Hi,
I have just had a company that has just bought the shares from a director. I have posted the surplus to Capital Redemption Reserve however where do I post the Stamp Duty on the transaction?
Thanks
Steve
Steve Baker
Replies (4)
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Without ANY warranty as to whether this is right...
...I believe the entries should be:
Dr Share capital 49
Dr P&L reserves 69,951
Cr Cash 70,000
To record the cash payment out
Dr P&L reserves 49
Cr CRR 49
To set up the CRR
Bear in mind I am a tax person, not an auditor!
All the best.
Check those entries again...
You posted the "surplus" to capital redemption reserve? My understanding was that it was the nominal value of the shares bought back that went to the CRR, with the rest of the transaction (including stamp duty) going straight to P&L reserves.
In longhand, I believe the entries are:
Dr Share capital - nominal value of shares bought back
Dr P&L reserves - surplus on buy-back plus stamp duty
Cr Cash - total paid out
Being share buy-back transactions
Dr P&L reserves - nominal value of shares bought back
Cr CRR - nominal value of shares bought back
Being creation of capital redemption reserve.
Incidentally, I assume this was a buy-back, rather than the redemption of redeemable shares. If the shares were redeemable, my understanding is that there is no stamp duty to pay.