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Internal Company Reconstruction:Capital Reduction By The Return Of Surplus Capital To Shareholders(Part2)
Published by slang December 1st, 2007 in Co. ReconstructionA simple capital reduction is when a company wants reduce its capital as it has deemed to have too much capital and would want to return surplus cash to its shareholders.
| Internal Company Reconstruction-Capital Reduction | |||||||||
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Accounting For Company Reconstruction- REFUND OF SURPLUS CAPITAL |
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In this case, it is merely a cash outflow where money are return to the shareholders. Company A has 100,000 shares at $1 per share . It has successfully applied to relevant authorities and being given the sanction to reduce its $1 share to 50 cent per share so that one half can be refunded to the shareholders. Accounting entries:-
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Return to Content Page for all articles on company capital reduction/reconstruction/reorganization |
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