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CA Intermediate · Advanced Accounting · Financial Statements of Companies

Under Schedule III (Division I), Veda Pharma Ltd. has 'Securities premium' ₹8,00,000, 'General reserve' ₹5,00,000, 'Surplus (debit balance in Statement of Profit and Loss)' ₹2,00,000 and 'Capital redemption reserve' ₹3,00,000. What amount will be shown as 'Reserves and Surplus' in the Balance Sheet?

Reserves and Surplus is ₹14,00,000. Securities premium, general reserve and capital redemption reserve total ₹16,00,000, and the debit balance of ₹2,00,000 in the Statement of Profit and Loss is shown as a negative figure within reserves and surplus, so it is deducted.

  1. A₹14,00,000Correct
  2. B₹16,00,000
  3. C₹18,00,000
  4. D₹10,00,000

Explanation

Reserves and Surplus includes securities premium, general reserve, capital redemption reserve and surplus. A debit balance in the Statement of Profit and Loss is shown as a negative figure. Total = 8,00,000 + 5,00,000 + 3,00,000 − 2,00,000 = ₹14,00,000. Adding the debit balance gives ₹18,00,000, which is wrong.

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