Small company preparing accounts FRS102 s1A has bought back shares from one of the shareholders and subsequently cancelled these. The shares were issued at nominal value of £1 and has been bought back for 6 figure sum.
I need to clarify couple of points from company's perspective for this buyback:
1. There is no doubt the transaction will reduce reserves but need to understand whether this needs to go through Income Statement or will simple be posted as "purchase of own shares" within reserves without affecting Income Statement
2. For CT purposes, would this be treated as capital loss?