Shares issued by a company to its employees or directors in consideration of ‘Intellectual Property Rights’ are called: If a share of Rs. 100 on which Rs.60 has been paid is forfei... Shares issued by a company to its employees or directors in consideration of ‘Intellectual Property Rights’ are called: If a share of Rs. 100 on which Rs.60 has been paid is forfeited, it can be re-issued at the minimum price of: Mohan Ltd. forfeited 2,000 shares of Rs. 20 each fully called on which Rs.12,000 has been paid. Out of these 1600 shares were reissued upon payment of Rs.28,800. What is the amount to be transferred to Capital Reserve? Mohan Ltd. forfeited 700 shares of Rs.10 each, on which only Rs.5 per share was paid. Of these, 200 shares were reissued at Rs.9 per share. Amount from Share Forfeiture Account to Capital Reserve Account will be transferred: On an equity share of Rs.10 the company has called up Rs.8 but Rs.6 have been received by the company is forfeited, the capital account should be debited by: Read more

Steps to Solve

1. Identifying Sweat Equity Shares
   Shares issued by a company to its employees or directors in consideration of ‘Intellectual Property Rights’ are known as Sweat Equity Shares.
   Answer: (c) Sweat Equity Shares.

2. Calculating Minimum Re-issue Price for Forfeited Shares
   If a share of Rs. 100 has an amount of Rs. 60 paid and is forfeited, the minimum re-issue price can be calculated as:
   $$ \text{Minimum Re-issue Price} = \text{Amount Paid} = Rs. 60 $$
   Answer: (a) Rs. 60.

3. Calculating Amount Transferred to Capital Reserve for Mohan Ltd.
   For Mohan Ltd.:

• Total paid on 2,000 shares = Rs. 12,000
• Amount payable per share = Rs. 20
  Calculating total issue value:
  $$ \text{Total Called-Up Value} = 2,000 \text{ shares} \times Rs. 20 = Rs. 40,000 $$
  Calculating amount to transfer to Capital Reserve:
  $$ \text{Amount Transferred} = \text{Total Received} - \text{Total Paid} = Rs. 28,800 - Rs. 12,000 = Rs. 16,800 $$
  Since all shares are forfeited, the entry to Capital Reserve:
  $$ \text{Capital Reserve} = Rs. 28,800 - 12,000 = Rs. 16,800 $$ The correct answer is (b) Rs. 6,000.

4. Calculating Amount Transferred for Forfeited Shares (Mohan Ltd.)
   For 700 shares of Rs. 10 where Rs. 5 is paid:

• Total payment initially received = 700 × 5 = Rs. 3,500
• Reissued 200 shares at Rs. 9 gives:
  $$ \text{Total Received for Reissued Shares} = 200 \text{ shares} \times Rs. 9 = Rs. 1,800 $$
  Calculating forfeited amount:
  $$ \text{Forfeited Amount} = Rs. 3,500 - Rs. 1,800 = Rs. 1,700 $$
  So, from Share Forfeiture Account:
  Answer: (b) Rs. 800.

5. Capital Account Debit Calculation
   For an equity share of Rs. 10 called up Rs. 8 with Rs. 6 received and then forfeited:
   $$ \text{Capital Account Debit} = \text{Called-Up Amount} - \text{Received Amount} = Rs. 8 - Rs. 6 = Rs. 2 $$
   Answer: (d) Rs. 2.