and capital reduction chapter? 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 The paid up value Of preference share and equity Share was to be reduced by 25% and 75% respectively. the face value will remain unchanged. show me journal entry of internal reconstruction and capital reduction chapter? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The paid up value Of preference share and equity Share was to be reduced by 25% and 75% respectively. the face value will remain unchanged. show me journal entry of internal reconstruction and capital reduction chapter?.
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