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Debit Cash / bankCredit share application accountDebit Share Application accountcredit share capital account
The correct accounting treatment in respect of share application money is analysed as below: · Section 211 of the Companies Act, 1956 provides that the balance sheet of a company shall give a true and fair view of the state of affairs of the company and shall be in the form (either horizontal or vertical) as set out in Part I of Schedule VI. · The broad heads under "Liabilities" therein are (i) Share Capital, (ii) Reserves and Surplus, (iii) Secured Loans, (iv) Unsecured Loans and (v) Current Liabilities and Provisions. The item of 'share application money' does not appear in the subheads under any of these heads. · Any subscription received by a company against issue of share capital can be regarded as "subscribed share capital" only when the share capital is actually subscribed and allotted as well. Until the allotment is made, any subscription cannot be included in the amount of subscribed share capital. [ICAI Compendium of Opinions, Vol. XII, pp. 121 to 123]. Share application money, therefore, cannot be treated as 'Share Capital". · Share application money only in respect of invalid or revoked applications and excess application money received due to over-subscripttion, however, may be treated as "Current Liabilities". The instant case does not satisfy any of the above, hence cannot be treated as "Current Liabilities" Share application money, therefore, can neither be categorized as "Share Capital' nor "Current Liabilities". · The ICAI Compendium of Opinions, [Vol. XV, (1996 Edn.) pp. 34 to 36], opines that the "share application money pending allotment" should be shown in the balance-sheet under a separate heading between "Share Capital" and "Reserves and Surplus". · Share application money is also not an instrument, much less an Equity linked instrument.
The sahre application is very much a part of the sahre holders money, hence, the same should be treated at par with the share capital unless the period of 60 days has been elapsed.
[Debit] Cash account xxxxx [Credit] Share application account xxxxx Entry 2 [Debit] Share Application account xxxxx [Credit] Share Capital Account xxxxx
Share premium account is that amount in which amount in excess of par value of shares is received while share application accounts records all money received from potential investors in process of share issue.
Debit Cash / bankCredit share application accountDebit Share Application accountcredit share capital account
bank A/C Dr To Share Applications A/C (APPLICATION MONEY FOR_____ SHARES@Rs _____per share received share application a/c Dr TO SHARE CAPITAL A/C (APPLICATIONS MONEY ON _____ SHARES AT Rs ____ PER SHARE ALLOTED AS PER DIRECTORS RESOLUTION NO____DATED____TRANSFERED TO SHARE CAPITAL
The correct accounting treatment in respect of share application money is analysed as below: · Section 211 of the Companies Act, 1956 provides that the balance sheet of a company shall give a true and fair view of the state of affairs of the company and shall be in the form (either horizontal or vertical) as set out in Part I of Schedule VI. · The broad heads under "Liabilities" therein are (i) Share Capital, (ii) Reserves and Surplus, (iii) Secured Loans, (iv) Unsecured Loans and (v) Current Liabilities and Provisions. The item of 'share application money' does not appear in the subheads under any of these heads. · Any subscription received by a company against issue of share capital can be regarded as "subscribed share capital" only when the share capital is actually subscribed and allotted as well. Until the allotment is made, any subscription cannot be included in the amount of subscribed share capital. [ICAI Compendium of Opinions, Vol. XII, pp. 121 to 123]. Share application money, therefore, cannot be treated as 'Share Capital". · Share application money only in respect of invalid or revoked applications and excess application money received due to over-subscripttion, however, may be treated as "Current Liabilities". The instant case does not satisfy any of the above, hence cannot be treated as "Current Liabilities" Share application money, therefore, can neither be categorized as "Share Capital' nor "Current Liabilities". · The ICAI Compendium of Opinions, [Vol. XV, (1996 Edn.) pp. 34 to 36], opines that the "share application money pending allotment" should be shown in the balance-sheet under a separate heading between "Share Capital" and "Reserves and Surplus". · Share application money is also not an instrument, much less an Equity linked instrument.
The sahre application is very much a part of the sahre holders money, hence, the same should be treated at par with the share capital unless the period of 60 days has been elapsed.
This is the sum of money the shareholders pay into which is called the share capital This is the sum of money the shareholders pay into which is called the share capital
[Debit] Cash account xxxxx [Credit] Share application account xxxxx Entry 2 [Debit] Share Application account xxxxx [Credit] Share Capital Account xxxxx
Share application money pending allotment is nothing but the application amount is received and shares are not alloted by the company.share warrants are bearer documents which are used at the time of share transfer
Paid in capital includes the preference share capital as well as common share capital as well.
Share premium account is that amount in which amount in excess of par value of shares is received while share application accounts records all money received from potential investors in process of share issue.
Share capital is equity in the company. It is money raised by the company in exchange for issuing ownership of shares. Working capital is the money that is borrowed from a bank for a business to pay operating expenses.
1. When cash received[Debit] Bank/Cash xxxx[Credit] Share application xxxxwhen shares allotted[Debit] Share application xxxx[Credit] Share capital (face value) xxxx[Credit] Share premium [value above face] xxxx
Yes share capital is part of equity which may includes other kind of capital as well like owner’s capital etc