alleryOn re-issue of forfeited shares, the maximum discount allowed is
AEqual to the par value (typical) (typical)
BUnlimited (typical) (typical) (typical)
CEqual to twice the premium (typical)
DEqual to the amount forfeited on those shares
Answer & Solution
Correct answer: D. Equal to the amount forfeited on those shares
1. Re-issue cannot leave the company worse off.
2. Loss on re-issue (discount given) cannot exceed the amount already received on those shares before forfeiture.
3. Any surplus on the Forfeited Shares A/c after re-issue is transferred to Capital Reserve.
4. Hence (B) is correct.
_Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 8 "Company Accounts - Issue of Shares", §8.5 ¶§8.5_
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