Comprehension
Neera Ltd. is registered with an authorised capital of ₹2,00,00,000 divided into equity shares of ₹10 each. The company invited applications for issuing 2,00,000 equity shares at a premium of ₹2 per share. Applications were received for 1,95,000 shares and allotment was made to all the applicants. All calls were made and duly received except the final call of ₹2 per share on 5,000 shares. The company forfeited these shares.
Answer the following questions:
Answer the following questions:
Question: 1
The amount of ‘Share Capital’ to be shown under the heading ‘Shareholder’s Funds’ will be:
The amount of ‘Share Capital’ to be shown under the heading ‘Shareholder’s Funds’ will be:
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Share Capital reflects the total face value of subscribed shares. It is not reduced for unpaid calls or forfeitures.
Updated On: Jul 17, 2025
- ₹19,50,000
- ₹19,40,000
- ₹20,00,000
- ₹2,00,00,000
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The Correct Option is A
Solution and Explanation
To determine the amount of 'Share Capital' to be shown under the heading 'Shareholder’s Funds,' we analyze the following:
Authorised Capital: ₹2,00,00,000 (divided into ₹10 each shares)
Issued Capital: 2,00,000 shares at a premium of ₹2 per share
Applications Received: 1,95,000 shares
Final Call Unpaid: ₹2 per share on 5,000 shares
Forfeited Shares: 5,000 shares due to non-payment of final call
| Details | Amount |
|---|---|
| Issued Capital (195,000 shares*₹10) | ₹19,50,000 |
| Share Premium (not part of Share Capital) | Ignore |
| Calls in Arrear (5,000 shares * ₹2) | Forfeited |
Therefore, the amount of 'Share Capital' to be shown is ₹19,50,000.
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Question: 2
‘Subscribed but not fully paid capital’ to be shown in ‘Notes to Accounts’ will be:
‘Subscribed but not fully paid capital’ to be shown in ‘Notes to Accounts’ will be:
Show Hint
Calls unpaid on any shares reduce the amount shown as "Subscribed but not fully paid capital."
Updated On: Jul 17, 2025
- ₹19,00,000
- ₹19,40,000
- ₹20,00,000
- Nil
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The Correct Option is B
Solution and Explanation
While the company issued 1,95,000 shares, full payment was not received on all of them.
Each share has a face value of ₹10. The final call of ₹2 per share was not received on 5,000 shares.
Unpaid call amount = 5,000 shares × ₹2 = ₹10,000
Thus, the amount received = ₹19,50,000 – ₹10,000 = ₹19,40,000
This figure represents the portion of capital that has been subscribed but not fully paid, and is disclosed separately in the Notes to Accounts.
Each share has a face value of ₹10. The final call of ₹2 per share was not received on 5,000 shares.
Unpaid call amount = 5,000 shares × ₹2 = ₹10,000
Thus, the amount received = ₹19,50,000 – ₹10,000 = ₹19,40,000
This figure represents the portion of capital that has been subscribed but not fully paid, and is disclosed separately in the Notes to Accounts.
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Question: 3
The amount of ‘Authorised Capital’ to be shown in ‘Notes to Accounts’ will be:
The amount of ‘Authorised Capital’ to be shown in ‘Notes to Accounts’ will be:
Show Hint
Authorised Capital is a statutory ceiling on total share issue and remains constant unless amended by special resolution.
Updated On: Jul 17, 2025
- ₹20,00,000
- ₹2,00,00,000
- ₹19,50,000
- ₹19,40,000
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The Correct Option is B
Solution and Explanation
Authorised Capital is the maximum amount of share capital that a company is allowed to issue as per its Memorandum of Association.
In this case, Neera Ltd. has authorised capital of ₹2,00,00,000, which is equivalent to 20,00,000 equity shares of ₹10 each.
This amount remains unchanged regardless of how many shares are actually issued or subscribed.
Hence, in the Notes to Accounts, the Authorised Capital will be reported as:
2,00,000 shares × ₹10 = ₹2,00,00,000
In this case, Neera Ltd. has authorised capital of ₹2,00,00,000, which is equivalent to 20,00,000 equity shares of ₹10 each.
