Question

When shares are issued at a price higher than the face value, they are said to be issued at ____________.

• A. Discount
• B. Premium
• C. Par
• D. None of above

Answer 1

The correct option is B Premium

Issue of Shares at Premium: When shares are issued at a price higher than the face value then it is called as the issue of shares at premium. The excess of issue price over the face value is the amount of premium. The premium on issue of shares is treated as revenue profits.

For e.g.

Let the share is issued at Rs. 120 then it is called that share is issued at a premium of Rs 20 (Rs 120 –Rs. 100).