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CRR

Kunal Aggarwal (Student) (27 Points)

26 July 2010

Hi Guys

I wanted to know what is Capital Redemption Reserve and how it is treated in Cash Flow Statment?

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Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 27 July 2010

DEAR KUNAL

Capital redemption reserve created when u paid off u'r share capital e.g. at the time of buyback of shares, redemption of preference shares. CRR can be utilised to issue bonus shares.

CRR doesn't afftect u'r cash flow statement as it is just the transfer of Free reserves to CRR. Whenever u make a buyback of shares or redemption of preference shares by making cash payment, that cash payment would only affect your CASH FLOW FROM FINANCING ACTIVITIES and no effect shall be given for CRR.

Hope this solves u'r query.

REGARDS,

MANOJ