Answer:

The correct answer is option 'A': Capital Receipt.

Explanation:

Share premium refers to the amount received by a company in excess of the face value of its shares. It is the amount received by a company when it issues its shares at a price higher than their face value. Share premium is considered a capital receipt for the following reasons:

1. Nature of Share Premium: Share premium is a capital receipt because it represents the additional amount received by a company over and above the face value of its shares. It is a form of capital raised by the company and is not earned through its regular business operations. Share premium is received when shares are issued to investors, and it enhances the company's capital base.

2. Capital Contribution: Share premium is considered a capital receipt as it represents the capital contribution made by shareholders. When investors purchase shares at a premium, they are essentially contributing additional capital to the company. This capital can be used for various purposes like funding expansion projects, reducing debt, or improving the company's financial position.

3. Capital Nature: Share premium is a part of the company's share capital. It is reflected in the company's balance sheet as a separate component of shareholders' equity. Share premium is not available for distribution as dividends to shareholders. It is treated as a reserve and can be utilized only for specific purposes as per the company's articles of association and applicable laws.

4. Accounting Treatment: Share premium is recorded in the books of accounts as a separate item under shareholders' equity. It is not considered as revenue earned by the company in its regular business operations. Share premium is credited to a separate account called "Share Premium Account" or "Securities Premium Account." This account is maintained to keep track of the amount of share premium received by the company.

In conclusion, share premium is considered a capital receipt because it represents the additional amount received by a company over and above the face value of its shares. It is a form of capital contribution made by shareholders and is recorded as a separate component of shareholders' equity in the company's balance sheet.