Practicing Success
The amount of Security Premium Reserve can not be utilised, as per section 52 of companies Act, 2013. Choose the correct option. |
To write off preliminary expenses To issue fully paid bonus shares To buy back its own shares To write off interest on debentures |
To write off interest on debentures |
The correct answer is Option 4 - to write off interest on debentures. The premium amount is credited to a separate account called ‘Securities Premium Account’ and is shown under the title ‘Equity and Liabilities’ of the company’s balance sheet under the head ‘Reserves and Surpluses’. It can be used only for the following five purposes: |