Question:
Assertion (A): Securities Premium cannot be utilized for writing off loss on sale of a fixed asset.
Reason (R): Securities Premium can be applied only for the purposes mentioned in the Companies Act, 2013.
Choose the correct option from the following:
Assertion (A): Securities Premium cannot be utilized for writing off loss on sale of a fixed asset.
Reason (R): Securities Premium can be applied only for the purposes mentioned in the Companies Act, 2013.
Choose the correct option from the following:
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Always refer to the provisions of the Companies Act, 2013, when determining the allowable uses of the Securities Premium Account.
Updated On: Jan 29, 2025
- Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
- Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- Assertion (A) is false, but Reason (R) is true.
- Assertion (A) is true, but Reason (R) is false.
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The Correct Option is B
Solution and Explanation
According to the Companies Act, 2013, Securities Premium can only be used for specified purposes such as issuing bonus shares, writing off preliminary expenses, or providing for the premium payable on redemption of preference shares or debentures. Writing off the loss on sale of a fixed asset is not an allowable use.
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