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Forfeiture & Re - Issue of Share With Over Subscription Problem With Solution Video Lecture | Advanced Corporate Accounting - B Com

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FAQs on Forfeiture & Re - Issue of Share With Over Subscription Problem With Solution Video Lecture - Advanced Corporate Accounting - B Com

1. What is the concept of forfeiture and re-issue of shares?
Ans. Forfeiture and re-issue of shares refer to the process where the company cancels the shares of a shareholder who fails to pay the amount due on those shares and then re-issues them to a new shareholder.
2. How does over-subscription occur in the issue of shares?
Ans. Over-subscription happens when the number of shares applied for by investors exceeds the number of shares available for issue by the company. This can lead to a situation where the company has to allocate shares in a fair manner among all applicants.
3. What is the problem associated with over-subscription in the issue of shares?
Ans. The main problem with over-subscription is that it can lead to discontent among investors who do not receive the full number of shares they applied for. This can result in a negative impact on the company's reputation and may affect future share offerings.
4. How can a company handle the problem of over-subscription in the issue of shares?
Ans. One way to handle over-subscription is by conducting a lottery or using a pro-rata allotment method to allocate shares among all applicants. This ensures fairness in the distribution of shares and minimizes the potential for investor dissatisfaction.
5. What are the implications of forfeiture and re-issue of shares on a company's financial statements?
Ans. The forfeiture and re-issue of shares can impact a company's financial statements by affecting the share capital and reserves. The company may need to adjust its balance sheet to reflect the changes in the number of shares outstanding and the amount of capital raised through share issuance.
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