Archive | Company Management

Buy-Back of Shares: 4 Modes | India | Accounting

In this article we will discuss about the four important modes of buy-back of shares. 1. From the existing security holders on a proportionate basis through the tender offer; or 2. From the open market through: (i) Book-building process, (ii) Stock exchange; 3. From odd lots, that is to say, where the lot of securities […]

Provisions for Prohibition of Buy-Back of Shares | India | Accounting

In this article we will discuss about the provisions for prohibition of buy-back of shares. According to Section 77B of the Companies Act, no company shall, directly or indirectly, purchase its own shares or other specified securities: (а) Through any subsidiary company including its own subsidiary companies; or (b) Through any investment company or group […]

Important Conditions for Buy-Back of Shares | India | Accounting

The conditions precedent to buy-back, as laid down in Section 77A (2) of the Companies Act are:- (a) The company’s article should authorise the buy-back. In case the articles are silent on this point, the same has to be amended to include a provision to that effect; (b) No company shall purchase its own shares […]

Accounting Entries for Buy-Back of Shares | India | Company

In this article we will discuss about the accounting entries for buy-back of shares. Buy-back of shares is just the opposite of issue of shares. Just as shares may be issued at par, at a premium or a discount, even buy-back may be at par, at a premium or at a discount. The basis of […]

Buy-Back of Securities: Meaning and Advantages | India | Accounting

In this article we will discuss about:- 1. Introduction to Buy-Back of Securities 2. Meaning of Buy-Back of Securities 3. Sources 4. Advantages. Introduction to Buy-Back of Securities: By virtue of section 77(1) of the Companies Act, 1956, a company limited by shares could not buy its own shares as the same would amount to […]

Treatment of Profit or Loss Prior to Incorporation | Company | Accounting

In this article we will discuss about the accounting treatment for profit or loss prior to incorporation of a company. Sometimes, a company is formed for purchasing certain running or going concern. A company comes into existence only after its registration i.e., its incorporation. A company can earn profits only after its incorporation, but not […]

Determining the Liability of the Underwriters | Accounting

The liability of the underwriter or underwriters will be determined in the following ways. They are:- 1. Complete Underwriting 2. Partial Underwriting 3. Firm Underwriting.  Way # 1. Complete Underwriting: (a) When the whole issue of shares or debentures is underwritten by a single underwriter: When the full issue is underwritten by one underwriter, then […]

Inter-Company Investments | Company

Apart from the inter-company indebtedness, we may also come across inter-company investments in shares or debentures. This situation is studied in the following situations:- 1. Shares may be held by the Transferee (Purchasing) company in the Transferor (Selling) company, or 2. Shares may be held by the Transferor (Selling) company in the Transferee (Purchasing) company, […]

Accounting Provisions Regarding Revaluation | Company

In this article we will discuss about the accounting provisions regarding revaluation of assets and liabilities in the consolidated balance sheet, explained with the help of a suitable illustration. At the time of acquiring shares in a subsidiary company, it is usual for the holding company to revalue the assets and liabilities of the former […]

Winding Up of a Company: 3 Modes | Accounting

The modes of winding up may be discussed under the following three heads, namely:- 1. Compulsory winding up by the court.  2. Voluntary winding up without the intervention of the court.  3. Voluntary winding up with the intervention of the court i.e., under the supervision of the court. Mode # 1. Compulsory Winding Up by […]

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