Step 1: Understanding Share Forfeiture
When shares are forfeited due to non-payment of calls or allotment money, the amount previously received on those shares is credited to the Share Forfeited Account.
Step 2: Treatment of Share Forfeited Account Balance
If the forfeited shares have not been re-issued, the balance in the Share Forfeited Account is presented as part of the Shareholders’ Fund, typically under the Capital Reserve heading or sometimes disclosed distinctly.
The amount transferred to Capital Reserve only occurs upon the re-issuance of forfeited shares, representing any profit derived from that re-issue.
Step 3: Conclusion
Consequently, the balance pertaining to forfeited shares that are still un-reissued is retained within the Shareholders’ Fund.