1
Question
If shares are issued at premium, i.e. at an amount more than the nominal or par value of shares, the amount of premium is credited to a separate account called ________.
If shares are issued at premium, i.e. at an amount more than the nominal or par value of shares, the amount of premium is credited to a separate account called ________.
Open in App
Solution
The correct option is C Securities Premium Account
It is quite common for the shares of financially strong and well-managed companies to be issued at a premium, i.e. at an amount more than the nominal or par value of shares. Thus, when a share of the nominal value of Rs. 100 is issued at Rs. 105, it is said to have been issued at a premium of 5 percent. When the issue of shares is at a premium, the amount of premium may technically be called at any stage of the issue of shares. However, premium is generally called with the amount due on allotment, sometimes with the application money and rarely with the call money. The premium amount is credited to a separate account called 'Securities Premium Account'.
It is quite common for the shares of financially strong and well-managed companies to be issued at a premium, i.e. at an amount more than the nominal or par value of shares. Thus, when a share of the nominal value of Rs. 100 is issued at Rs. 105, it is said to have been issued at a premium of 5 percent. When the issue of shares is at a premium, the amount of premium may technically be called at any stage of the issue of shares. However, premium is generally called with the amount due on allotment, sometimes with the application money and rarely with the call money. The premium amount is credited to a separate account called 'Securities Premium Account'.
Suggest Corrections
0
Similar questions
View More
Join BYJU'S Learning Program
Explore more
Join BYJU'S Learning Program
