Commerce Exam > Commerce Videos > Accountancy Class 12 > Issue of Shares at Premium
Issue of Shares at Premium Video Lecture | Accountancy Class 12 - Commerce
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47 videos|180 docs|56 tests
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FAQs on Issue of Shares at Premium Video Lecture - Accountancy Class 12 - Commerce
| 1. What is the concept of issuing shares at a premium? |  |
Ans. Issuing shares at a premium refers to the practice of selling company shares at a price higher than their face value. This is usually done when the market value of the shares is higher than their nominal value, allowing the company to raise additional capital through the premium charged.
| 2. Why would a company choose to issue shares at a premium? | |
Ans. A company may choose to issue shares at a premium to take advantage of favorable market conditions and investor demand. By offering shares at a higher price, the company can raise more capital and potentially enhance its financial position, allowing for future growth opportunities or debt repayment.
| 3. How is the premium determined when issuing shares? | |
Ans. The premium for issuing shares is typically determined through a combination of factors, including market conditions, investor demand, the company's financial performance, and the perceived value of the shares. It is usually set by the company's board of directors or through a process involving investment bankers and financial advisors.
| 4. Are there any legal requirements or restrictions when issuing shares at a premium? | |
Ans. Yes, there may be legal requirements and restrictions when issuing shares at a premium. Companies need to comply with the laws and regulations of the jurisdiction they operate in, which may include obtaining necessary approvals from regulatory bodies and ensuring proper disclosure to shareholders. Additionally, the premium charged must be justifiable and reasonable, avoiding any unfair practices or misleading investors.
| 5. How does issuing shares at a premium impact shareholders? | |
Ans. Issuing shares at a premium can have both positive and negative impacts on shareholders. On one hand, it can potentially increase the value of existing shares, benefiting current shareholders. The additional capital raised through the premium can also be used to fund growth initiatives that may lead to higher returns. However, shareholders' ownership percentage may be diluted if a significant number of new shares are issued, which could affect their voting rights and control over the company.
Text Transcript from Video
next let us just consider issue of
shares in one installment at a premium
what is a premium if the face value is
rupee still if it is issued at say
rupees 15 then this is the issue price
then rupees five is the premium rupees
five is the premium so the excess of the
issue price minus the face value the
excess of the issue price over the face
value is the premium and it is held
under the securities premium account
securities premium appears under
reserves and surplus under shareholders
funds on the equity and liability side
of the bank so what are the entries
let us talk of a single rupees then
share being issued at rupees fifty when
the money comes in bank account debit 52
share application and allotment with the
amount received let's say 15 when the
share is allotted share application and
allotment account debit 15 to share
capital is always shown at the face
value which is 10 and therefore the
remainder is the premium to securities
premium 5 so entry on issue of share for
cash at premium a simple bank account
debit to share application allotment
with the amount received share
application allotment account debit to
share capital with always the face value
to securities premium with the amount of
premium on the shares are not paid with
face value securities premium on shares
allotted if there was over subscription
money has to be refunded entry is the
same refund money share application
allotment account debit to back
you
shares in one installment at a premium
what is a premium if the face value is
rupee still if it is issued at say
rupees 15 then this is the issue price
then rupees five is the premium rupees
five is the premium so the excess of the
issue price minus the face value the
excess of the issue price over the face
value is the premium and it is held
under the securities premium account
securities premium appears under
reserves and surplus under shareholders
funds on the equity and liability side
of the bank so what are the entries
let us talk of a single rupees then
share being issued at rupees fifty when
the money comes in bank account debit 52
share application and allotment with the
amount received let's say 15 when the
share is allotted share application and
allotment account debit 15 to share
capital is always shown at the face
value which is 10 and therefore the
remainder is the premium to securities
premium 5 so entry on issue of share for
cash at premium a simple bank account
debit to share application allotment
with the amount received share
application allotment account debit to
share capital with always the face value
to securities premium with the amount of
premium on the shares are not paid with
face value securities premium on shares
allotted if there was over subscription
money has to be refunded entry is the
same refund money share application
allotment account debit to back
you
About this Video
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Nov 24, 2024 Last updated |
Video Description: Issue of Shares at Premium for Commerce 2024 is part of Accountancy Class 12 preparation.
The notes and questions for Issue of Shares at Premium have been prepared according to the Commerce exam syllabus.
Information about Issue of Shares at Premium covers all important topics for Commerce 2024 Exam.
Find important definitions, questions, notes, meanings, examples, exercises and tests below for Issue of Shares at Premium.
Introduction of Issue of Shares at Premium in English is available as part of our Accountancy Class 12 for Commerce & Issue of Shares at Premium in
Hindi for Accountancy Class 12 course. Download more important topics related with notes, lectures and mock test series for
Commerce Exam by signing up for free.
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Video Lecture & Questions for Issue of Shares at Premium Video Lecture | Accountancy Class 12 - Commerce - Commerce full syllabus preparation | Free video for Commerce exam to prepare for Accountancy Class 12.
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