Can accumulated losses (Debit Balance in the P/L Account) of a company be set off or adjusted from the Securities Premium or Revaluation Reserve Account?
Rajiv Lall (Advocate) (28 Points)
14 November 2009Can accumulated losses (Debit Balance in the P/L Account) of a company be set off or adjusted from the Securities Premium or Revaluation Reserve Account?
CA. Prabudh Sharma
(CA)
(83 Points)
Replied 15 November 2009
Securities Premium Account can be used only for the four purposes as stated in Sec 78 (2) of the CA, 1956 + For buying back of securities as stated in Sec 77A (1)
Writing off of Accumulated Losses does not form part of any of the aforesaid purposes.
Therefore, no adjustment from Securities Premium Account is permitted
Revaluation reserves should be adjusted only to write off the revalued value of the asset over the useful life.
Hence even that is not permitted.
Ashish M
(Chartered Accountant)
(2731 Points)
Replied 20 November 2009
securities premium A/c balance can be used only for prescribed purposes........
Losses can't be set off from revaluation reserve as it is not realised in cash as it would amount to losses being set off to unrealised gains hence distorting the picture.....!!!!!!!!!!
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