Calculating Capital Reserve on Share Forfeiture and Reissue
This solution explains the calculation for the amount transferred to the Capital Reserve Account when shares are forfeited and subsequently reissued.
Step 1: Calculate Amount Forfeited Per Share
First, determine the amount received per forfeited share. This is the portion of the share's face value that the company has collected.
Amount Received = ₹300
Number of Shares Forfeited = 100
Amount Forfeited per Share = $ \frac{₹300}{100 \text{ shares}} = ₹3 \text{ per share} $
Step 2: Calculate Amount Forfeited on Reissued Shares
Next, calculate the total amount forfeited that relates specifically to the shares that were reissued.
Number of Shares Reissued = 60
Amount Forfeited on Reissued Shares = $ ₹3 \text{ per share} \times 60 \text{ shares} = ₹180 $
Step 3: Calculate Discount on Reissue
Determine the discount given when the shares were reissued. The discount is the difference between the nominal (face) value of the reissued shares and the price at which they were reissued.
Nominal Value per Share = ₹10
Reissue Price per Share = ₹9
Discount per Share = $ ₹10 - ₹9 = ₹1 $
Total Discount on Reissue = $ ₹1 \text{ per share} \times 60 \text{ shares} = ₹60 $
Step 4: Calculate Amount Transferred to Capital Reserve
The amount transferred to the Capital Reserve Account is the forfeited amount on the reissued shares minus any discount given on their reissue. This represents the realized gain on the transaction.
Amount Transferred to Capital Reserve = Amount Forfeited on Reissued Shares - Total Discount on Reissue
Amount Transferred to Capital Reserve = $ ₹180 - ₹60 = ₹120 $
Therefore, ₹120 is transferred to the Capital Reserve Account.
Important Questions from Corporate Accounting
In order to compensate the investors, what kind of debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures?
If the value of debentures is less than the value of the net asset taken over, then the difference will be credited to:
The part of capital which is called-up only on winding up is called ______.
From which of the following, companies cannot buy its own shares?
In order to compensate the investors, what kind of debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures?
