Question

In preparing financial statements as per Schedule III of

Q: Answer-In preparing financial statements as per Schedule III of the Companies Act, ABC Ltd. classifies ‘Sha...

If the conditions of allotment are met, such application money is part of equity and not a liability.

the Companies Act, ABC Ltd. classifies ‘Share Application Money Pending Allotment’ under current liabilities. The amount is intended for equity shares and complies with conditions of allotment. Is this classification correct?

A Yes, if allotment not done within 12 months

B No, it should be shown under equity

C Yes, since it's money received in advance

D No, it should be disclosed in notes

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In preparing financial statements as per Schedule III of

Solution