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When a company issues shares at a premium, the premium amount will be received by it along with

When a company issues shares at a premium, the premium amount will be received by it along with Correct Answer Any of the above <div class="toast-bottom-right" id="toast-container" style=""> <div aria-live="polite" class="toast toast-info" style="display: block; opacity: 0;"><button class="toast-close-button" role="button" style="" type="button">×</button> <div class="toast-message" style="">duplicate options found. English Question 1 options 1,3</div> </div> </div>

Shares Issued at Premium:

  1. When the company allots shares for the first time these shares can be issued at their nominal price or above or below such a nominal price. 
  2. When the company decides to issue shares at a price higher than the nominal value or face value we call it shares issued at a premium. 
  3. It is quite a common practice especially when the company has a great track record and strong financial performances and standing in the market.
  4. So say the face value of a share is Rs. 100/- and the company issues it at Rs. 110/-. The share is said to have been issued at a 10% premium. 
  5. The premium will not make a part of the Share Capital account but will be reflected in a special account known as the Securities Premium Account.
  6. Now, this amount of premium can be called up by the company at any given time, i.e. with any call. The general norm is to collect the premium with either allotment or application money, rarely with call money.

Therefore, When a company issues shares at a premium, the premium amount will be received by it along with application money, allotment money, or calls.

Related Questions

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