The correct answer is D. All of the above.
Capital profits are profits that arise from the revaluation of assets or the issue of shares or debentures at a premium. They are not included in the profit and loss account, but are instead reported in the statement of changes in equity.
Premium on issue of shares is the amount by which the issue price of a share exceeds its face value. It is a capital profit because it represents an increase in the company’s equity.
Profit prior to incorporation is the profit that a company makes before it is incorporated. It is a capital profit because it represents an increase in the company’s assets that has not been earned through trading activities.
Premium on issue of debentures is the amount by which the issue price of a debenture exceeds its face value. It is a capital profit because it represents an increase in the company’s equity.
Here are some additional details about each option:
- Premium on issue of shares: When a company issues shares, it can sell them for more than their face value. This is known as a premium. The premium is a capital profit because it represents an increase in the company’s equity.
- Profit prior to incorporation: A company can make a profit before it is incorporated. This is known as a profit prior to incorporation. The profit prior to incorporation is a capital profit because it represents an increase in the company’s assets that has not been earned through trading activities.
- Premium on issue of debentures: When a company issues debentures, it can sell them for more than their face value. This is known as a premium. The premium is a capital profit because it represents an increase in the company’s equity.