If preference shares of Rs. 2,50,000 are to be redeemed and for that 12,500 equity shares of Rs. 10 each are to be issued at 10% discount, then the amount transferred to capital redemption fund will be

Let’s solve this step-by-step using the concept of Capital Redemption Reserve (CRR) under the Companies Act, 2013 India.
🔹 Key Rule:
When preference shares are redeemed out of fresh issue, the amount to be transferred to CRR =
👉 Nominal value of shares redeemed – Nominal value of fresh issue
⚠️ Important: Discount or premium is ignored for CRR calculation (only face value matters).
🔹 Given:
Preference shares redeemed = ₹2,50,000
Equity shares issued = 12,500 shares of ₹10 each
→ Nominal value of fresh issue = 12,500 × 10 = ₹1,25,000
Issued at 10% discount → irrelevant for CRR
🔹 Calculation:
CRR = 2,50,000 – 1,25,000
= ₹1,25,000
✅ Final Answer:
B. ₹1,25,000

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