Treatment of Share Application Money Pending Allotment
This query is : Resolved
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Chaitanyaa
(Querist)
20 October 2021
What are the laws regarding Share application Money pending allotment. In which situation, we may classify it as part of Net Worth or whether it will be current/Term Liability?
CA R SEETHARAMAN
(Expert)
20 October 2021
As share application money pending allotment is neither free reserve nor paid up capital, the same cannot be included in the computation of net worth.
The share application money awaiting allotment can be represented on the balance sheet separately between the equity capital and reserves. This will express it as distinct from equity and reserves. Any user of the balance sheet information will have a clear view of the extra funds since they are separately identified.
The share application money awaiting allotment can be represented on the balance sheet separately between the equity capital and reserves. This will express it as distinct from equity and reserves. Any user of the balance sheet information will have a clear view of the extra funds since they are separately identified.
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Chaitanyaa
(Querist)
20 October 2021
Sir,
If the Company says that they have finalized the allotment and money will be appropriated shortly , then Can we treat is as part of Net Worth?
Second thing Sir, Is there any specific period after getting share application money within which the allotment/refund has to be done compulsory??
Thanx and regards
If the Company says that they have finalized the allotment and money will be appropriated shortly , then Can we treat is as part of Net Worth?
Second thing Sir, Is there any specific period after getting share application money within which the allotment/refund has to be done compulsory??
Thanx and regards
CA R SEETHARAMAN
(Expert)
20 October 2021
No, it can't treated as networth.
Allotment shall be done within 60 days of receipt of application money.
Allotment shall be done within 60 days of receipt of application money.
Chaitanyaa
(Querist)
20 October 2021
thank you Sir
Regards
Regards
CA R SEETHARAMAN
(Expert)
20 October 2021
You are welcome.......
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