Accountancy Part AAccounting for Shares

Varun Ltd. forfeited 40,000 equity shares of Rs. 100 each for non-pay…

Varun Ltd. forfeited 40,000 equity shares of Rs. 100 each for non-payment of first and final call of Rs. 40 per share. The maximum amount of discount per share at which these shares can be re-issued will be:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Rs 60

Forfeited shares can be reissued at a discount, but the discount cannot exceed the amount already received on them, which is credited to the Share Forfeiture account.

Face value per share = Rs. 100
Call unpaid = Rs. 40
Amount received = Rs. 100 − Rs. 40 = Rs. 60 per share
Maximum discount per share = Rs. 60

Rs. 40 is the amount still unpaid; it is the lowest reissue price, not the largest discount.

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’.”