Amount of Calls in Arrears will be deducted from______ under share cap...
The amount of Calls in Arrears should be deducted from Subscribe but not fully paid up under share capital, while preparing notes to accounts for share capital.
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Amount of Calls in Arrears will be deducted from______ under share cap...
Explanation:
Introduction:
In company law, share capital refers to the total amount of capital raised by a company through the issue of shares. It represents the ownership interest of shareholders in the company. Share capital is divided into different types, such as authorized capital, issued capital, called-up capital, and paid-up capital. Each type represents a different stage in the capital raising process.
Understanding the different types of share capital:
1. Authorized capital: It refers to the maximum amount of share capital that a company is authorized to issue. This amount is specified in the company's memorandum of association and can only be changed by a special resolution of the shareholders.
2. Issued capital: It represents the total value of shares that have been issued by the company to shareholders. When a company issues shares, it receives money or other consideration in return.
3. Called-up capital: It refers to the portion of issued capital that the company has requested shareholders to pay. When shares are issued, the company may not require immediate payment of the full amount. Instead, it may ask shareholders to pay in installments or on a specific due date.
4. Subscribe but not fully paid up: This refers to the situation where a shareholder has agreed to subscribe to shares but has not yet made the full payment. The shareholder is obligated to pay the remaining amount in the future.
Impact of calls in arrears on share capital:
Calls in arrears refer to the unpaid amount of money that shareholders owe to the company for their subscribed shares. This amount represents the difference between the called-up capital and the amount actually paid by shareholders. Calls in arrears are considered a liability of the shareholder to the company.
Deduction of calls in arrears from share capital:
Calls in arrears are deducted from the "Subscribe but not fully paid up" category under share capital. This is because calls in arrears represent the portion of the called-up capital that has not been paid by shareholders. By deducting calls in arrears from the share capital, the company reflects the true value of the capital that has been received from shareholders.
Conclusion:
Calls in arrears are deducted from the "Subscribe but not fully paid up" category under share capital. This deduction reflects the unpaid portion of the called-up capital and provides an accurate representation of the capital raised by the company.
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