Can forfeited shares be re issued at discount?

These shares can be reissued at par, at premium or at discount. Generally, these shares are reissued at a discount i.e. at a price which is less than its nominal value. The amount of discount allowed at the time of reissue in no case should be more than the amount forfeited on such shares.

Can forfeited shares be issued at discount?

Forfeited shares can be reissued at a discount.

In what ways forfeited shares are reissued?

When forfeited shares are originally issued at discount are reissued then discount allowed at the time of original issue is again applicable. On reissue of shares, the discount on issue of shares account is debited by the original discount amount.

When forfeited shares are reissued the amount of discount allowed on these shares Cannot exceed?

Forfeited shares can be reissued as fully paid at a par, premium or discount. In this, it may be noted that the amount of discount allowed cannot exceed the amount that had been received on forfeited shares at the time of initial issue. Joy Ltd. issued 1,00,000 equity shares of Rs 10 each.

THIS IS IMPORTANT:  Does Discount Tire warranty cover slashed?

When all forfeited shares are not reissued?

Forfeited shares originally issued on premium where premium money was not received need not be reissued at premium. However, if reissue price is sufficient enough, then the share premium can be re-recorded and the balance can be transferred to capital reserve. Illustration 1: Moonshine Company Ltd.

What is the maximum amount of discount at which the forfeited shares can be re-issued?

2. In case of the forfeited shares were originally issued at discount, then these forfeited shares can be reissued with the maximum discount equal = amount forfeited on the re-issued share + the discount allowed at the time of original issue.

Can forfeited share be re-issued at premium?

These shares can be reissued at par, at premium or at discount. Generally, these shares are reissued at a discount i.e. at a price which is less than its nominal value. The amount of discount allowed at the time of reissue in no case should be more than the amount forfeited on such shares.

How do you calculate profit on reissue of forfeited shares?

At the time of reissue of forfeited shares a discount of Rs 2 per share is allowed so the total amount of discount of Rs 400 is adjusted from the forfeited amount of Rs 600 and the balance amount of Rs 200 is transferred to Capital Reserve A/c being a capital gain.

How are the shares forfeited and reissued give example?

Solved Example For You

A, a shareholder having 1000 shares fails to pay the allotment and call money until the due date of payment. Consequently, the company forfeits his shares. Later, it re-issues these shares to B for ₹11 per share fully paid up. Pass the necessary journal entries in the books of MN Ltd.

THIS IS IMPORTANT:  Best answer: How do you find the discount rate of an investment?

Which accounts profit on reissue of forfeited share posted to?

When a company re-issues only a part of the forfeited shares, then it will transfer only the profit relating to this part to the capital reserve. When a company re-issues shares at a price more than their face value, it needs to transfer the excess amount to the Securities Premium A/c.

When can shares be forfeited?

A company can forfeit shares only when the Articles of Association of the company contain a provision for share forfeiture. A shareholder subscribing to the shares of a company owes the subscription price of the shares to the company. The company may call upon the shareholder to pay the price in instalments.

What is the minimum price at which a company can reissue its forfeited shares?

The Re-issue price of forfeited shares must be at least equal to the difference between the paid up value of Re-issued Shares and the Amount Forfeited on Re-issue Shares. In other words, Re-issue price must not be less than the amount unpaid on Forfeited Shares.

When all the forfeited shares are reissued then balance of share forfeited account is transferred to account?

Balance of forfeited shares Account after re-issue of forfeited shares is transferred to Capital account.

Is it compulsory to reissue forfeited shares?

1 Answer. It is not at all compulsory to reissue forfeited shares. … A company may not reissue forfeited shares unless it requires further funds. If the company does not reissue the forfeited shares, it will reduce the number of issued shares (issued share capital) in the Balance Sheet of the company.

THIS IS IMPORTANT:  How much is Telstra student discount?
Bargain purchase