There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A):  Forfeited shares may be reissued by the company on terms that are different from the issue of shares.
Reason (R):  Forfeited shares can be reissued at their nominal (face) value or at a premium only, not at discount.

Assertion (A) is correct but the Reason (R) is not correct.

The correct answer is option 4- Assertion (A) is correct but the Reason (R) is not correct.

Assertion (A):  Forfeited shares may be reissued by the company on terms that are different from the issue of shares. THIS IS TRUE.
Reason (R):  Forfeited shares can be reissued at their nominal (face) value or at a premium only, not at discount. THIS IS FALSE as forfeited shares can issued at discount also.

The directors can either cancel or re-issue the forfeited shares. In most cases, they reissue such shares which may be at par, at premium or at a discount. Forfeited shares may be reissued as fully paid at a par, premium, discount. In this context, it may be noted that the amount of discount allowed cannot exceed the amount that had been received on forfeited shares at the time of initial issue, and that the discount allowed on reissue of forfeited shares should be debited to the ‘Forfeited Share Account’. The balance, if any, left in the Share-Forfeited Account relating to reissued Shares, should be treated as capital profit and transferred to Capital Reserve Account.