internal reconstruction

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janak (Querist)
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04 October 2010 if shares r surrendered by shareholders when the com. is continuesly incurring losses..............& part of surrendered shares r issued to discharege a outside liabilities..........how will it be treated?

Rashaad Hussain

Rashaad Hussain (Expert)
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05 October 2010 Current liabilites Dr
To Shares forfieted.

The liability would be discharged off by the forfeited shares as if new shares are issued to them.

janak

janak (Querist)
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05 October 2010 and rest of the surrendered shares which were not reissued .........will be credited to "capital reduction a/c"

janak

janak (Querist)
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05 October 2010 and if shares given to outside liability, may be of higher value or lesser value regarding the actual value of liability.
in this case ,profit or loss on discharging these outsiders, will be transfered to capital reduction a/c.....?

Srinivas Rao

Srinivas Rao (Expert)
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05 October 2010 For surrendering shares:
Share capital a/c dr.
To Share Surrendered a/c

For cancellation of liabilities who will be receiving shares:
Liabilities a/c dr.
to Capital Reduction a/c

For issue of shares to the liabilities:

Share Surrendered a/c dr.
to share capital
balance of share surrendered transferred to capital reductiona/c.

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