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:
Reason (R): Securities Premium can be applied only for the purposes mentioned in the Companies Act, 2013.
Choose the correct option from the following:
Show Hint
Refer to Section 52 of the Companies Act, 2013 to understand permissible uses of the Securities Premium Account.
Updated On: Feb 4, 2025
- Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct reason of Assertion (A).
- Both Assertion (A) and Reason (R) are true and Reason (R) is the correct reason of Assertion (A).
- Both Assertion (A) and Reason (R) are false.
- Assertion (A) is false, but Reason (R) is true.
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The Correct Option is B
Solution and Explanation
The Companies Act, 2013 specifies the purposes for which the Securities Premium Account can be utilized, such as issuing bonus shares, writing off preliminary expenses, and providing for premiums on redemption of preference shares and debentures. Loss on sale of a fixed asset does not fall under these specified purposes.
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Top Questions on Accounting for Share Capital
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% [Balance Sheet Extract & Notes shown in Question] Notes to accounts' as at 31st March, 2023 \& 2024 show changes in Share Capital.
Analysis from Notes:
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