Quick Answer: What is the minimum amount of discount which may be allowed on reissue of shares?

Discount allowed on reissue of forfeited shares should not exceed the amount forfeited, i.e., amount credited to ‘Forfeited Shares Account’s at the time of forfeiture. C.P. of 12 oranges is equal to S.P. of 9 oranges and discount of 10 oranges is equal to profit of 5 oranges .

What is the minimum reissue price of shares?

NCERT Class 11 Economics – Indian …

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.

What is the maximum amount of discount on reissue of shares?

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).

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How is share reissue price calculated?

The shares can be reissued at any price, but there is a clause, it states that the total money received on shares should not be less than the price of shares held in arrears. The total amount includes the price paid by the first allottee and the price paid by the second purchaser.

What is the minimum price at which a company can reissue its forfeited shares which was originally issued at par?

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.

What is the maximum amount of discount on issue?

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.

What maximum amount of discount can be allowed at the time of reissue of forfeited shares when shares were issued at a premium?

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.

When forfeited shares are reissued the amount of discount 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.

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What type of shares can be issued at discount?

As per companies Act 2013, a company shall not issue shares at a discount except as provided in section 54 for issue of sweat equity shares. Any share issued by a company at a discounted price shall be void.

What is loss on reissue of shares?

ADVERTISEMENTS: … ADVERTISEMENTS: 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.

In which account profit on reissue of forfeited shares is transferred?

Answer: If the discount allowed on reissue of shares is less than the forfeited amount, there will be some balance left in the Forfeited Account, which should be transferred to capital reserve, because it is a profit of capital nature. ADVERTISEMENTS: Example: A company forfeited shares of Rs. 100 each.

Which account will be credited if the gain on forfeiture is more than the loss on reissue?

If shares are reissued at par or at a premium, the amount of gain credited to Forfeited Shares Account at the time of forfeiture of these reissued shares will be transferred from Forfeited Shares Account to Capital Reserve.