Where is Share Application money receiced is shown in balance sheet?

The correct accounting treatment in

respect of share application money is analysed as below: · Section

211 of the Companies Act, 1956 provides that the balance sheet of a

company shall give a true and fair view of the state of affairs of

the company and shall be in the form (either horizontal or

vertical) as set out in Part I of Schedule VI. · The broad heads

under "Liabilities" therein are (i) Share Capital, (ii) Reserves

and Surplus, (iii) Secured Loans, (iv) Unsecured Loans and (v)

Current Liabilities and Provisions. The item of 'share application

money' does not appear in the subheads under any of these heads. ·

Any subscription received by a company against issue of share

capital can be regarded as "subscribed share capital" only when the

share capital is actually subscribed and allotted as well. Until

the allotment is made, any subscription cannot be included in the

amount of subscribed share capital. [ICAI Compendium of Opinions,

Vol. XII, pp. 121 to 123]. Share application money, therefore,

cannot be treated as 'Share Capital". · Share application money

only in respect of invalid or revoked applications and excess

application money received due to over-subscripttion, however, may

be treated as "Current Liabilities". The instant case does not

satisfy any of the above, hence cannot be treated as "Current

Liabilities" Share application money, therefore, can neither be

categorized as "Share Capital' nor "Current Liabilities". · The

ICAI Compendium of Opinions, [Vol. XV, (1996 Edn.) pp. 34 to 36],

opines that the "share application money pending allotment" should

be shown in the balance-sheet under a separate heading between

"Share Capital" and "Reserves and Surplus". · Share application

money is also not an instrument, much less an Equity linked

instrument.