Issue Of Shares

Step 1: Calculate premium per share.
Face value of one share = Rs. 10. Premium = 10% of 10 = Rs. 1 per share.
Step 2: Total premium.
For 10,000 shares:
Step 3: Conclude.
Hence, the total securities premium received will be Rs. 10,000.
Final Answer:

Step 1: Meaning of discount on shares.
When a company issues its shares at a price below face value, the difference is called “discount on issue of shares”.
Step 2: Nature of loss.
This is not a trading (revenue) loss, because it is not related to day-to-day operations. It is connected with capital raising. Hence, it is a capital loss.
Step 3: Conclude.
Thus, discount on issue of shares is treated as a capital loss.
Final Answer:

Step 1: Section reference.
As per the Indian Companies Act, 2013, issue of shares at a premium and its treatment is governed under Section 52.
Step 2: Use of securities premium.
Securities Premium Account can be used for: - Issuing fully paid bonus shares, - Writing off preliminary expenses, - Writing off premium on redemption of debentures, - Providing for buy-back of shares, etc.
Step 3: Conclude.
Therefore, issue of shares at premium is dealt under Section 52.
Final Answer:

Step 1: Par value vs. premium.
Par value (face value) is the nominal value of shares. If company issues shares above par, the excess amount is called “securities premium”.
Step 2: Accounting treatment.
This extra amount is not credited to Capital A/c but to a separate account called “Securities Premium A/c” under Reserves and Surplus in Balance Sheet.
Step 3: Conclude.
Hence, the amount received over and above par value is credited to Securities Premium A/c.
Final Answer: