Section 78 of the companies act

abhijeet (Querist) 17 September 2012 This query is : Resolved
Dear Sirs,

If the company by mistake invested the share premium amount in the purchase of equity share capital of the other company, how it may rectify the said mistake since Section 78 does not permit utilisation of the share premium amount for the said purpose.

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Guest (Expert) 17 September 2012
It is a type of accounting mistake, which can be rectified by the Company's CA/ Accounts Manager by debit & credit to relevant heads of accounts through journal entries, as perr accounting rules.

abhijeet (Querist) 17 September 2012
Sir,

The entry is for financial year 10-11. The audit of the same is already done and accounts are finalised and updated on MCA.

Guest (Expert) 17 September 2012
You will have to writeback the entries in consultation with your auditors as per the standards laid down by the ICAI.

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