Question

When shares are issued at a price less 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 A Discount

Issue of shares at discount: When the shares are issued at a price lower than the face value, they are said to be issued at discount.

Any company could not offer the shares at discount when

• It is a new company

• It is a new class of shares even though of an old company

The discount on issue of shares is treated as a loss of capital nature.

For e.g.

Let the share is issued at Rs. 90 then it is called that share is issued at the discount of Rs 10 (Rs 100 –Rs. 90).