In the case of a share issue being oversubscribed,excess application monies:
A) will always be refunded to applicants.
B) may be used to reduce future amounts owing on allotment if the shares are issued on a pro rata basis.
C) must be recorded as revenue in the current financial period.
D) must be placed in a trust account until a refund is requested by applicants.

Question

Quizplus · Accepted Answer

Excess application monies can be used to reduce future amounts owing on allotment if the shares are issued on a pro-rata basis. This means that if a shareholder has applied for more shares than they are allotted, the excess payment can be used to cover any future payments they need to make for the allotted shares. It is not always guaranteed that excess application monies will be refunded to applicants, so option A is incorrect. Option C is incorrect because excess application monies are not revenue but rather a liability owed to the shareholders. Option D is also incorrect as the excess funds can be used to reduce future allotment amounts.

In the Case of a Share Issue Being Oversubscribed,excess Application