B Com Exam > B Com Videos > Advanced Corporate Accounting > Issue of Shares at Premium
Issue of Shares at Premium Video Lecture | Advanced Corporate Accounting - B Com
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FAQs on Issue of Shares at Premium Video Lecture - Advanced Corporate Accounting - B Com
| 1. What is the meaning of issuing shares at a premium? |  |
Ans. Issuing shares at a premium refers to selling company shares at a price higher than their face value. This premium is an additional amount paid by investors over and above the face value of the shares.
| 2. Why would a company issue shares at a premium? | |
Ans. A company may choose to issue shares at a premium to raise additional funds for expansion or to strengthen its financial position. It can also reflect positively on the company's perceived value in the market.
| 3. How is the premium on shares calculated? | |
Ans. The premium on shares is calculated by taking the excess of the issue price over the face value of the shares. For example, if a company issues shares at $20 with a face value of $10, the premium would be $10 per share.
| 4. What are the accounting implications of issuing shares at a premium? | |
Ans. When a company issues shares at a premium, the premium amount is recorded in a separate account called "Securities Premium Account." This amount cannot be distributed as dividends but can be used for specific purposes as per regulations.
| 5. Are there any legal restrictions on issuing shares at a premium? | |
Ans. Yes, there are legal restrictions on issuing shares at a premium. Companies must comply with the regulations set by the regulatory authorities in their jurisdiction, ensuring transparency and fairness to shareholders.
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Nov 22, 2024 Last updated |
Video Description: Issue of Shares at Premium for B Com 2024 is part of Advanced Corporate Accounting preparation.
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