Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Issue and Redemption of Debentures NCERT Solutions | What is meant by ‘Redemption out o

Welcome to the NCERT Solutions for Class 12th Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Issue and Redemption of Debentures. This page offers a step-by-step solution to the specific question from Exercise 1, Question 18: what is meant by lsquo redemption out of capital....
Question 18

What is meant by ‘Redemption out of Capital?

Answer

When debentures are redeemed out of capital and no profits are utilised for redemption, then such redemption is termed as redemption out of capital. In such a situation, no profits are transferred to the Debenture Redemption Reserve (DRR)

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