Business Daily from THE HINDU group of publications
Monday, Sep 29, 2008
ePaper | Mobile/PDA Version | Audio | Blogs
Business Daily from THE HINDU group of publications Monday, Sep 29, 2008 ePaper | Mobile/PDA Version | Audio | Blogs |
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Mentor
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Accounting Standards Columns - For the Asking Free reserves For computing the ceiling on inter-corporate loans/ investments/ guarantees, the paid up share capital and free reserves form the basis. Free reserves are those as appearing in the latest balance sheet. In case there is a substantial accretion to such reserves following a public issue post balance sheet date, that is, March 31, can one go by the latest figure? Anil Cherian, email By just mentioning ‘as per latest balance sheet’ Section 372A allows a company the freedom of getting the balance sheet audited afresh so as to be able to take advantage of the substantial accretion to its free reserves. Incidentally, the same section does not attach the same condition to the other element of the base — paid up share capital. Therefore, one can take advantage of the accretion to the paid up share capital even without going for fresh audit. Perhaps this is an intended omission. There obviously cannot be two norms — one for capital and another for reserves. But till such time the omission is not made good, one can take the capital figure as transient as obtaining from time to time while attributing greater permanence to reserves. S. MURLIDHARAN More Stories on : Accounting Standards | For the Asking
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