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During the year 2018-2019, T Ltd. buy back 20,000 equity shares of ₹100 each at a premium of 5%. During the year 2018-2019, as the company did not have sufficient cash resources to buy back equity shares, it issued 1,00,000, 12% Preference shares of 10 each at a premium of 15%. The company has sufficient balance in general reserve. At the time of buy back equity shares, the amount to be transferred to capital redemption reserve = ?
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During the year 2018-2019, T Ltd. buy back 20,000 equity shares of ₹10...
Calculation of amount to be transferred to capital redemption reserve:

Step 1: Calculate the total amount spent on buyback of equity shares
- Number of equity shares bought back = 20,000
- Face value of each equity share = ₹100
- Premium on each equity share = 5%
- Total cost of each equity share = Face value + Premium = ₹100 + ₹5 = ₹105
- Total amount spent on buyback = Number of equity shares bought back * Total cost of each equity share = 20,000 * ₹105 = ₹21,00,000

Step 2: Determine the source of funds for buyback
- Since the company did not have sufficient cash resources, it issued preference shares to raise funds
- Number of preference shares issued = 1,00,000
- Face value of each preference share = ₹10
- Premium on each preference share = 15%
- Total cost of each preference share = Face value + Premium = ₹10 + ₹1.50 = ₹11.50
- Total amount raised through preference shares = Number of preference shares issued * Total cost of each preference share = 1,00,000 * ₹11.50 = ₹11,50,000

Step 3: Transfer the excess amount to capital redemption reserve
- Excess amount spent on buyback = Total amount spent on buyback - Total amount raised through preference shares = ₹21,00,000 - ₹11,50,000 = ₹9,50,000
- This excess amount of ₹9,50,000 needs to be transferred to the capital redemption reserve as per the provisions of the Companies Act, 2013.
Therefore, the amount to be transferred to capital redemption reserve = ₹9,50,000.
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During the year 2018-2019, T Ltd. buy back 20,000 equity shares of ₹100 each at a premium of 5%. During the year 2018-2019, as the company did not have sufficient cash resources to buy back equity shares, it issued 1,00,000, 12% Preference shares of 10 each at a premium of 15%. The company has sufficient balance in general reserve. At the time of buy back equity shares, the amount to be transferred to capital redemption reserve = ?
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During the year 2018-2019, T Ltd. buy back 20,000 equity shares of ₹100 each at a premium of 5%. During the year 2018-2019, as the company did not have sufficient cash resources to buy back equity shares, it issued 1,00,000, 12% Preference shares of 10 each at a premium of 15%. The company has sufficient balance in general reserve. At the time of buy back equity shares, the amount to be transferred to capital redemption reserve = ? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about During the year 2018-2019, T Ltd. buy back 20,000 equity shares of ₹100 each at a premium of 5%. During the year 2018-2019, as the company did not have sufficient cash resources to buy back equity shares, it issued 1,00,000, 12% Preference shares of 10 each at a premium of 15%. The company has sufficient balance in general reserve. At the time of buy back equity shares, the amount to be transferred to capital redemption reserve = ? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for During the year 2018-2019, T Ltd. buy back 20,000 equity shares of ₹100 each at a premium of 5%. During the year 2018-2019, as the company did not have sufficient cash resources to buy back equity shares, it issued 1,00,000, 12% Preference shares of 10 each at a premium of 15%. The company has sufficient balance in general reserve. At the time of buy back equity shares, the amount to be transferred to capital redemption reserve = ?.
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