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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Determine the maximum permissible discount and minimum reissue price that a company can allow at the time of reissue of forfeited shares in the following cases: (i) a share of ₹10, originally issued at par, on which application and allotment money of ₹5 was received; (ii) a share of ₹10, originally issued at a premium of ₹1, on which application and allotment money (including premium) of ₹5 was received; (iii) a share of ₹10, originally issued at a premium of ₹1, on which application and allotment money (excluding premium) of ₹5 was received.
MAXIMUM PERMISSIBLE DISCOUNT AND MINIMUM REISSUE PRICE
| Situation | Maximum Permissible Discount | Minimum Reissue Price |
|---|---|---|
| (i) At par, ₹5 received (all face value) | ₹5 | ₹5 |
| (ii) At premium, ₹5 received including ₹1 premium (₹4 face value) | ₹4 | ₹6 |
| (iii) At premium, ₹5 received excluding premium (all ₹5 is face value) | ₹5 | ₹5 |
Rule: The maximum discount allowed on reissue cannot exceed the amount of face value actually forfeited (received) on the share; premium already received is not available to fund a discount (it is not returned even on forfeiture). Minimum reissue price = face value − maximum permissible discount.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.58 - Share Capital", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Share Capital.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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