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Share Buy Back

Accounting Treatment of Share Buy Back

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A Ltd has an issued and fully paid share capital of £100 (100 £1 ordinary shares). Shareholder B has 70 shares and shareholder C has 30 shares. C wishes to dispose of his shares in A limited. A Ltd has the distributable reserves and cash available to buy the shares for a sum of £100,000. When A Ltd pays C £100,000 what is the other side of the entry in the books of A Ltd?

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By johngroganjga
10th Dec 2019 16:44

£30 to share capital and the rest to reserves.

I would need to check whether you still need also to transfer £30 from distributable reserves to Capital Redemption Reserve.

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By thestudyman
11th Dec 2019 08:34

This ICAEW article is pretty good at explaining the mechanics (legal and accounting) of a share buyback

https://www.icaew.com/-/media/corporate/files/members/advisory-helplines...

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