Issue of Shares at Discount Video Lecture | Accountancy Class 12 - Commerce

issue of shares at discount when shares
are issued at a price lower than the
face value they are said to be issued at
a discount so the face value - the issue
price is equal to the discount earlier
as per the company's at 1956 the
discount could not exceed 10% of the
face value of the shares and it could be
issued a shares could be issued by a
company and discount only after one year
of operations it should not be for any
new class of shares however as per the
new Companies Act 2013 shares cannot be
issued at a discount if there is
discount in the balance sheet and it is
being carried forward forward then it is
shown under other current or non-current
asset depending on whether the discount
is intended to be written off within one
year if it is within one year additional
draw the current asset if it is intended
to be written off over a period of
greater than one year that portion is
shown under non current assets
so if rupees 10 share is being issued
for rupees nine then through p1 is the
discount the accounting entry in that
case would be money is received so bank
account debit we get only nine rupees to
share application and allotment and on
allotment of shares the entry would be
share application and allotments debit
so lead-lined discount on issue of
shares is a capital loss discount on
issue of shares that's why it's debited
because it is a lost capital loss debits
one to share capital has to be shown at
it face value rupees ten this would be
the accounting entry let us take an
example a company issued a prospectus
inviting the public to subscribe to its
issue of 10 lakh shares of 10 each
issued at a discount of 10% applications
were received for nine lectures past
journal entries so first we receive what
do we receive we receive nine lectures
on receipt and what is the amount we
receive 9 lakh shares into nine because
the shares are being issued they are
rupees 10 each they are being issued at
a discount of 10% that is minus rupee
one issue price is rupees nine therefore
on receipt we will say bank account
debit line like shares into nine
therefore we get eighty one lakh rupees
to share application and allotment
next on allotment of the shares it would
be share application and allotment
discount on issue of shares account how
much would this be this will be rupee 1
per share into 9 lakh shares that's 9
lakh to equity share capital or to share
capital how much would this mean line
like 8 to 10 90 lakhs
so this count account is debited with
the amount of discount per share into
the number of shares allotted share
capital is credited with face value per
share in to number of shares allotted