Share application money pending allotment

Anushka (Professional) (61 Points)

01 December 2014  

While analysing the Balance Sheet of a Public Limited Company, I came across a Head called "Share Application Money pending Allotment", wherein a huge amount is being depicted on the BS for 3 years and it is being consistently increasing year by year.

1. What will be the effect of this share application money pending allotment as per Accounting Standards are corcerned on the borrowing Company??  what will be the entry in the books of accounts of the Funding Company??

2. Will it be treated as Loan and advances in the books of Accounts of the Funding Company??

3. If in case the borrowing Company wants to show this money as current liabilites, will it possible to show it ??