In case a company has purchased certain shares of other company and share certificates have still not been issued by the latter company then under what head should that amount appear in balance sheet? Is it investments or advance???
10 Replies
VINEET
(learner)
(53 Points)
Replied 03 April 2010
The Specified Situation Company should not record investment because we take date of aqu. on date of allotment in case of original issue date and in any other case date of broker note should be taken as recording date.
pls correct me if u find any other answer relvent ans.
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 03 April 2010
It should be treated as "Investment" only. Advances means any amount given in advance by the company to suppliers in ordinary course of the busines.
hope ur doubt will be cleared.
keep smiling....
regards,
ratan
AKSHAY D. C.
(AUDIT AND ACCOUNTS EXECUTIVE)
(26 Points)
Replied 03 April 2010
It will be under the head Investment, coz Bank Statement & resolution for the purchase of such shares will be the primafacie evidence of spending the money for the purchase of shares of that company, & in notes to accounts the fact to be disclosed that the Share Certificate is yet to be receive.
that is what i will sugest , to Group it under Investment.
VINEET
(learner)
(53 Points)
Replied 03 April 2010
the amount paid shoul be disclosed under investment a/c but that should disclosed in that manner so that it can be preceive that the shares are yet to be alloted
Raj Saxena (1412th Tiger)
(Struggling Student)
(272 Points)
Replied 03 April 2010
| Originally posted by : AKSHAY | ||
 |
It will be under the head Investment, coz Bank Statement & resolution for the purchase of such shares will be the primafacie evidence of spending the money for the purchase of shares of that company, & in notes to accounts the fact to be disclosed that the Share Certificate is yet to be receive. that is what i will sugest , to Group it under Investment. |
 |
Mohan
(Accounts Mgr)
(209 Points)
Replied 04 April 2010
obviously it is "investment", but you should undertake from the latter company the shares already to your company and certificates will issue shortly. hav a grt sunday..take care.
CA Anshu Agarwal
(B€ @LW@¥$ ]-[@Pp¥)
(1832 Points)
Replied 05 April 2010
considering the substance over form rather than legal form, it should be treated as investment.
for more detail refer to AS-1.
SACHIN KUMAR GARG
(Final Student)
(105 Points)
Replied 05 April 2010
It should be treated as Investment, coz former company still not issue share certificate, but it will issue the same from the date of allotment e:g
If X Ltd. allot 1000 share @ 10 each to Y Ltd. on 01st March-2010 and X Ltd. not issued the share certificate till 31st March 2010. In that case Y Ltd. shows it as investment of 1000 share @ 10 each in balance sheet, coz X Ltd. bound to issue the share certificate from back date i:e 1st March-2010
Regds
Sachin
shakuntala chhangani
(FCA Course co-ordinator WIRC coaching centre)
(2525 Points)
Replied 13 April 2010
Dear friends, since the query says that the shares were purchased, the fact will be evident from broker's invoice. It takes time to get the share certificate. There is no question of Substance over from as the shares are legally purchased. Hence it should be shown under the head investments in the Balance Sheet.
Regards, CA Shakuntala Chhangani
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