The coupon rate or yield for bonds and the dividend rate for preferred stocks have a material effect on whether new issues of these securities are issued at par at a discount or at a premium. A number of shares may be collected in different installments. Also the shares may be issued in par which is the payment of share at its face value at a discount which is the issuance of shares at a price below the face value and at a premium which is to issue the share above the face value of the share.
100 each as fully paid. 2 00 000 and in payment allotted 2 000 shares of rs. A company purchased land costing rs.
A at par b at a discount of 5 and c at a premium of 25. Show the journal entries if such issues are made. 10 each fully paid in satisfaction of their claim.
It issued equity shares of rs. The amount of the premium is the difference between the par value and the selling price. A company issues its shares at a premium when the price at which it sells the shares is higher than their par value this is quite common since the par value is typically set at a minimal value such as 0 01 per share.
It should be noted that the issue of share below the market price but above face value is not termed as issue of share at discount issue of share at discount is always below the nominal value of shares. It is a loss to the company. Rs 100 95 is the amount of discount.
For example if a share of rs 100 is issued at rs 95 then rs 5 i e. At less than the face value. Issue of shares at discount i e.
At more than face value.
Issue of shares at par premium and discount. A company can issue its shares either at par at a premium or even at a discount. The shares will be at par is when the shares are sold at their nominal value. Shares sold at a premium cost more than their nominal value and the amount in excess of the face value is the premium. Shares tempt the investors also because it can give huge profits to them unlike the fixed rate of return on debentures.
There are various ways or prices at which a company issues its shares like at par at a premium and at discount. The issue of shares at a discount means the issue of the shares at a price less than the face value of the share. Iii at a discount. Entries regarding the issue of debentures are similar to the entries on the issue of shares i issue of debentures at par.
Debentures are said to be issued at par when the amount collected for it is equal to the nominal value face value of the debentures. For example issue of rs. 1 000 debenture for rs. When shares are issued at a price higher than the face value also called par value or nominal value it is called an issue of shares at a premium.
Excess of issue price over face value is the amount of premium. It is a capital profit for the company and the amount so earned has to be credited to a separate account called securities premium. A limited company may issue the shares on following different terms. Issue of shares for consideration other than cash or for cash or on capitalization of reserves.
Issue of shares at par i e. At face value or at nominal value. Issue of shares at premium i e.
Issue of shares at premium i e. At face value or at nominal value. Issue of shares at par i e.
Issue of shares for consideration other than cash or for cash or on capitalization of reserves. A limited company may issue the shares on following different terms. It is a capital profit for the company and the amount so earned has to be credited to a separate account called securities premium.
Excess of issue price over face value is the amount of premium. When shares are issued at a price higher than the face value also called par value or nominal value it is called an issue of shares at a premium. 1 000 debenture for rs.
For example issue of rs. Debentures are said to be issued at par when the amount collected for it is equal to the nominal value face value of the debentures. Entries regarding the issue of debentures are similar to the entries on the issue of shares i issue of debentures at par.
Iii at a discount. The issue of shares at a discount means the issue of the shares at a price less than the face value of the share. There are various ways or prices at which a company issues its shares like at par at a premium and at discount.
Shares tempt the investors also because it can give huge profits to them unlike the fixed rate of return on debentures. Shares sold at a premium cost more than their nominal value and the amount in excess of the face value is the premium. The shares will be at par is when the shares are sold at their nominal value.
A company can issue its shares either at par at a premium or even at a discount.
