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When shares are issued at par and interest, what are the accounting records in this regard?

Issue of Shares

A public company obtains its capital by issuing shares to the public. Issue of shares refers to the offering of shares by a company to the public in exchange for cash or other consideration. Therefore, the company issues its shares for two purposes. First, the shares are issued for any consideration other than cash and second, to receive cash, whether for consideration other than cash, such issue at (1) par (Issue at Par) and (ii) premium ( At Premium).

Issue of shares at face value (Issue of Shares at Par)

When the issue of shares is done at their face value, then it is called ‘Issue at Par’, for example, if a share of ₹ 10 is issued at ₹ 100 in ₹ 10, then it is called par value. Will release. Following entries are made in this regard-

Presentation in Balance Sheet On the issue of shares in the purchase consideration of assets, such shares are separately listed under the heading ‘Share Capital’ on the ‘Equity and Liability’ side of the balance sheet of the company. ) and the properties purchased are shown under the head ‘Fixed Assets’ on the property side.

Always remember that the payment by issue of shares to the seller is always equal to the purchase whether the shares are issued at par or at a premium.

Issue of Shares at Premium

When the company issues its shares at a price higher than the face value, it is called issue at a premium. As the face value of the share is ₹100. It has been released at ₹120. Here 120-100 = ₹20 is the premium on the share. The amount of premium can be taken in any installment and premium can be charged on more than one instalment.

There is no statutory restriction on the amount of premium. It depends on the reputation of the company. The premium is called Securities Premium as per Schedule III of the Companies Act, 2013. Securities Premium Account is a nominal account. This account always shows the deposited balance. Utilization of Securities Premium

The amount is capital gain. According to section 52 of the Companies Act, 2013, the company can use the premium amount for the purposes of (1) The unissued shares of the company shall be paid-up bonus to the members of the company.

Accounting Treatment: With the application or allotment of premium amount. Can be solicited with or with other demands. Share Application B or Share Allotment Account or Share Calling Account (as the case may be) is debited for the amount of Share Premium and Securities Premium Account is credited. Normally the amount of premium is payable along with allotment and payment is received thereafter. For these the following journal entries are made-

Presentation in Balance Sheet:-  The premium on the shares is the capital gain for the company. It is used to write off capital losses. Dividend cannot be paid out of this amount. It is shown in the name of Securities Premium Reserve under the heading Reserve and Surplus in the ‘Equity and Liability’ side of the balance sheet.

Writingoff Losses from Securities Premium Reserve:- Section 52 of the Companies Act, 2013 provides for writing off the expense of issue of shares from the amount of premium. made the following journal entries for She goes

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