Internal Reconstruction - Surrendered shares

Accountancy

Settlement of contingent liability during internal reconstruction by issuing shares using surrendered shares: Journal entries: 1. Shares surrendered: Equity share capital a/c dr. To Share surrender a/c 2. Settlement of Contingent Liability using surrendered shares Share surrender a/c dr. To Equity share capital a/c Doubt: Why there is no "Reconstruction a/c" is involved in this case?

Girinath A

CA Inter

★ 765

25-Mar-26 19:51

199

Answers (2)

The reduced capital results in gain and settlement of contingent liability results in a loss. So net impact is nil

CA Suraj Lakhotia

Admin

26-Mar-26 10:15

CA Suraj Lakhotia Admin

The reduced capital results in gain and settlement of contingent liability results in a loss. So net impact is nil

Thank You Sir

Thread Starter

Girinath A

CA Inter

★ 765

26-Mar-26 10:54