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Points to Remember

 1. Loss on re-issue should not exceed the forfeited amount.

2. If the loss on re-issue is less than the amount forfeited, the surplus should be transferred to capital reserve.

3. The forfeited amount on shares not yet re-issued should be shown in the balance sheet as an addition to the share capital.

4. When only a portion of the forfeited shares are re-issued, then the profit made on reissue of such shares must be transferred to capital reserve.

5. When the shares are re-issued at a loss, such loss is to be debited to “Forfeited shares account”.

6. If the shares are re-issued at a price which is more than the face value of the shares, the excess amount will be credited to securities premium account.

7. If the re-issued amount and forfeited amount (taken together) exceeds the face value of the share re-issued, it is not necessary to transfer such amount to securities premium account.

8. When shares, originally issued at a discount, are reissued at a loss, the loss to the extent of original discount is debited to discount of issue of shares account and the balance loss is debited to forfeited shares account.

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