Share application money

Respected Sir,

The Share Application money received shall not be treated as part of Share Capital as shares are not issued against it. As per my knowledge the Share Appliaction money received shall be shown under the Non-Current Liabilities.

Regards,

Devendra Kulkarni

share application money treated as non current liabilities in BALANCE SHEET 

It is I mean it was suspense capital or share suspense capital

Liability is a present obligation due to past events (Para 59 of framework)

Co. has not resolved to not to allot the shares, as such there is no liability of the Co. to refund the amount, Therefore it can not be classified as a liability.

But this item can not be treated as equity either because these funds can become liability

Treatment should be of share application money pending allotment. Para 8.2 , page 30

https://www.mca.gov.in/XBRL/pdf/Guidance_Note_Rev_ScheduleVI.pdf

This should be shown between Shareholders fund and non current liability AS SEPERATE LINE OF ITEM

Thanks for your valuable commnt,

can company retain the share Application money for unlimited time without alloting shares..??

Practically no because if you want to give this treatment then you will have to make sure that this money is not used in business. That is you will not be able to invest in anything or pay any expense from such funds. These funds will be blocked. What gives? You will rust your money.

As soon as you use it then it will automatically go into capital account and the co will have to issue shares

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 subscripttion 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 subscripttion cannot be included in the amount of subscribed share capital