Why are shares reissued?

Shares are forfeited because only a part of the due amount of such shares is received and the balance remains unpaid. Such sale of shares is called ‘reissue of shares’. Thus reissue of shares means issue of forfeited shares.

What is profit on reissue of shares?

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.

How is share reissue calculated?

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.

What entries are made for forfeiture of shares and their reissue?

If a share is reissued at a loss, on reissue Bank is debited with cash received, Forfeited Shares Account is debited with loss suffered (or discount allowed) and Share Capital Account is credited will the total of the two amounts which is the paid up value of reissued shares.

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.

Is it compulsory to reissue forfeited shares?

Forfeited shares are available with the company for sale. After the forfeiture of shares, the company is under an obligation to dispose off the forfeited shares. The company requires to pass a resolution in its Board Meeting for the re-issue of forfeited shares.

How will you deal with the profit on reissue of forfeited shares?

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 the maximum amount of discount which may be allowed on reissue of shares?

65 is the unpaid amount. Now on reissue of such shares at discount, the maximum discount could be Rs. 35.

When shares are forfeited share capital account is?

When shares are forfeited, share capital account is debited. Explanation: Share Capital Account represents the liability of the company as it is the amount that is borrowed from the public. Therefore, at the time of forfeiture of shares, it is debited with a called-up amount.

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

What amount of gain on reissue will be transferred?

1200 is the gain that will be transferred to the General Reserve.

What happens when a share is reissued at a loss?

If a share is reissued at a loss, on reissue Bank is debited with cash received, Forfeited Shares Account is debited with loss suffered (or discount allowed) and Share Capital Account is credited will the total of the two amounts which is the paid up value of reissued shares.

Can a forfeited share be reissued at any price?

The issuing company can reissue forfeited shares at whatever price they want; typically, the reissue is at a discount to the initial price.

Can a company re issue shares at any price?

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. For example, A pays the application amount of ₹3 on 100 shares of the face value ₹10.

What’s the difference between issued and retired shares?

What are ‘Issued Shares’. Issued shares include the stock a company sells publicly to generate capital and the stock given to insiders as part of their compensation packages. This is in contrast to the shares held as treasury stock and shares that have been retired, which are not included in this figure.