A public company has the following balances. Accumulated realised profits 640,000; accumulated realised losses 190,000; accumulated unrealised profits 70,000; accumulated unrealised losses 110,000. Applying ss830 and 831 Companies Act 2006, what is the maximum amount it may distribute?

Correct answer: A) 410,000

Explanation

Step 1 (s830, all companies): net realised profits = 640,000 - 190,000 = 450,000. Step 2 (s831, public companies): the distribution must not reduce net assets below called-up share capital plus undistributable reserves, so any excess of unrealised losses over unrealised profits must also be covered. Net unrealised loss = 110,000 - 70,000 = 40,000. Maximum distribution = 450,000 - 40,000 = 410,000. A private company could distribute 450,000, as unrealised profits can never be distributed and net unrealised losses do not affect it.