The balance of the share forfeiture account is shown in the balance sheet under:

When shares are forfeited, the company retains the amount already paid by the defaulting shareholders. This amount is credited to the Share Forfeiture Account.

The Share Forfeiture Account represents money received from shareholders, which is capital in nature. Since it arises from share transactions and represents an amount that can be used to write off losses on reissue of forfeited shares or can be transferred to Capital Reserve, it is treated as part of shareholders' funds.

In the Balance Sheet, the Share Forfeiture Account balance is shown under Share Capital on the liabilities side. It appears either:

• Added to the Called-up Share Capital, or
• Shown separately under the Share Capital heading

This treatment makes logical sense because:

The forfeited amount originally came from share capital payments. Until the forfeited shares are reissued, this amount remains with the company as capital. After reissue, any profit on reissue stays in Share Forfeiture Account (later transferred to Capital Reserve), while any discount on reissue is adjusted against it.

The Share Forfeiture Account is not a reserve (since it hasn't been formally transferred), not a loan (as it need not be repaid), and not a current liability (as there's no obligation to pay it back). It logically belongs under Share Capital as it represents capital receipts from share transactions.