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If the balance in a forfeited share account is refundable to the owner of those shares,...

If the balance in a forfeited share account is refundable to the owner of those shares, then the forfeited share account is classified as component of

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Normally when the share holder fails to met the calls to the payment towards the allotted shares, then after a couple of paper works the shares alloted may be forfeited and thus the share holder will lose the every right on that shares. and the share price that the holder have paid upto that date may be forfeited. And the company will reissue that share again. really the company earns profit here.

But as in the question if the balance in a forfeited share account is refundable to the owner of those shares, then the forfeited share account is classified as a component of Liabilities.

Because if the any amount in the account has a right for the third party then it can be treated as Liabilities. Here if the forfeited share amount is refundable then the previous share holder has the right on it and thus we can say that amount and account is classified as a component of Liabilities.

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