Kit Library / Commerce / Accountancy & Taxation
⚡ Topic Learning KitShared by a Veda learner · Generated with Veda AI
Veda Bites are swipeable micro-lessons — each one teaches exactly one idea. Here's a taste from this kit; the app has the full deck.
Reduce capital, erase losses, rebuild the balance sheet.
In internal reconstruction, share capital is reduced to write off accumulated losses and overvalued assets, so the company gets a realistic, healthy balance sheet without liquidating.
↳ Reconstruction = sacrifice by shareholders + write-offs of losses/assets = a clean balance sheet.
How much did shareholders sacrifice?
For Devis Ltd.: Equity = 2000 × 87.50 = ₹1,75,000; Preference = 1500 × 50 = ₹75,000; Total = ₹2,50,000.
↳ Total capital reduction = ₹2,50,000, which funds all write-offs and the Capital Reserve.
Four entries solve the whole problem.
↳ All write-offs are debited to Capital Reduction A/c; the remaining balance is transferred to Capital Reserve.
This topic covers two high-value exam areas: capital reduction (internal reconstruction) through journal entries and post-reconstruction balance sheets, and computation of taxable income and tax liability for individuals…
~25 min · full explanation, examples & memory tricks in the app
16 questions laddered from warm-up to topper-level, each with an explanation. A taste:
What is the primary purpose of capital reduction in internal reconstruction?
BeginnerTo shrink the capital base and write off losses
Capital reduction shrinks the capital base so the balance sheet reflects reality by writing off accumulated losses and fictitious assets.
In Devis Ltd., what is the total reduction pool from equity and preference shares before adding depreciation provision?
Beginner₹2,50,000
Equity reduction ₹1,75,000 + Preference reduction ₹75,000 = ₹2,50,000.
Which section of the Companies Act, 2013 governs internal reconstruction?
BeginnerSection 66
Section 66 of the Companies Act, 2013 governs internal reconstruction.
Under the Default Tax Regime (DTR), what deduction is available for a person with 82% disability?
Beginner₹1,25,000 under Section 80U
Under DTR, a person with 82% disability can claim ₹1,25,000 deduction under Section 80U.
30 flashcards in this kit — the app reviews them with spaced repetition so the right card returns on the right day.
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