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Question
Assertion (A): Forfeited shares cannot be issued at a price that is higher than its nominal (face) value.
Reason (R): Forfeited shares is not an issue of shares but sale of shares.
In the context of above two statements, which of the below options is correct?
Options
Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
Assertion (A) is false but Reason (R) is true.
Both Assertion (A) and Reason (R) are false.
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Solution
Assertion (A) is false but Reason (R) is true.
Explanation:
Forfeited shares may be reissued at par, at a discount or at a premium. Hence, they can be reissued at a price higher than their nominal value because reissue is treated as a sale of shares.
