Internal Reconstruction

Dear Singh,

1--  If any Credit Balance is left in the Capital Reduction A/c, it should be transferred to Capital Reserve A/c.

2--  Patents/ Copyrights/ any intangible asset will be written off only to the extent of Over valuation done.

3--  If specified in question, then only provide..

Dear Faiz

Is it possible to have a Cr. Bal in capital reduction A/c ?

Originally posted by : dinesh
	Dear Faiz Is it possible to have a Cr. Bal in capital reduction A/c ?

At times it can come , depending upon Internal Reconstructions carried out. kindly see CA(PCC) Nov,2007 paper to get an idea about various adjustments on it.

If transferred to Capital Reserve, it will have debit balance. So, will it be shown on assets side????? Is it possible?

In some questions, they ask to bring in fresh equity to make up for that difference. 

Hi Singh

It won't have debit balance. You'll transfer only to the extent of balance in Capital Reduction A/c. None of the court approvals can be obtained if the internal reconstructions are such that write downs by liability, capital are inadequate to cover up the losses.

Just visualize a Creditor to whom Rs.100 is payable (Credit Balance). Will you pay more than Rs.100? No. The same way, Capital Reduction will be transferred to Cap Res only to the extent of balance available.

Therefore, never will Capital Reserve on the Debit Side.

Rineesh

thanks, sir

Hi,,

Can capital reserve be use for reconstruction purpose there in old Balance sheet?

plz help me. if in the question's balance sheet there is share premium account and the question is silent regarding write off. what to do ?