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. … There is no limit of the price at which it can be reissued if price charged is more than the price of issue at the time of their forfeiture.
Can the forfeited shares be re-issued?
Forfeited shares are available with the company for sale. … 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. Here, total amount refers to the amount received from the original allottee and the second purchaser.
When forfeited shares are issued at premium The premium amount is credited to?
Forfeiture of Shares
|Share capital account||Dr.|
|Share premium account||Dr.|
|To Share allotment account||Cr.||6,000|
|To Forfeiture calls account||Cr.||4,000|
Can forfeited shares be reissued if so at what terms?
The directors of the company are empowered to re-issue the forfeited shares if authorized by its articles. A forfeited share may be sold or otherwise disposed of, on such terms and in such manner as the Board thinks fit. Such shares may be re-issued at par, at a premium or even at a discount.
What is the procedure for reissue of forfeited shares?
Ascertain that Articles of Association authorize Board to reissue forfeited shares. Check and ensure Board Resolution passed by the Board of Directors at meeting for forfeiture and re-issue are accurate. Ensure correct accounting entries for forfeiting and re-issue.
What is the maximum amount of discount at which 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 shares be re issued at discount?
These shares can be reissued at par, at premium or at discount. … 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.
Why premium is not included in forfeiture of shares?
When a share is forfeited on which the amount of premium has been made do but has not been received, either wholly or partially, the Securities Premium A/c will be cancelled and it will be credited. (Forfeiture of shares originally issued at premium due to non-payment of dues) .
When shares are issued at premium then premium is?
A company issues its shares at a premium when the price at which it sells the shares is higher than their par value. This is quite common, since the par value is typically set at a minimal value, such as $0.01 per share.
What is the minimum price at which a company can reissue its forfeited shares?
Amount equal to the unpaid amount on the forfeited shares/calls-in-arrears.
How can profit on reissue of forfeited shares be treated in accounts?
If a Company makes any loss on reissue of shares, such loss is made good by making adjustments by debiting the Forfeited Shares Account. The balance remaining the forfeited Share Account is a capital profit and it must be transferred to Capital Reserve Account.
What do you mean by reissue of forfeited share?
Reissue of shares simply means issue of share again. Due to numerous reasons a company may forfeit shares of their shareholders. Most common case is due to default in installments such as allotment money or calls. These forfeited are thus supposed to be reissued.