Best answer: What is Share forfeiture account?

A forfeited share is an equity share investment which is cancelled by the issuing company. A share is forfeited when the shareholder fails to pay the subscription money called upon by the issuing company.

What is forfeited account?

What is a Forfeiture Account? A forfeiture account is comprised of participants’ unvested employer contributions. Usually a plan has a vesting schedule for any employer discretionary matching or discretionary profit sharing contributions made to employees.

Which type of account is share forfeiture account?

Q. 13) Share Forfeiture account is : Fictitious Asset.

Where is share forfeiture account?

Accounting Treatment for Forfeiture

The balance in the Share Forfeiture A/c is shown under the Share Capital on the liabilities side of the balance sheet. This account will remain till the said shares forfeited are reissued by the company.

What is forfeiture of share with example?

What Is a Forfeited Share? … For example, a forfeiture may occur if a shareholder fails to pay an owed allotment (call money), or if he sells or transfers his shares during a restricted period.

What is the procedure of forfeiture of shares?

Forfeiture of shares is a process where the company forfeits the shares of a member or shareholder who fails to pay the call on shares or instalments of the issue price of his shares within a certain period of time after they fall due.

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Can forfeited shares be Cancelled?

The shares forfeited can be reissued to another shareholder at a different price by the company. The forfeited shares are generally reissued at a discount to the issue price. This is because the company would have forfeited a portion of the issue price already paid on the shares earlier.

What do you mean by forfeited?

transitive verb. 1 : to lose or lose the right to especially by some error, offense, or crime. 2 : to subject to confiscation as a forfeit also : abandon, give up. forfeit.

What do you mean by reissue of forfeited shares?

Re-issue of forfeited shares is a mere sale of shares for the company. A company does not make allotment of these shares. … A company can re-issue these shares at any price but the total amount received on these shares should not be less than the amount in arrears on these shares.

When shares are forfeited share forfeited account is credited by?

When shares are forfeited, the share capital A/c is debited with paid-up capital of shares fortified and the share forfeiture A/c is credited with called up capital of shares forfeited.

Can fully paid shares be forfeited?

Fully paid-up shares are those shares on which the shareholders’ have paid the entire amount due from such shares. Forfeiture of shares is done when a shareholder fails to pay the amount when called by the company. ​Therefore, what we can say is that fully paid-up shares cannot be forfeited.

Can a shareholder cancel shares?

Cancellation of shares as part of share capital reduction involves the approval of all shareholders. It is a mandatory cancellation of shares and sometimes involves payment by the company. However, a company can proceed with this option only if: Approved by shareholders.

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Can security premium be Cancelled on forfeiture of shares?

In case securities premium has been duly received on the shares to be forfeited, the Securities Premium Reserve Account already credited at the time of making call will not be cancelled at the time of forfeiture of shares.