If there is debit balance of capital reduction a/c in internal recontruction, then with what it should be adjusted Capital Reserve a/c or Goodwill a/c?
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Internal reconstruction
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I think it would be Goodwill a/c since it has a dr balance...but wait for experts to confirm it.
capital reserve 90% sure
Goodwill would also be written off in most of the cases, thereby further increasing the balance in capital reduction account.
(It would be very difficult for a company who is under going reconstruction to establish the value of Goodwill)
The debit balance is Capital Reduction Account would be transfered to Capital reserve.
That is to be transferred to capital reserve a/c
the debit balance in capital reduction account is to be transferred to capital reserve
I accept my answer was wrong ...it would be Capital Reserve...sorry for misguiding.
it should be transfered to capital reserve account.
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