If a company buys back shares of nominal value ₹50 lakh out of free reserves at a premium, the transfer to CRR will be:
A₹50 lakh (equal to nominal value)
BBuy-back price × shares
CPremium amount only
DNo transfer needed
Answer & Solution
Correct answer: A. ₹50 lakh (equal to nominal value)
1. Step 1: CRR transfer equals NOMINAL value of bought-back shares.
2. Step 2: Premium portion is adjusted against free reserves / securities premium separately.
3. Step 3: Hence (A).
_Source: ICAI BoS CA Inter Paper 1, Ch 12 "Buy-Back of Securities"_