Cash flow problem

probably in that question there was a share premium a/c in balance sheet,you see when we redeem pref share the journal is

pref share cap -dr

premium on redmn--dr

 to pref. share holders

and to cancel out the premium we use the share premium a/c and pass the entry

share premium--dr

to premium on redmpn.

thats why premium was not adjusted on operating activity because it didnt have any relation with p/l

sprite ,clear hai!!!!!!!!!!!!!!!

It's the result of financing activity. So the outflow(face value + premium paid on redemption) would be shown under financing activity and not operating activity.

Originally posted by : CA Sumit Patwari
	It's the result of financing activity. So the outflow(face value + premium paid on redemption) would be shown under financing activity and not operating activity.

agreed

cheers

Dear Gaurav,

    Share premium is a result of Investing activity not operational activity and it is the reason

All the Best 

premium on redemption will be shown in operating activity under adjustment of non-cash items and (fase value of share + premium )show in financing activity....