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rajaa

AUDIT EXECUTIVE

62 Points Posted on 28 January 2011

QUESTION No. 89 State with reasons, whether the following statements are true or false: 1. Premium payable on redemption of preference shares must be debited to securities premium account only. 2. Dividend can be declared by a company after providing only for current year’s depreciation. 3. Interest cannot be paid out of capital during construction period. 4. Bonus shares issued out of pre-acquisition profits by subsidiary company will have no effect on the cost of control while preparing consolidated balance sheet. 5. Sinking fund is created in those cases where debentures are to be redeemed in instalments.

Replies (2)

Ajay Kumar

175 Points Posted on 28 January 2011

1. True

2. True,

3. False, subject to limitations.

4.False

Manmohan ACA, CS

Chartered Accountant

11622 Points Posted on 28 January 2011

Originally posted by : rajaa

QUESTION No. 89

State with reasons, whether the following statements are true or false:

1. Premium payable on redemption of preference shares must be debited to securities premium account only.

False

2. Dividend can be declared by a company after providing only for current year’s depreciation.

False

3. Interest cannot be paid out of capital during construction period.

False
4. Bonus shares issued out of pre-acquisition profits by subsidiary company will have no effect on the cost of control while preparing consolidated balance sheet.

True

5. Sinking fund is created in those cases where debentures are to be redeemed in instalments.

False