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New queries: Another capital idea; Share swap...

17 September 2013
Issue: 4420 / Categories: Forum & Feedback

...Problem with parts; Interest payments

Another capital idea

I act on behalf of a limited company and the latest accounts show the following entries: share capital £100; share premium £249 900 profit and loss reserves £10 000; total £260 000. These entries are represented by: cash £250 000; stock and working capital £10 000; total £260 000.

The share premium account was created on the transfer of a partnership business to the company about 15 years ago before I was acting. This was at book value which was mainly represented by stock/cash.

Due to trading conditions the company has generated very low profits over the past few years and no dividends have been paid since incorporation.

It is anticipated that the company will cease trading when the lease of its premises expires in three years’ time.

The husband and wife shareholders/directors are both about 70 years old and are...

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