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Increase in paid-up capital

Ajay Singh Bhati (Manager (Accounts)) (215 Points)

08 November 2012

Please suggest me Can we use non cash consideration (such as Fixed Assets) to increase the paid-up capital of our company? If yes, how and what would be the accounting entries for this?

Thanks in advance

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2 Replies

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 08 November 2012

Non-cash consideration in fixed assets, i think relates to increase in notional value of fixed assets..

Now, any non-cash considerations are there to increase your reserves and not the capital of the company.., so as per me, this is not possible..

Still, let some expert reply for this..

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Tanveer Md Masood (Indispensable) (361 Points)
Replied 08 November 2012

Dear experts,

As far change in the amount or percentage of pad up capital is concerned then it deppends on several factors infact issue such as payment of dividend out of reserves affect the amount of dividend . What needs to be ensured is that dividend when paid out of resernes does not result in the decrease in the amount of dividend by 15% of the paid up capital .

other experts are welcome to comment more on this issue.

Thanks

Tanveeer Md Masood.