heyya everybody, can anyone plz tell me whether sweat equity shares are potential equity shares? and if not, then also tell me the reason? plz reply... thanx...
3 Replies
rachit jain
(chartered accountant )
(635 Points)
Replied 13 June 2011
according to me sweat equity share are issued to person who work for company for free and in exchange company issue him certain amt of share in good gesture. company afford the cost of these share so these are potential equity.
if i am wrong plz rectify me i would love to know about it in detail.....
PREETI GUPTA
(CA FINAL STUDENT)
(126 Points)
Replied 15 June 2011
HEYYA RACHIT, THANX FOR UR REPLY.. BT I HAV COME TO KNOW DAT SWEAT EQUITY SHARES ARE NOT POTENTIAL EQUITY SHARES... BT I DONT NO THE REASON WHY IT IS SO????
Sagar
(B Com, ACA)
(44 Points)
Replied 02 September 2011
AS 20 defines "potential equity share" as follows -
A potential equity share is a financial instrument or other contract that
entitles, or may entitle, its holder to equity shares
Thus, SWEAT EQUITY SHARES are potential Equity Shares as it entitles the holder (employee) for a equity share.
Thanks
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