Question

What are the different ways in which the forfeited shares account can be used?

Answer 1

When the forfeited shares are reissued at a discount, the shortfall is recovered using the credit amount in the Forfeited Shares Account. After the reissue, any money left over in the Forfeited Shares Account is known as a Capital Profit and needs to be moved to a Capital Reserve so that losses or capital expenses can be written off.