This amount remains unchanged regardless of how many shares are actually issued or subscribed.
Hence, in the Notes to Accounts, the Authorised Capital will be reported as:
2,00,000 shares × ₹10 = ₹2,00,00,000
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Question: 4
The amount of ‘Issued Capital’ to be shown in ‘Notes to Accounts’ will be:
The amount of ‘Issued Capital’ to be shown in ‘Notes to Accounts’ will be:
Show Hint
Issued Capital = Shares offered to public × Face Value, regardless of actual subscription.
Updated On: Jul 17, 2025
- ₹20,00,000
- ₹9,50,000
- ₹1,00,00,000
- ₹19,40,000
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The Correct Option is A
Solution and Explanation
Issued Capital refers to the portion of Authorised Capital that has been offered to the public for subscription.
Neera Ltd. invited applications for 2,00,000 shares. This number determines the Issued Capital, regardless of how many shares are actually subscribed.
Issued Capital = 2,00,000 shares × ₹10 = ₹20,00,000
Even though only 1,95,000 shares were subscribed and allotted, Issued Capital stays at the number of shares offered.
Neera Ltd. invited applications for 2,00,000 shares. This number determines the Issued Capital, regardless of how many shares are actually subscribed.
Issued Capital = 2,00,000 shares × ₹10 = ₹20,00,000
Even though only 1,95,000 shares were subscribed and allotted, Issued Capital stays at the number of shares offered.
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Question: 5
The amount of ‘Subscribed and fully paid share capital’ to be shown in ‘Notes to Accounts’ will be:
The amount of ‘Subscribed and fully paid share capital’ to be shown in ‘Notes to Accounts’ will be:
Show Hint
Deduct unpaid calls from subscribed capital to calculate “Fully Paid Share Capital”.
Updated On: Jul 17, 2025
- ₹19,50,000
- ₹19,40,000
- ₹19,00,000
- ₹1,90,000
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The Correct Option is B
Solution and Explanation
Out of 1,95,000 subscribed shares, 5,000 shares did not pay the final call of ₹2. This makes them “not fully paid”.
Hence, only 1,90,000 shares are fully paid. But in financial reporting, capital is reported on the basis of amounts actually received, so:
Total amount received = 1,95,000 shares × ₹10 – 5,000 × ₹2 = ₹19,40,000
Thus, Subscribed and fully paid share capital = ₹19,40,000
This figure appears under Share Capital – “Subscribed and Fully Paid-Up”.
Hence, only 1,90,000 shares are fully paid. But in financial reporting, capital is reported on the basis of amounts actually received, so:
Total amount received = 1,95,000 shares × ₹10 – 5,000 × ₹2 = ₹19,40,000
Thus, Subscribed and fully paid share capital = ₹19,40,000
This figure appears under Share Capital – “Subscribed and Fully Paid-Up”.
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Question: 6
The amount of ‘Share Forfeiture’ shown in the ‘Notes to Accounts’ will be:
The amount of ‘Share Forfeiture’ shown in the ‘Notes to Accounts’ will be:
Show Hint
Share Forfeiture = Amount received on forfeited shares; it is a capital reserve unless shares are reissued.
Updated On: Jul 17, 2025
- ₹10,000
- ₹40,000
- ₹5,000
- ₹50,000
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The Correct Option is B
Solution and Explanation
The company forfeited 5,000 shares due to non-payment of final call of ₹2. However, all prior amounts had been received.
Let’s assume share payment structure:
- Application = ₹3 Allotment = ₹3 First Call = ₹2 Final Call = ₹2
Amount received per forfeited share = 3 + 3 + 2 = ₹8
So, total amount credited to Share Forfeiture A/c = 5,000 × ₹8 = ₹40,000
This is shown under the heading “Reserves and Surplus” until the shares are reissued.
Let’s assume share payment structure:
- Application = ₹3 Allotment = ₹3 First Call = ₹2 Final Call = ₹2
Amount received per forfeited share = 3 + 3 + 2 = ₹8
So, total amount credited to Share Forfeiture A/c = 5,000 × ₹8 = ₹40,000
This is shown under the heading “Reserves and Surplus” until the shares are reissued.
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