Question
A company initiated the process of raising money by issue of equity shares. It received the share application money, but the allotment is pending. The money received will be recorded as _____ for the company.
Solution
Share application money pending allotment is a liability which is shown as a separate item in the balance sheet. It is a liability since the company is liable to either allot shares against that money or refund it. Any application money received for allotment of securities and due for refund is shown under other current liabilities.
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