Purchase of Own Shares

Purchase of Own Shares

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A company wishes to repurchase some shares which were issued some years ago for a nominal value of £1 + £24999 share premium. The consideration for the repurchase is £20,000. Distributable reserves stand at £100,000. Can the company set the £20000 against the share premium on the original issue or must it set it against the distributable reserves?

Guidance much appreciated.
Richard

Richard Condon

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By roymacfarlane
09th Nov 2007 16:32

My view
Step 1

Debit Share capital £1 and Share pemium £24,999 crediting Capital redemption reserve.

Step 2

Dr Reserves £20,000
Cr Cash

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