Accountancy Part AAccounting for Shares

The maximum amount of discount on the re-issue of forfeited shares wi…

The maximum amount of discount on the re-issue of forfeited shares will be:-

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → The amount already received at the time of forfeiture.

On forfeiture, the money already paid by the shareholder is kept by the company in the Share Forfeiture Account. A discount on reissue is met out of that balance, so the maximum discount is the amount received on those shares before they were forfeited.

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “… 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’.”