Accountancy Part AAccounting for Shares

If a share of Rs. 100 on which Rs. 45 has been paid is forfeited at w…

If a share of Rs. 100 on which Rs. 45 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. 55

A forfeited share may be reissued at a discount. But the discount cannot be more than the amount already received on that share and forfeited. Here Rs. 45 was received, so the largest discount allowed is Rs. 45.

Face value of the share = Rs. 100

Amount forfeited (paid by the old holder) = Rs. 45

Maximum discount on reissue = Rs. 45

Minimum reissue price = Rs. 100 − Rs. 45 = Rs. 55

Rs. 45 is the most discount the company may allow, not the price the new holder pays.

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’.”

Test Your Understanding

Extract from the NCERT textbook