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ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shares of 10 each fully paid .if issue are made at a premium of 25% .securities premium account is credited with?
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ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shar...
Calculation of Premium on Equity Shares
Accounting Treatment of Premium on Equity Shares
In conclusion, ABC ltd will credit its Securities Premium account with Rs. 23,750, which is 25% of the face value of the equity shares issued. This account can be used for various purposes such as issuing bonus shares, writing off expenses, or redeeming preference shares or debentures.
- Total amount of assets purchased by ABC ltd = Rs. 95,000
- Equity shares issued by ABC ltd = Rs. 10 each
- Number of equity shares issued = Total amount of assets purchased / Face value of equity shares = Rs. 95,000 / Rs. 10 = 9,500 shares
- Premium on equity shares = 25% of face value of equity shares = 25% of Rs. 10 = Rs. 2.50 per share
- Total premium on equity shares = Premium per share * Number of equity shares issued = Rs. 2.50 * 9,500 = Rs. 23,750
Accounting Treatment of Premium on Equity Shares
- Securities Premium account is credited with the total premium on equity shares i.e. Rs. 23,750
- Amount credited to Securities Premium account is not available for distribution as dividends to shareholders
- Securities Premium account can be used for the following purposes:
- To issue bonus shares to the shareholders
- To write off the preliminary expenses of the company
- To write off the expenses of issuing shares or debentures
- To redeem preference shares or debentures
In conclusion, ABC ltd will credit its Securities Premium account with Rs. 23,750, which is 25% of the face value of the equity shares issued. This account can be used for various purposes such as issuing bonus shares, writing off expenses, or redeeming preference shares or debentures.
Community Answer
ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shar...
Equity share capital credited with Rs.76,000/- &
Securities premium reserve by Rs.19,000/-
Securities premium reserve by Rs.19,000/-
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ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shares of 10 each fully paid .if issue are made at a premium of 25% .securities premium account is credited with?
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ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shares of 10 each fully paid .if issue are made at a premium of 25% .securities premium account is credited with? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shares of 10 each fully paid .if issue are made at a premium of 25% .securities premium account is credited with? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shares of 10 each fully paid .if issue are made at a premium of 25% .securities premium account is credited with?.
ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shares of 10 each fully paid .if issue are made at a premium of 25% .securities premium account is credited with? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shares of 10 each fully paid .if issue are made at a premium of 25% .securities premium account is credited with? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ABC ltd.purchase assets of 95000 rs from C bros .it issued equity shares of 10 each fully paid .if issue are made at a premium of 25% .securities premium account is credited with?.
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