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Which of the reserves ll b debited for the finance of Bonus issue when it says” to leave the reserves in the most flexible manner..” Smts it adebits Share Premium early n Smts Revaluation.. M very confused.. Please help me out.. And also could u please provide me with a trick to identify a Distribution cost and Admin cost..
Waiting for ur responseAs I explain in the free lectures, you have to debit a reserve and most sensibly you will debit capital reserves. Of the two capital reserves (share premium and revaluation) it would make more sense for it to be share premium because it is the only way of using it (the revaluation reserve would disappear anyway when the relevant asset was eventually sold).
(You asked exactly the same question just over two years ago, and you replied ‘Got it’ to my answer 🙂 )There is no ‘trick’ to identifying distribution and admin costs. Distribution costs are all those costs relating to selling and delivering. Admin costs are all ‘office’ costs (all those costs that do not relate to the factory or to the selling and delivering).
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