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Question
When shares are issued at discount, the amount of discount is debited to _______, which is in the nature of capital loss for the company.
When shares are issued at discount, the amount of discount is debited to _______, which is in the nature of capital loss for the company.
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Solution
The correct option is A Discount on issue of shares account
When shares are issued at a discount, the amount of such discount is debited to 'Discount on Issue of Shares Account', which is the nature of a capital loss for the company. For example, when a share of the nominal value of Rs.100 is issued at Rs.98, it is said to have been issued at a discount of Rs.2.
When shares are issued at a discount, the amount of such discount is debited to 'Discount on Issue of Shares Account', which is the nature of a capital loss for the company. For example, when a share of the nominal value of Rs.100 is issued at Rs.98, it is said to have been issued at a discount of Rs.2.
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