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

Can forfeited shares be re issued at discount if so to what extent?

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

1. In case of the forfeited shares were originally issued at par or at premium, then these shares can be reissued with the maximum discount = amount forfeited on the re-issued share.

Can the forfeited shares be issued at discount only?

Discount thus allowed on re-issue has to be debited to Shares Forfeited Account. … If the discount allowed on re-issue is less than the forfeited amount, there will be a surplus left in the Shares Forfeited Account which will be treated as net gain on forfeiture.

What is the restriction on reissue of forfeited shares at discount?

Board will decide the new price of reissue of shares. These shares can be reissued at par value, at premium value or at discount. There is no restriction on amount of premium for reissue of shares.

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What is the maximum limit of discount allowed to shareholders?

A shareholder paid only the application amount of Rs 3, consequently, these shares were forfeited. Now, if the company want to reissue these shares at discount, then the maximum permissible discount is equal to the amount paid by the original shareholder plus the original discount (i.e. Rs 3 + Rs 2 = Rs 5).

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

The Company can reissue its fortified shares at par, at premium or at discount but the reissue price together with the amount already received on such shares should not be less than the called up amount on each share.

Can forfeited shares be reissued if so at what terms?

Reissue of forfeited shares at par, at discount and at premium, originally issued at premium : If the shares were originally issued at premium, it is not necessary that their reissue after forfeiture is to be at premium. Such shares can be reissued at par, at discount or at premium.

When shares issued can be forfeited?

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.

Can the forfeited shares be reissued?

The forfeited shares can be reissued by the company at any price. But in no case, the amount collected on the reissue of such shares plus the amount already forfeited be less than the amount credited as paid upon reissue of shares.

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How do you calculate gain 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 can profit on reissue of forfeited shares be treated in accounts?

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.

What is profit on reissue of shares?

Forfeited shares can be re-issued. Any amount of profit on re-issue is a capital receipt and should be transferred to capital reserve account because this profit is a capital gain for the company.