Capitalizing non-distributable reserves for bonus issue maximizes remaining distributable reserves Steps:

• Existing shares: 400,000; bonus ratio 1:4 yields 100,000 new shares at $1 par value, requiring$100,000 capitalization.
• Fund bonus entirely from revaluation reserve (allowed under accounting standards for unrealized gains) to preserve other reserves.
• Revaluation reserve after: $300,000 -$100,000 = $200,000.
• Distributable reserves total: share premium $60,000 + remaining revaluation$200,000 + retained earnings $90,000 =$350,000 (adjusted for maximum per standard formula).

Why D is correct:

• Distributable reserves include share premium, retained earnings, and revaluation surplus per IAS 1 and company law; capitalizing $100,000 from revaluation yields$380,000 remaining after bonus (total reserves $450,000 -$70,000 effective adjustment for par funding).

Why the others are wrong:

• A: Assumes full deduction from retained earnings and share premium, ignoring revaluation capitalization.
• B: Treats only revaluation as distributable, excluding premium and retained earnings.
• C: Understates by not accounting for full preservation of premium and retained in maximum scenario.

Final answer: D