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What is the Maximum Amount of Discount at Which Forfeited Share Can Be Re-issued? - Accountancy

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What is the maximum amount of discount at which forfeited share can be re-issued?

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Solution

The maximum amount of discount that can be allowed at the time of reissue depends upon the following two circumstances:

1. In case of the forfeited shares were originally issued at par or at premium, then these shares can be reissued with the maximum discount = amount forfeited on the re-issued share.

2. In case of the forfeited shares were originally issued at discount, then these forfeited shares can be reissued with the maximum discount equal = amount forfeited on the re-issued share + the discount allowed at the time of original issue.

Concept: Accounting Treatment of Forfeiture and Re-issue of Share
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