Accountancy Part AAccounting for Shares

If a share of Rs. 10 on which Rs. 7 has been paid is forfeited, at wh…

If a share of Rs. 10 on which Rs. 7 has been paid is forfeited, at what minimum price can it be reissued ?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Rs. 3

Forfeited shares may be reissued at a discount, but the discount cannot be more than the amount already received on those shares (the amount forfeited).

Amount forfeited per share = Rs. 7
Maximum discount on reissue = Rs. 7
Minimum reissue price (as fully paid Rs. 10 share) = Rs. 10 − Rs. 7 = Rs. 3

At Rs. 3 the company still receives Rs. 7 + Rs. 3 = Rs. 10 in all on the share, its full face value.

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “The directors can either cancel or re-issue the forefeited 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’.”

NCERT (2026-27 edition):
Test Your Understanding – III

Extract from the NCERT textbook