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) .
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.
When forfeited shares are issued at premium The premium amount is credited to?
The amount in the account represents the additional amount shareholders paid for their issued shares that was in excess of the par value of those shares. If forfeited shares are re-issued at a premium, the amount of such premium should be credited to such account.
Can securities 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.
Can the forfeited shares be issued at discount only?
Forfeited shares can be reissued at a discount.
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.
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.
What is share issued at premium?
When shares are issued at a price higher than the face value, they are said to be issued at a premium. Thus, the excess of issue price over the face value is the amount of premium. For example, if a share of Rs. 10 is issued at Rs. … the premium on issue of shares must not be treated as revenue profits.
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.
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 happens when shares are forfeited?
When a share is forfeited, the shareholder no longer owes any remaining balance and surrenders any potential capital gain on the shares, which automatically revert back to the ownership of the issuing company.
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 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.
Can forfeited shares be issued at discount explain?
If forfeited shares are re-issued at a discount, the amount of discount can, in no case, exceed the amount credited to Shares Forfeited Account. Discount thus allowed on re-issue has to be debited to Shares Forfeited Account.