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Question
The balance of share forfeited account after the reissue of forfeited shares is transferred to ______?
Options
General reserve
Capital redemption reserve
Capital reserve
Revenue reserve
Solution
The balance of share forfeited account after the reissue of forfeited shares is transferred to Capital reserve.
Explanation:
The forfeited shares are reissued at a discount and fully compensated. It should be highlighted in this context that the amount of discount allowed cannot exceed the amount received on forfeited shares on their original issue and that the discount allowed on reissue of forfeited shares shall be deducted from the 'Share Forfeited Account.' The remaining sum in the Share Forfeited Account, if any, shall be considered capital profit and transferred to the Capital Reserve Account.
