Multiple Choice Questions (MCQ's) of Accounting

[awaisaftab]

Dear Danish

You explained the capital reserve in god way but you did not mention the capital profit (Capital Reserves) arising from the purchase of subsidiary at lesser amount.

For instantce Comapany A purchased 60% shares of Company B (60,000 thousands shares out of 100,000 shares @ 10 each ) at a cost of 500,000/- . The capital reserve or capital Profit of Comapany A will be

Paid Up value of Shares========== Rs 600.000
(60,000x10)
Amount Paid by Company A =======<u>Rs 500,000</u>
Capital Reserve =============== Rs 100,000/-



This capital profit shall only be available to the equity shareholders for issuing them right share or for any other purpose,alowed by Law.


Regards

Awais Aftab