Effect of Payment in the books of co.

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Abhi123 (Querist)
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25 March 2010 Mr. X had made a payment towards the instalment of plot and thereafter form a company and become a director cum shareholder of that company. Thereafter company is making payment of instalments which is to be t/f in the name of company after making the full payment. What effect should be given for previous payment made by Mr. X in the books of company. Whether U/L or Share Application Money

Rasesh

Rasesh (Expert)
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25 March 2010 the effect depends on the understanding between the company and its director. If the understanding is that the comapny will issue shares to Mr x then show it as share application money and take a board noting for the same.

However, if the understanding is that the money will be reimbursed by the company then show it as loans from director.