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Corporate Law

kishor kumar g.c (C A Final Student) (142 Points)

06 January 2011

Under which head Share Application Money received shown in Balancesheet Schedule VI

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12 Replies

Shabnam Siddiqui (Company Secretary) (152 Points)
Replied 06 January 2011

Under Shareholders' Fund

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nidhigoel89 (Company Secretary ) (594 Points)
Replied 06 January 2011

Hello!

That would go under th head of SHARE CAPITAL

Regards

Nidhi

kishor kumar g.c (C A Final Student) (142 Points)
Replied 07 January 2011

Nowhere mentioned in the Schedule VI

nidhigoel89 (Company Secretary ) (594 Points)
Replied 07 January 2011

Hello!

Its true that it is nowhere mentioned in Schedule VI......Bt its a part of share capital and consider to b a liability on co.......As well as its a general practice followed by the accountants.

Regards

Nidhi

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 07 January 2011

Show under Advances.

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kishor kumar g.c (C A Final Student) (142 Points)
Replied 07 January 2011

Hai,

It is neither a part of Share Capital, or Liability the shares may be alloted or not.

We cannot show as a advance

Reg

kishor kumar g.c (C A Final Student) (142 Points)
Replied 07 January 2011

Hai

It is in general practice that Ltd Companies will shown between the Share Capital & Reserves & Surplus in the balanceSheet not in Schedule to Balancesheet but how about Pvt Ltd Companies.

Reg

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 08 January 2011

As on date, share application money is received and shares are not alloted. It's the money received in advance. Definitely it's a liability of the company to be shown on the liability side of the Balance Sheet. As and when shares are alloted, the amount will appear in Paid-up Share Capital again on the liability side of Balance Sheet.

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 08 January 2011

If shares are not alloted, what will you do with this money. You have to return to the applicant. Hence it's a liability of the company.

nidhigoel89 (Company Secretary ) (594 Points)
Replied 12 January 2011

Posted On 25 January 2008 at 17:58

Hello!

Jst think to share it with you.....its one of the prior post posted on CCI. May prove useful.

" The correct accounting treatment in respect of share application money is analysed as below: · Section 211 of the Companies Act, 1956 provides that the balance-sheet of a company shall give a true and fair view of the state of affairs of the company and shall be in the form (either horizontal or vertical) as set out in Part I of Schedule VI. · 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 sub-heads under any of these heads. · Any subscriptttion 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 subscriptttion cannot be included in the amount of subscribed share capital. [ICAI Compendium of Opinions, Vol. XII, pp. 121 to 123]. Share application money, therefore, cannot be treated as ‘Share Capital”. · Share application money only in respect of invalid or revoked applications and excess application money received due to over-subscriptttion, however, may be treated as “Current Liabilities”. The instant case does not satisfy any of the above, hence cannot be treated as “Current Liabilities” Share application money, therefore, can neither be categorized as “Share Capital’ nor “Current Liabilities”. · The ICAI Compendium of Opinions, [Vol. XV, (1996 Edn.) pp. 34 to 36], opines that the “share application money pending allotment” should be shown in the balance-sheet under a separate heading between “Share Capital” and “Reserves and Surplus”. · Share application money is also not an instrument, much less an Equity linked instrument. "

Regards

Nidhi

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kishor kumar g.c (C A Final Student) (142 Points)
Replied 12 January 2011

kishor kumar g.c
C A Final Student [edit]
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[ Scorecard : 129]

Posted On 07 January 2011 at 17:45

Hai

It is in general practice that Ltd Companies will shown between the Share Capital & Reserves & Surplus in the balanceSheet not in Schedule to Balancesheet but how about Pvt Ltd Companies.

Reg

Yes u ar Right Nidhi but it is mandatory for Public Ltd Companies not for Pvt Ltd companies

Reg

Kishor Kumar G.C

nidhigoel89 (Company Secretary ) (594 Points)
Replied 12 January 2011

Hello!

Its ok thats mandatory for public co.

Bt as per ICAI Compendium of Opinions, [Vol. XV, thats the right treatment with share application money.......So you can follow the same for public as well for private...........i think there is no prohibition on private co to treat the share application money in the same manner.

Nidhi