Question

Assertion (A): Security Premium received on issue of debentures may be utilised for writing off capital losses, such as discount on issue, premium on redemption, preliminary expenses and for declaration of dividend.

Reason (R): Security Premium may be used for issue of fully paid bonus shares.

In the context of the above two statements, which of the following is correct?

Options

• Both (A) and (R) are correct and (R) is the correct reason of (A).

• Both (A) and (R) are correct but (R) is not the correct reason of (A).

• Only (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Only (R) is correct.