Page 46 - IC26 LIFE INSURANCE FINANCE

Securities Premium A/c Dr.
To Share Allotment A/c
To Share First & Final Call A/c
To Share Forfeited A/c

Note 1 - If the amount of Securities Premium has been received earlier it cannot be cancelled later.

Note 2 - Securities premium is cancelled with that amount only which is not received.

Re-issue of forfeited shares : A forfeited share is merely a share available to the company for sale and
% vested in the company for that purpose only. Reissue of forfeited share is not allotment of shares but
only a sale. Accounting Treatment will be as follows;

(i) Bank A/c Dr.

Forfeited Share A/c Dr.

To Share Capital A/c

(For Shares reissued)

(ii) Forfeited Shares A/c Dr.

To Capital Reserve A/c

(For amount of balance of forfeited transferred to Capital Reserve)

Issue of shares for consideration can be issued in a direct exchange for land and building or other
assets. Shares may also be issued in payment for services rendered by Promoters, lawyers in the
formation of the company. Accounting treatment will be as follows :

(i) When assets purchased in exchange of Shares
Assets A/c Dr.
To Share Capital A/c

(ii) When shares are issued to promoters

Goodwill A/c Dr

To Share Capital A/c

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