Redemption Premium on Preference Shares
This query is : Resolved
19 October 2009
A company is redeeming its Preference Shares by paying a premium of 50% on the face value of each preference share. what's the accounting procedure for the above and can the company book the redemption premium as expenditure. If so in how many years?
20 October 2009
Premium on redemption on pref share cannot be book in profit & loss a/c. However company can amortize this exp. against Security Premium a/c ( If available ) Otherwise from free reserve. If company does not have both as explained above company can debit this exp. under the head of Misc. expenditure a/c and shown In balance Sheet.
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