Debenture Redemption Reserve (DRR) is created out of which of the following company resources?
Answer and explanation
Correct answer: B. Profits available for distribution of dividend
- Step 1: Refer to Section 71(4) of the Companies Act 2013 and Rule 18 of Companies (Share Capital and Debentures) Rules.
- Step 2: DRR must be created exclusively out of the profits of the company available for payment of dividend.
- Step 3: Free reserves such as general reserve and surplus in P&L are used for this purpose.
Answer
Profits available for distribution of dividend.
Practise more Company Accounts: Issue of Shares, Forfeiture and Debentures.
Free questions with an explanation for every one, and full timed CA Foundation mock tests.
More Company Accounts: Issue of Shares, Forfeiture and Debentures questions
- A company forfeited 1,000 shares of ₹10 each, ₹8 called up, on which application and allotment of ₹5 was paid. What amount is credited to Sh…
- 500 forfeited shares of ₹10 each (₹7 paid) were reissued at ₹8 per share as fully paid up. What amount is transferred to Capital Reserve Acc…
- Under Table F of Companies Act 2013, what is the maximum rate of interest chargeable on calls-in-arrears if articles are silent?
- A company issued 10,000 12% Debentures of ₹100 each at a discount of 5%, redeemable at a premium of 5%. What is the total Loss on Issue of D…
- Under Section 52(2) of Companies Act 2013, Securities Premium Account cannot be utilized for which of the following purposes?
- Applications are received for 1,50,000 shares against 1,00,000 shares offered. Pro-rata allotment is made. If X applied for 1,500 shares, ho…