1. Buy- Back of Shares and Redemption of Preference shares Concepts, accounting treatment, Income tax applications. By Prof.Augustin Amaladas M.Com., AICWA.,PGDFM.,B.Ed. Prof. Shanthi Augustin M.Com., M.Phil., MBA., B.Ed.

2. An old lady, with shabby looks was picking up something from the sea shore but the people, scared of her, did not allow their children to go near her. What was she picking? Why were the people scared of her?

3. Did she pick up Shells or Stones? Think, before having a look at the next slide.

4. She picked up broken pieces of glass Why did she pick up these?

5. So that these pieces should not harm the children. Judge not by the looks or colour!!!!!

24. If free reserves used For redemption CRR to Fully paid up Bonus shares Bonus shares to Equity shares Revenue profit to Be transferred to CRR account Steps from Left to right Redemption of Preference shares

25. If fresh issue of shares Issued for redemption with CRR Cash received to the extend of Nominal value of shares Premium on issue to be accounted separately + CRR = Nominal value of Redeemable preference shares Note

26. Divisible profits or Profits for redemption 1.Profit and loss Account 2.Reserves 3.Investment fluctuation Reserve 4.Dividend equalisation reserve 1.Security premium 2.Capital Redemption Reserve Account 3.Development rebate reserve 4. Capital profits/reserve 6. Statutory reserve 7. Profits prior to Incorporation Not divisible/Capital profits Kept in the company for ever (Married) Can be used for any purpose (bachelor)

27. If loss occurred due to sale of Any asset Set off such capital with Capital reserve If not enough Set off against revenue Profit. the balance is DIVISIBLE PROFITS

28. Premium on redemption To be set off against existing security premium account and new Security premium on fresh issue of shares If not enough Reduce such deficit with revenue profits Then calculate divisible profits.

29. Amalgamation cost of acquisition of the asset of old company deemed to be the cost of acquisition of the new company(continuing company conversion of bonds or debentures, debenture-stock the cost of acquisition of the asset to the assessee shall be deemed to be that part of the cost of debenture, debenture- stock or deposit certificates in relation to which such asset is acquired by the assessee. If Section 2(1B) is fulfilled it does not attract capital gain as per Income tax Act to share holders. Section 2(1B) states that all assets and liabilities to be transferred to the new company and the new company should be an Indian company. At least 75% of share holders should be the shareholders of the new company(acquiring company)

39. Thank you Help your father/mother in cooking Do your house hold work Without giving excuses.