UGC NET COMMERCE June 2019 Q25

25Redeemable preference shares of Rs.2,00,000 are to be redeemed at par for which fresh equity shares of Rs.80,000 are issued at a discount of 10%. What amount should be transferred to Capital Redemption Reserve Account?

Option : C
Explanation : Transfer of Capital Redemption Reserve = Nominal value of preference shares to be redeemed – proceeds from issue of shares
= 2,00,000 – (80,000 – 80,000 × 10%)
= 2,00,000 – (80,000 – 8,000)
= 2,00,000 – 72,000 = 1,28,000.

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