Question

Assertion (A): Securities Premium cannot be utilized for writing off loss on sale of a fixed asset.

Reason (R): Securities Premium can be applied only for the purposes mentioned in the Companies Act, 2013.

Choose the correct option from the following:

विकल्प

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

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

• Both Assertion (A) and Reason (R) are false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct reason of Assertion (A).

Explanation:

Securities Premium cannot be used for writing off the loss on the sale of fixed assets because the Companies Act, 2013 limits its use to specific purposes like bonus shares, preliminary expenses, and buy-back of shares.