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LW Global Chapter 18 Questions Capital Maintenance

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Comments

  1. riya24 says

    March 20, 2021 at 6:24 am

    Q4, I am not able to understand why financing of bonus shares isn’t the right answer. Please help me understand why 2nd option and why not 1st.
    Thanks
    Riya

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    • barbjohn says

      March 20, 2021 at 9:12 am

      The option concerning the bonus shares specifies that the shares are to be credited as 95 cents paid. The allowable use of the share premium account re bonus shares is that it may be used to finance the issue of FULLY PAID bonus shares to existing members

      Does that make sense?

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      • riya24 says

        March 20, 2021 at 4:02 pm

        Understood sir. Thank you so much!

  2. ashishbhasin2000 says

    June 18, 2020 at 5:23 pm

    I think there is some mistake in Q>3
    we can pay bonus shares from sec prem acc
    what is the reason behind that
    help me ?

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    • MikeLittle says

      June 18, 2020 at 7:49 pm

      We cannot ‘pay’ bonus shares …

      What we CAN do is finance the issue of fully paid bonus shares to existing members

      The question asks about distributable reserves

      The capital redemption reserve and the share premium account are the two BIG statutory capital reserves and are not distributable

      But the statutory definition of non-distributable reserves includes (in its abbreviated format) ‘accumulated unrealised profits less accumulated unrealised losses’ … and clearly that includes a ‘revaluation reserve’

      Better?

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  3. francihco says

    February 25, 2019 at 12:26 pm

    ahhhh okay, thanks!

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  4. francihco says

    February 25, 2019 at 10:12 am

    Q4, which of the following is not an allowable use of the share premium account? I was under the impression that share premium accounts allow for the issue of bonus shares. Apparently, my impression was wrong, but I don’t get why. Could you give me a hint?
    Cheers,
    Fran.

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    • MikeLittle says

      February 25, 2019 at 11:02 am

      Here’s a hint: credited as 95 pence paid

      OK?

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