Dear All
A Scheme of Reconstruction has been awarded by court
In the Balance sheet Share Capital exhibited as 20000 shares of Rs 10 each Rs200000
If Adjustment is given as
1.Equity shares are reduced to Rs7.50
2.Equity Shares are Reduced by Rs7.50
Are both wordings one and the same how should I interpret the adjustment and passentries
Is it talking about reducing paid up value or Face Value
Give Journal entries for both the adjustment scenario with explanations
Thanks in advance
Hello Sir. The two adjustments have different meanings.
The word 'to' means that the share price has gone from 10 per share to 7.5 pershare
The word 'by' means that the share price has gone done by 7.5 (i.e. 10 less 7.5 = 2.5)
Hence the journal entries will be as follows :
Case 1 (TO)
Dr. Equity Share Capital A/c - 2,00,000
Cr. Equity Share Capital A/c - 1,50,000
Cr. Capital Reduction/Reconstruction A/c - 50,000
Case 2 (BY)
Dr. Equity Share Capital A/c - 2,00,000
Cr. Equity Share Capital A/c - 50,000
Cr. Capital Reduction/Reconstruction A/c - 1,50,000
Please question me in case of further clarification.
Getmyca Consultant Pvt Ltd
New Delhi
CA Inter
View Details
Bharat Shah & Associates
Mumbai
CA Inter
View Details
RBSM Corporate Advisors Private Limited
Pune
CA
View Details
Subrahmanyam & Sivudu CA Firm
Hyderabad
CA Inter
View Details
CCI
Pro
CAclubindia
