If the company is buying back shares at a valuation well in excess of their issued or par value and it has no accumulated profits but an asset revaluation reserve, should the excess of the buy-back over the par value be debited against the reserve account or added to accumulated losses?
Md Ariful Islam
বিএসসি(সিএসই)
,
এমবিএ(মার্কেটিং)
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Dr. Md Rushad Rahman
এমবিবিএস(আরপিএমসি)
,
পিজিটি(মেডিসিন)
According to the IAS 16, the loss on the stock buy back would be charged to accumulated losses in this situation and not to the revaluation reserve. The revaluation reserve is adjusted only for valuation changes to fixed assets or fixed asset retirements. With no accumulated or retained earnings, the resulting buy back loss would be a current period addition to accumulated losses on the balance sheet only. There should be no gain or loss recorded in the income statement from a buyback.
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