Akash (CA Final Article Assistant) (1671 Points)
29 May 2011
CA Romil Shah
(CA )
(669 Points)
Replied 29 May 2011
AMOUNT TO BE TRANSFER TO C.R.R=50000(200000-150000)...WHEREAS THE SECURITY PREMUIM RECIEVED FROM THE ISSUE OF EQUITY SHARES WILL BE UTILISED FOR WRITING OFF PREMIUM ON REDEMPTION OF PREFERENCE SHARES..
shakuntala chhangani
(FCA Course co-ordinator WIRC coaching centre)
(2525 Points)
Replied 31 May 2011
Hi Akash, the answer for ur second question is Rs. 19,000. there is a typing error in the question. Instead of 1/6, it should be 1/5.
The question says that C purchases his share from existing partner. It means that existing partners are selling their share and c is buying it. Hence amount of capital introduced by C will be withdrawn by the existing partners. In effect, the total capital of the firm before and after admission will remain the same. Total capital of the firm before C's admission is 30,000 + 50,000 + 15,000 = 95,000
total capital after admission = 95,000
C's capital = 1/5 x 95,000 = 19,000
total amount brought by C = Rs. 25,000
C's share of goodwill = 25,000 - 19,000 = 6,000
total goodwill of the firm = 6,000 x 5 = 30,000
shakuntala chhangani
(FCA Course co-ordinator WIRC coaching centre)
(2525 Points)
Replied 31 May 2011
Hi again, for ur 1st question, pref. shares can either be redeemed out of the preceeds of fresh issue or out of divisible profits. proceeds in case of shares issued at par/discount = amount received and in case of premium it is the face value of shares issued. In the given case since pref. shares are issued at premium, proceeds means face value that is Rs. 100. It means
proceeds of fresh issue is 15,000 shares x Rs. 100 = Rs. 1,50,000
for the balance, divisible profits will be used and an equivalent amount will be transferred to CRR i.e.
Nominal value of pref. shares to be redeemed = 2,000 shares x Rs. 100 = Rs. 2,00,000
proceds of fresh issue = Rs. 1,50,000
amount to be transferred to CRR = Rs. 50,000 (balance)
Regards, CA Shakuntala Chhangani
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India