What is Watered Capital?


It refers to that portion of the share capital of a joint stock company. Which is not represented by any tangible or realizable assets; thus the amount paid for goodwill is known as watered capital.Watered capital is the value of the eroded capital on account of a company continuously incurring losses. The accumulated losses and other intangible assets are viewed as a percentage of the paid-up capital and watered capital is the residual part of the paid-up capital after accounting the amount of losses.
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