Calculation of effective capital

Bhagwati Prasad Singh (Company Secretary) (170 Points)

01 May 2014  

Hii,

For the purpose of calculating effective capital ( for calculating managerial remunerstion) , following formula is used:

Add : Paid up capital

         Security Premium  Account

         Reserve and Surplous

         Loan

My doubt is that Security premium is part of reserve and surplous, so while mentioning the value of reserve and surplous do we need to again put the value of security premium or after deducting security premium.

For Ex:

Security Premium Account 

Opening Balance                               88720000

Add : Security Premium Credited    150000000

Closing Balance                                 238720000

 

Profit & Loss Account

As per last Balance Sheet                 (80300)

Closing Balance                                (80300)

Reserve & Surplous                           238639700

 

Now what sholud be the amount to be shown in security premium account and in Reserve & Surplous, for calculating Effective Capital ??