redemption of redeemable preference shares
redemption of redeemable debentures
reorganisation of share capital
issue of bonus shares
Answer is Right!
Answer is Wrong!
The correct answer is: A. redemption of redeemable preference shares.
A capital redemption reserve account is a reserve account that companies can use to redeem redeemable preference shares. Redeemable preference shares are shares that have a fixed term and can be redeemed by the company at a specified price. The capital redemption reserve account is funded by the company’s retained earnings.
The other options are incorrect because:
- B. redemption of redeemable debentures: Redeemable debentures are loans that can be redeemed by the company at a specified price. The capital redemption reserve account is not used to redeem redeemable debentures.
- C. reorganisation of share capital: A reorganisation of share capital is a change to the company’s share capital structure. The capital redemption reserve account is not used to reorganise share capital.
- D. issue of bonus shares: Bonus shares are shares that are issued to existing shareholders without any additional payment. The capital redemption reserve account is not used to issue bonus shares.